Document:

Exhibit 10.1

 

 

FIRST

AMENDMENT TO CREDIT AGREEMENT, WAIVER AND CONSENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT, WAIVER AND

CONSENT (this “Amendment”), dated

as of January 24, 2003, is by and among INSIGHT HEALTH SERVICES CORP., a

Delaware corporation (the “Borrower”),

INSIGHT HEALTH SERVICES HOLDINGS CORP., a Delaware corporation (the “Parent”), the Subsidiary Guarantors

parties hereto, the Lenders defined in the Existing Credit Agreement defined

below, BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in such

capacity, the “Administrative Agent”),

WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as First Union National

Bank), as Syndication Agent (in such capacity, the “Syndication Agent”) and THE CIT GROUP/BUSINESS

CREDIT, INC., as Documentation Agent (in such capacity, the “Documentation Agent”).

 

 

W I T N

E S S E T H

 

WHEREAS, the Borrower, the Parent, the Subsidiary

Guarantors, the Lenders, the Administrative Agent, the Syndication Agent and

the Documentation Agent entered into that certain Credit Agreement dated as of

October 17, 2001 (the “Existing Credit

Agreement”);

 

WHEREAS, the Borrower has requested that certain

provisions of the Existing Credit Agreement be amended; and

 

WHEREAS, the parties have agreed to amend the Existing

Credit Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the agreements

hereinafter set forth, and for other good and valuable consideration, the

receipt and adequacy of which are hereby acknowledged, the parties hereto agree

as follows:

 

 

PART 1

DEFINITIONS

 

SUBPART 1.1    Certain

Definitions.    Unless

otherwise defined herein or the context otherwise requires, the following terms

used in this Amendment, including its preamble and recitals, have the following

meanings:

 

“2002 Lease Buyout” means the buyout by the

Consolidated Parties of certain operating leases on June 30, 2002 which

became effective as of July 1, 2002 for an aggregate cost of approximately

$14,243,000.

 

“2002 Lease Conversion” the conversion by

the Consolidated Parties on July 1, 2002 of certain operating leases into

Capital Leases having an outstanding principal component of approximately

$23,571,000.

 

“Amended Credit Agreement” means the

Existing Credit Agreement as amended hereby.

 

“First Amendment Effective Date” is defined

in the first paragraph of Part 4.

 

SUBPART 1.2    Other

Definitions.    Unless otherwise defined herein

or the context otherwise requires, terms used in this Amendment, including its

preamble and recitals, have the meanings provided in the Amended Credit

Agreement.

 

 

PART 2

AMENDMENTS

TO EXISTING CREDIT AGREEMENT

 

Effective on (and subject to the occurrence of) the

First Amendment Effective Date, the Existing Credit Agreement is hereby amended

in accordance with this Part 2.

Except as so amended, the Existing Credit Agreement and all other Credit

Documents shall continue in full force and effect.

 

 

SUBPART 2.1    Amendments

to Recitals.    The first recital paragraph of

the Existing Credit Agreement is hereby amended in it entirety to read as

follows:

 

WHEREAS, the Borrower has requested that the

Lenders provide credit facilities in an aggregate amount of up to $325,000,000

(the “Credit Facilities”) for the

purposes hereinafter set forth;

 

SUBPART 2.2    Amendments

to Section 1.1.

 

A.    The following definitions

set forth in Section 1.1 of the Existing Credit Agreement are hereby

amended in their entireties to read as follows:

 

“Applicable Percentage” means (i) for

purposes of calculating the applicable interest rate for any day for any

Revolving Loan, Tranche B Term Loan or Delayed-Draw Term Loan, the applicable

rate of the Revolving Commitment Unused Fee for any day for purposes of

Section 3.5(a)(i), the applicable rate of the Standby Letter of Credit Fee

for any day for purposes of Section 3.5(b)(i) or the applicable rate

of the Trade Letter of Credit Fee for any day for purposes of

Section 3.5(b)(ii), the appropriate applicable percentage corresponding to

the Senior Leverage Ratio in effect as of the most recent Calculation Date, as

set forth in the table below: 

 

	

   

  	

   

  	

   

  	

   

  	

  Applicable

  Percentages

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  For

  Revolving Loans

  	

   

  	

  For

  Tranche B Term

  Loans and

  Delayed-Draw

  Term Loans

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Pricing

  Level

  	

   

  	

  Senior

  Leverage

  Ratio

  	

   

  	

  Eurodollar

  Loans

  	

   

  	

  Base Rate

  Loans

  	

   

  	

  Eurodollar

  Loans

  	

   

  	

  Base Rate

  Loans

  	

   

  	

  For

  Standby

  Letter of

  Credit Fee

  	

   

  	

  For Trade

  Letter of

  Credit Fee

  	

   

  	

  For

  Revolving

  Commitment

  Unused Fee

  	

   

  
	

  I

  	

   

  	

  > 2.50 to

  1.0

  	

   

  	

  3.50

  	

  %

  	

  2.50

  	

  %

  	

  3.75

  	

  %

  	

  2.75

  	

  %

  	

  3.50

  	

  %

  	

  1.75

  	

  %

  	

  0.625

  	

  %

  
	

  II

  	

   

  	

  < 2.50 to

  1.0 but >

  2.25 to 1.0

  	

   

  	

  3.25

  	

  %

  	

  2.25

  	

  %

  	

  3.50

  	

  %

  	

  2.50

  	

  %

  	

  3.25

  	

  %

  	

  1.625

  	

  %

  	

  0.50

  	

  %

  
	

  III

  	

   

  	

  < 2.25 to

  1.0 but >

  1.75 to 1.0

  	

   

  	

  3.00

  	

  %

  	

  2.00

  	

  %

  	

  3.50

  	

  %

  	

  2.50

  	

  %

  	

  3.00

  	

  %

  	

  1.50

  	

  %

  	

  0.50

  	

  %

  
	

  IV

  	

   

  	

  < 1.75 to 1.0

  but > 1.25 to 1.0

  	

   

  	

  2.75

  	

  %

  	

  1.75

  	

  %

  	

  3.25

  	

  %

  	

  2.25

  	

  %

  	

  2.75

  	

  %

  	

  1.375

  	

  %

  	

  0.50

  	

  %

  
	

  V

  	

   

  	

  < 1.25 to 1.0

  	

   

  	

  2.50

  	

  %

  	

  1.50

  	

  %

  	

  3.25

  	

  %

  	

  2.25

  	

  %

  	

  2.50

  	

  %

  	

  1.25

  	

  %

  	

  0.375

  	

  %

  

 

2

 

and (ii) for purposes of calculating the applicable interest rate

for any day for any New Delayed-Draw Term Loan, the appropriate applicable

percentage corresponding to the Senior Leverage Ratio in effect as of the most

recent Calculation Date, as set forth in the table below: 

 

	

   

  	

   

  	

   

  	

   

  	

  Applicable

  Percentages

  for New

  Delayed-Draw

  Term Loans

  	

   

  
	

  Pricing Level

  	

   

  	

  Senior

  Leverage

  Ratio

  	

   

  	

  Eurodollar

  Loans

  	

   

  	

  Base

  Rate

  Loans

  	

   

  
	

  I

  	

   

  	

  > 2.50 to

  1.0

  	

   

  	

  4.00

  	

  %

  	

  3.00

  	

  %

  
	

  II

  	

   

  	

  < 2.50 to

  1.0 but >

  2.25 to 1.0

  	

   

  	

  3.75

  	

  %

  	

  2.75

  	

  %

  
	

  III

  	

   

  	

  < 2.25 to

  1.0 but >

  1.75 to

  1.0

  	

   

  	

  3.75

  	

  %

  	

  2.75

  	

  %

  
	

  IV

  	

   

  	

  < 1.75 to

  1.0 but >

  1.25 to

  1.0

  	

   

  	

  3.50

  	

  %

  	

  2.50

  	

  %

  
	

  V

  	

   

  	

  < 1.25 to

  1.0

  	

   

  	

  3.50

  	

  %

  	

  2.50

  	

  %

  

 

The Applicable Percentages shall be determined and adjusted quarterly

on the date (each a “Calculation Date”)

five (5) Business Days after the date by which the Credit Parties are

required to provide the officer’s certificate in accordance with the provisions

of Section 7.1(c) for the most recently ended fiscal quarter of the

Consolidated Parties; provided, however,

that (i) on and after the First Amendment Effective Date, the Applicable

Percentages shall be based on Pricing Level III (as shown in each of the tables

set forth above) and shall remain at such Pricing Level III until the Calculation

Date for the fiscal quarter of the Consolidated Parties ending on

March 31, 2003, on and after which time the Pricing Level shall be

determined by the Senior Leverage Ratio as of the last day of the most recently

ended fiscal quarter of the Consolidated Parties preceding the applicable

Calculation Date and (ii) if the Credit Parties fail to provide the

officer’s certificate to the Administrative Agency Services Address as required

by Section 7.1(c) for the last day of the most recently ended fiscal quarter

of the Consolidated Parties preceding the applicable Calculation Date, the

Applicable Percentage from such Calculation Date shall be based on Pricing

Level I until such time as an appropriate officer’s certificate is provided,

whereupon the Pricing Level shall be determined by the Senior Leverage Ratio as

of the last day of the most recently ended fiscal quarter of the Consolidated

Parties preceding such Calculation Date. Each Applicable Percentage shall be

effective from one Calculation Date until the next Calculation Date. Any

adjustment in the Applicable Percentages shall be applicable to all existing

Loans and Letters of Credit as well as any new Loans and Letters of Credit made

or issued.

 

“Commitment”

means (i) with respect to each Lender, the Revolving Commitment of such

Lender, the Delayed-Draw Term Loan Commitment, the Tranche B Term Loan

Commitment and the New Delayed-Draw Term Loan Commitment of such Lender,

(ii) with respect to the Issuing Lender, the LOC Commitment and

(iii) with respect to the Fronting Bank, (a) the Fronting Commitment

and (b) the New Fronting Commitment.

 

“Excess Cash Flow”

means, with respect to any fiscal year period of the Consolidated Parties on a

consolidated basis, an amount equal to (a) Consolidated EBITDA (determined

after adding back, but without duplication, any amounts deducted in determining

Consolidated Net Income for such fiscal year period that were paid, incurred,

assumed or accrued in violation of any of the

 

3

 

provisions of this Credit Agreement) minus

(b) Consolidated Capital Expenditures that are permitted to be made

hereunder paid (or required to be paid) in cash (excluding any cash obtained

through the incurrence of Indebtedness) minus

(c) Consolidated Interest Expense in respect of Indebtedness that is

permitted to be incurred hereunder paid (or required to be paid) in cash minus (d) Federal, state and other

income taxes actually paid by the Consolidated Parties on a consolidated basis minus (e) Consolidated Scheduled

Funded Indebtedness Payments that are permitted to be made hereunder, together

with any optional prepayments of the Delayed-Draw Term Loans, the Tranche B

Term Loans or the New Delayed-Draw Term Loans and any prepayments of Revolving

Loans to the extent accompanied by a permanent reduction of the Revolving

Committed Amount minus

(f) Permitted Investments made in cash plus/minus

(g) changes in Consolidated Working Capital other than as the result of

the consummation of any Permitted Acquisition during such fiscal year; provided, however, that solely with

respect to the calculation of Excess Cash Flow for fiscal year 2002, the

applicable period for measuring the components thereof shall commence on the

Closing Date and end on June 30, 2002.

 

“Lender” means (i) any of the Persons

identified as a “Lender” on the

signature pages hereto, (ii) any Person which may become a Lender by way

of assignment in accordance with the terms hereof, together with their

successors and permitted assigns and (iii) any Person which may become a

Lender by executing a New Commitment Agreement.

 

“Loan” or “Loans”

means the Revolving Loans, the Delayed-Draw Term Loans, the Tranche B Term Loan

and/or the New Delayed-Draw Term Loans (or a portion of any Revolving Loan, any

Delayed-Draw Term Loan, the Tranche B Term Loan or any New Delayed-Draw Term

Loan bearing interest at the Adjusted Base Rate or the Adjusted Eurodollar Rate

and referred to as a Base Rate Loan or a Eurodollar Loan), individually or

collectively, as appropriate.

 

“Maturity Date” means (i) as to the

Revolving Loans, Letters of Credit (and the related LOC Obligations),

October 17, 2007, (ii) as to the Delayed-Draw Term Loans, the Tranche

B Term Loan and the New Delayed-Draw Term Loans, October 17, 2008.

 

“Note” or “Notes”

means the Revolving Notes, the Delayed-Draw Term Notes, the Tranche B Term

Notes and/or the New Delayed-Draw Term Notes, individually or collectively, as

appropriate.

 

“Principal Amortization Payment” means a

principal payment on the Delayed-Draw Term Loans as set forth in

Section 2.3(d), on the Tranche B Term Loans as set forth in

Section 2.4(d) (as adjusted from time to time pursuant to

Section 2.6(a) and/or Section 3.4(g)) or on the New Delayed-Draw Term

Loans as set forth in Section 2.5(d).

 

“Revolving Commitment Percentage” means,

for any Lender, the percentage identified as its Revolving Commitment

Percentage on Schedule 2.1(a),

as such percentage may be modified in connection with any assignment made in

accordance with the provisions of Section 11.3 or any increase in the

Revolving Committed Amount pursuant to Section 3.4(g).

 

“Tranche B Term Loan Percentage” means, for

any Lender, the percentage identified as its Tranche B Term Loan Percentage on Schedule 2.1(a), as such percentage

may be modified in connection with any assignment made in accordance with the

provisions of Section 11.3 or the conversion of Delayed-Draw Term Loans to

Tranche B Term Loans in accordance with the provisions of Section 2.6 or

any increase in the Tranche B Term Loan Committed Amount pursuant to

Section 3.4(g).

 

B.    The definitions

“Delayed-Draw Term Loan Tranches 1, 2, 3 and 4”, “Delayed-Draw Term Loan

Tranches” and “Unused Delayed-Draw Term Loan Committed Amount are hereby

deleted in their entireties from Section 1.1 of the Existing Credit

Agreement.

 

4

 

C.    The following new

definitions are hereby added to Section 1.1 of the Existing Credit

Agreement in the appropriate alphabetical order:

 

“CMI Acquisition” means the Acquisition by

InSight Health Corp. of all or a portion of the CMI Assets pursuant to the CMI

Purchase Agreement in a series of up to three (3) separate closings.

 

“CMI Assets” shall have the meaning

assigned to the term “Purchased Assets” in the CMI Purchase Agreement.

 

“CMI Purchase Agreement” means the Asset

Purchase Agreement dated as of January 6, 2003, by and among InSight

Health Corp., Comprehensive Medical Imaging, Inc., a Delaware corporation,

Comprehensive Medical Imaging Centers, Inc., a Delaware corporation, and

Cardinal Health 414, Inc., a Delaware corporation, in respect of the CMI

Acquisition, together with all schedules and exhibits thereto.

 

“First Amendment” means the First Amendment

to Credit Agreement, Waiver and Consent dated as of January 24, 2003 by

and among the Borrower, the Guarantors, the Lenders, the Administrative Agent,

the Syndication Agent and the Documentation Agent.

 

“First Amendment Effective Date” means the date that the First

Amendment becomes effective in accordance with the terms of Part 4

thereof.

 

“Initial CMI Acquisition Closing” shall

have the meaning assigned to the term “Initial Closing” in the CMI Purchase

Agreement.

 

“Initial CMI Acquisition Closing Conditions”

means:

 

(i)  The

Administrative Agent shall have received an executed copy of the CMI Purchase

Agreement, certified by an Executive Officer of the Borrower to be true,

correct and complete.

 

(ii)  The

Administrative Agent shall have received the financial statements of the CMI

Assets referred to in Section 7.2(d) of the CMI Purchase Agreement.

 

(iii)  The

Acquisition of the portion of the CMI Assets purchased in the Initial CMI

Acquisition Closing shall be permitted under Section 8.6(i) (provided

that the waivers set forth in paragraphs (a) and (b) of Subpart 3.1

of the First Amendment shall have become effective with respect to such

closing) and shall have been consummated on or before May 9, 2003 in

accordance with the terms of the CMI Purchase Agreement and in compliance with

applicable law and regulatory approvals, and all material conditions precedent

to the obligation of the buyer for the Initial CMI Acquisition Closing under

the CMI Purchase Agreement shall have been satisfied. The CMI Purchase

Agreement shall not have been altered, amended or otherwise changed or

supplemented or any condition therein waived without the prior written consent

of the Administrative Agent.

 

“New Commitment Agreement” means an

agreement in the form of Exhibit 1.1E.

 

“New Delayed-Draw Term Loan Borrowing Request”

means a written notice from the Borrower to the Administrative Agent requesting

a New Delayed-Draw Term Loan and specifying (i) that a New Delayed-Draw

Term Loan is requested, (ii) the date of the requested borrowing (which

shall be a Business Day at least five (5) Business Days after the date of

receipt of such notice by the Administrative Agent (or such later date as the

Fronting Bank and the Administrative Agent may agree with the Borrower in order

to minimize the incurrence of costs by the Borrower pursuant to

Section 3.12(a) in connection with such borrowing)), (iii) the

aggregate principal amount to be borrowed (which shall be at least $10,000,000

or an integral multiple of $1,000,000 in excess thereof, or the remaining

amount of the New Delayed-Draw Term Loan Committed Amount, if

 

5

 

less) and (iv) whether the borrowing shall be

comprised of Base Rate Loans, Eurodollar Loans or a combination thereof, and if

Eurodollar Loans are requested, the Interest Period(s) therefor.

 

“New Delayed-Draw Term Loan Commitment” means, with

respect to each Lender, the commitment of such Lender in an aggregate principal

amount at any time outstanding of up to such Lender’s New Delayed-Draw Term

Loan Commitment Percentage (if any) of the New Delayed-Draw Term Loan Committed

Amount, to make New Delayed-Draw Term Loans in accordance with the provisions

of Section 2.5(a).

 

“New Delayed-Draw Term Loan Commitment Percentage”

means, for any Lender, the percentage identified as its New Delayed-Draw Term

Loan Commitment Percentage on Schedule 2.1(a),

as such percentage may be modified in connection with any assignment made in accordance with the provisions of

Section 11.3 or any increase in the New Delayed-Draw Committed Amount

pursuant to Section 3.4(g).

 

“New Delayed-Draw Term Loan Commitment Termination

Date” means the earliest of (i) the date that the New

Delayed-Draw Term Loan Commitments

shall have been terminated as provided herein, (ii) the date that the New

Delayed-Draw Term Loan Committed Amount shall have been reduced to zero ($0)

and (iii) January 31, 2005.

 

“New Delayed-Draw Term Loan Commitment Unused Fee”

shall have the meaning assigned to such term in Section 3.5(a)(iii).

 

“New Delayed-Draw Term Loan Commitment Unused Fee

Calculation Period” shall have the meaning assigned to such term in

Section 3.5(a)(iii).

 

“New Delayed-Draw Term Loan Committed Amount”

shall have the meaning assigned to such term in Section 2.5(a).

 

“New Delayed-Draw Term Loan Funding Notice”

shall have the meaning assigned to such term in Section 2.5(b)(i).

 

“New Delayed-Draw Term Loan Tranches 1, 2 and 3”

and “New Delayed-Draw Term Loan Tranches”

shall have the meaning assigned to such terms in Section 2.5(g).

 

“New Delayed-Draw Term Loans” shall have the meaning assigned to such term in

Section 2.5(a).

 

“New Delayed-Draw Term Note” shall have the

meaning assigned to such term in

Section 2.5(f).

 

“New Fronting Commitment” means the

commitment of the Fronting Bank to front New Delayed-Draw Term Loans in an aggregate

cumulative principal amount of up to the New Delayed-Draw

Term Loan Committed Amount.

 

“Required New Delayed-Draw Term Lenders”

means, at any time, Lenders

(other than Defaulting Lenders) holding in the aggregate at least a majority of

the unfunded New Delayed-Draw Term Loan Commitments (and Participation

Interests therein) and the outstanding New Delayed-Draw Term Loans (and

Participation Interests therein).

 

“Required Unfunded New Delayed-Draw Term Lenders”

means, at any time, Lenders (other than Defaulting Lenders) holding in the aggregate at least a majority of the unfunded New Delayed-Draw Term

Loan Commitments (and Participation Interests therein).

 

“Subsequent CMI Acquisition Closing” shall have the meaning assigned to the term

“Subsequent Closing” in the CMI Purchase Agreement.

 

6

 

“Subsequent CMI Acquisition Closing Conditions”

means, with respect to each Subsequent CMI Acquisition Closing, if any:

 

(i)  The

Initial CMI Acquisition Closing

shall have occurred and no more than one (1) Subsequent CMI Acquisition

Closing shall have occurred.

 

(ii)  The

Acquisition of the portion of the CMI Assets purchased in such Subsequent CMI

Acquisition Closing shall be permitted under Section 8.6(i) (provided

that the waivers set forth in paragraphs (a) and (b) of Subpart 3.1

of the First Amendment shall have become effective with respect to such

closing) and shall have been consummated on or before May 9, 2003 in

accordance with the terms of the CMI Purchase Agreement and in compliance with

applicable law and regulatory approvals, and all material conditions precedent

to the obligation of the buyer for such Subsequent CMI Acquisition Closing

under the CMI Purchase Agreement shall have been satisfied. The CMI Purchase

Agreement shall not have been altered, amended or otherwise changed or

supplemented or any condition therein waived without the prior written consent

of the Administrative Agent.

 

SUBPART 2.3    Amendments

to Section 2.1.    Subsection (a) of

Section 2.1 of the Existing Credit Agreement is hereby amended in its

entirety to read as follows:

 

2.1    Revolving Loans.

 

(a)    Revolving Commitment.    Subject

to the terms and conditions hereof and in reliance upon the representations and

warranties set forth herein, each Lender severally agrees to make available to

the Borrower such Lender’s Revolving Commitment Percentage of revolving credit

loans requested by the Borrower in Dollars (“Revolving

Loans”) from time to time from the Closing Date until the Maturity

Date, or such earlier date as the Revolving Commitments shall have been

terminated as provided herein; provided,

however, that (i) the sum of the aggregate outstanding

principal amount of Revolving Loans shall not exceed FIFTY MILLION DOLLARS ($50,000,000) (as such aggregate maximum

amount may be reduced or increased from time to time as provided in

Section 3.4, the “Revolving Committed

Amount”), (ii) with regard to each Lender individually, the sum

of such Lender’s outstanding Revolving Loans plus

such Lender’s Participation Interests in Letters of Credit and LOC Obligations

shall not exceed such Lender’s Revolving Commitment Percentage of the Revolving

Committed Amount and (iii) the sum of the aggregate outstanding principal

amount of Revolving Loans plus

LOC Obligations shall not exceed the Revolving Committed Amount. Revolving

Loans may consist of Base Rate Loans or Eurodollar Loans, or a combination

thereof, as the Borrower may request; provided,

however, that no more than ten (10) Eurodollar Loans which are

Revolving Loans shall be outstanding hereunder at any time (it being understood

that, for purposes hereof, Eurodollar Loans with different Interest Periods

shall be considered as separate Eurodollar Loans, even if they begin on the

same date, although borrowings, extensions and conversions may, in accordance

with the provisions hereof, be combined at the end of existing Interest Periods

to constitute a new Eurodollar Loan with a single Interest Period). Revolving

Loans hereunder may be repaid and reborrowed in accordance with the provisions

hereof.

 

7

 

SUBPART 2.4    Amendments

to Section 2.3.    Subsection

(b)(i) of Section 2.3 of the Existing Credit Agreement is hereby

amended in its entirety to read as follows:

 

2.3    Delayed-Draw Term Loans.

 

*************

 

(b)    Delayed-Draw Term Loan

Borrowings.

 

(i)  Borrowing Mechanics.  On each

occasion occurring prior to the date ten (10) Business Days prior to the

Delayed-Draw Term Loan Commitment Termination Date (and at least 30 days

after the immediately preceding date of a Delayed-Draw Term Loan borrowing, if

any) that either (x) the aggregate principal amount of Revolving Loans

equals or exceeds $30,000,000 or (y) the Borrower delivers to the Administrative

Agent a Delayed-Draw Term Loan Borrowing Request for a Delayed-Draw Term Loan

of at least $10,000,000 (or an integral multiple of $1,000,000 in excess

thereof, or the remaining amount of the Delayed-Draw Term Loan Committed

Amount, if less), the Borrower shall be deemed to have requested a Delayed-Draw

Term Loan borrowing (which request shall be irrevocable) (A) in an

aggregate principal amount equal to (1) in the case of a borrowing request

deemed to have been made pursuant to clause (x) of this subsection (i),

the lesser of (I) the amount by which the aggregate principal amount of

Revolving Loans outstanding on the date such borrowing request is deemed to

have been made exceeds $20,000,000 and (II) the remaining amount of the

Delayed-Draw Term Loan Committed Amount, or (2) in the case of a borrowing

request made pursuant to clause (y) of this subsection (i), the amount of

the requested borrowing as set forth in the related Delayed-Draw Term Loan

Borrowing Request, (B) to be funded on the date ten (10) Business

Days thereafter (or such later date as the Fronting Bank and the Administrative

Agent may agree with the Borrower in order to minimize the incurrence of costs

by the Borrower pursuant to Section 3.12(a) in connection with such borrowing)

and (C) unless the Borrower shall specify otherwise in a written notice

(or telephonic notice promptly confirmed in writing) to the Administrative

Agent not later than 12:00 Noon (Charlotte, North Carolina time) on the third

Business Day prior to the date of the applicable borrowing, to consist of a

Base Rate Loan. The Administrative Agent shall give notice (a “Delayed-Draw Term Loan Funding Notice”) to

the Fronting Bank and each affected Lender promptly upon the occurrence of any

request or deemed request for a Delayed-Draw Term Loan pursuant to this

Section 2.3(b)(i), specifying the aggregate principal amount of such

Delayed-Draw Term Loan, whether such Delayed-Draw Term Loan shall be comprised

of Base Rate Loans, Eurodollar Loans or a combination thereof, and if

Eurodollar Loans are requested, the Interest Period(s) therefor and the portion

of such Delayed-Draw Term Loan which each such Lender is required to purchase.

Notwithstanding any other provision of this Credit Agreement to the contrary,

the proceeds of any borrowing of Delayed-Draw Term Loans deemed to have been

requested pursuant to clause (x) of this subsection (i) shall be

applied to the repayment of Revolving Loans.

 

SUBPART 2.5    Amendments

to Section 2.4.    Subsections (a) and

(d) of Section 2.4 of the Existing Credit Agreement are hereby

amended in their entireties to read as follows:

 

2.4    Tranche B Term Loan.

 

(a)    Tranche B Term Commitment.    Subject

to the terms and conditions hereof and in reliance upon the representations and

warranties set forth herein, each Lender severally agrees to make available to

the Borrower on the Closing Date such Lender’s Tranche B Term Loan Percentage

of a term loan in Dollars (the “Tranche B

Term Loan”) in the aggregate principal amount of ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000)

(as such aggregate

 

8

 

maximum amount may be reduced from time to time by any

payments or prepayments of principal on the Tranche B Term or increased from

time to time as provided in Section 3.4, the “Tranche B Term Loan Committed Amount”). The full principal

amount of the Tranche B Term Loan shall be disbursed on the Closing Date as a

Base Rate Loan, and no portion of the Tranche B Term Loan shall consist of a

Eurodollar Loan until the date which is 5 Business Days after the Closing Date.

Thereafter, the Tranche B Term Loan may consist of Base Rate Loans or

Eurodollar Loans, or a combination thereof, as the Borrower may request; provided, however, that no more than five

(5) Eurodollar Loans which are Tranche B Term Loans shall be outstanding

hereunder at any time (it being understood that, for purposes hereof,

Eurodollar Loans with different Interest Periods shall be considered as

separate Eurodollar Loans, even if they begin on the same date, although

borrowings, extensions and conversions may, in accordance with the provisions

hereof, be combined at the end of existing Interest Periods to constitute a new

Eurodollar Loan with a single Interest Period). Amounts repaid on the Tranche B

Term Loan may not be reborrowed.

 

*************

 

(d)    Repayment of Tranche B Term

Loan.    The Borrower hereby promises to pay the

outstanding principal amount of the Tranche B Term Loan in twenty-eight

(28) consecutive quarterly installments as follows (as such installments

may hereafter be adjusted as a result of prepayments made pursuant to

Section 3.3 or as the result of an increase in the amount of the Tranche B

Term Loan Committed Amount pursuant to Section 2.6(a) or Section 3.4(f)),

unless accelerated sooner pursuant to Section 9.2: 

 

	

  Principal

  Amortization Payment Dates

  	

   

  	

  Tranche B

  Term

  Loan

  Principal

  Amortization

  Payment

  	

   

  
	

  Each

  March 31, June 30, September 30 and December 31 from and

  including December 31, 2001 through and including September 30,

  2007

  	

   

  	

  $

  	

  375,000

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  December 31,

  2007, March 31, 2008 and June 30, 2008

  	

   

  	

  $

  	

  35,250,000

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Maturity Date

  	

   

  	

  Unpaid Balance

  	

   

  

 

SUBPART 2.6    New

Section 2.5.    The following new

Section 2.5 is hereby added to the Existing Credit Agreement immediately

following existing Section 2.4 thereof:

 

2.5    New Delayed-Draw Term Loans.

 

(a)    Term Commitment.    Subject

to the terms and conditions hereof and in reliance upon the representations and

warranties set forth herein, (i) the Fronting Bank severally agrees, to

the extent, in each case, that the Administrative Agent has received

corresponding payments from other Lenders pursuant to clause (ii) below,

to make available to the Borrower up to four (4) advances of term loans in

Dollars (“New Delayed-Draw Term Loans”)

from time to time after the Delayed-Draw Term Loan Committed Amount shall have

been reduced to zero ($0) or been terminated and until the New Delayed-Draw

Term Loan Commitment Termination Date and (ii) each Lender severally

agrees, for the benefit of the Borrower, to purchase from the Fronting Bank

such Lender’s New Delayed-Draw Term Loan Commitment Percentage of each such New

Delayed-Draw Term Loan advanced by the Fronting Bank; provided, however, that (i) the

aggregate principal amount of all New Delayed-Draw Term Loans shall not exceed TWENTY-SEVEN MILLION DOLLARS ($27,000,000)

(as such aggregate maximum amount may be reduced or increased from time to time

as provided in Section 3.4, the “New

Delayed-Draw Term Loan Committed Amount”) and (ii) with regard

to each Lender individually, such Lender shall not be

 

9

 

required to purchase outstanding New Delayed-Draw Term

Loans in an aggregate amount exceeding such Lender’s New Delayed-Draw Term Loan

Commitment Percentage of the New Delayed-Draw Term Loan Committed Amount. New

Delayed-Draw Term Loans may consist of Base Rate Loans or Eurodollar Loans, or

a combination thereof, as the Borrower may request (subject to the terms of

this Section 2.5); provided, however,

that no more than six (6) Eurodollar Loans which are New Delayed-Draw Term

Loans shall be outstanding hereunder at any time (it being understood that, for

purposes hereof, Eurodollar Loans with different Interest Periods shall be

considered as separate Eurodollar Loans, even if they begin on the same date,

although borrowings, extensions and conversions may, in accordance with the

provisions hereof, be combined at the end of existing Interest Periods to

constitute a new Eurodollar Loan with a single Interest Period). Amounts repaid

or prepaid on the New Delayed-Draw Term Loans may not be reborrowed.

 

(b)    New Delayed-Draw Term Loan

Borrowings.

 

(i)  Borrowing Mechanics.  On each

occasion occurring after the Delayed-Draw Term Loan Committed Amount shall have

been reduced to zero ($0) or been terminated and prior to the date ten

(10) Business Days prior to the New Delayed-Draw Term Loan Commitment

Termination Date (and at least 30 days after the immediately preceding

date of a New Delayed-Draw Term Loan borrowing, if any) that either

(x) the aggregate principal amount of Revolving Loans equals or exceeds

$30,000,000 or (y) the Borrower delivers to the Administrative Agent a New

Delayed-Draw Term Loan Borrowing Request for a New Delayed-Draw Term Loan of at

least $10,000,000 (or an integral multiple of $1,000,000 in excess thereof, or

the remaining amount of the Delayed-Draw Term Loan Committed Amount, if less),

the Borrower shall be deemed to have requested a New Delayed-Draw Term Loan

borrowing (which request shall be irrevocable) (A) in an aggregate

principal amount equal to (1) in the case of a borrowing request deemed to

have been made pursuant to clause (x) of this subsection (i), the lesser

of (I) the amount by which the aggregate principal amount of Revolving

Loans outstanding on the date such borrowing request is deemed to have been

made exceeds $20,000,000 and (II) the remaining amount of the New

Delayed-Draw Term Loan Committed Amount, or (2) in the case of a borrowing

request made pursuant to clause (y) of this subsection (i), the amount of

the requested borrowing as set forth in the related New Delayed-Draw Term Loan

Borrowing Request, (B) to be funded on the date ten (10) Business

Days thereafter (or such later date as the Fronting Bank and the Administrative

Agent may agree with the Borrower in order to minimize the incurrence of costs

by the Borrower pursuant to Section 3.12(a) in connection with such

borrowing) and (C) unless the Borrower shall specify otherwise in a written

notice (or telephonic notice promptly confirmed in writing) to the

Administrative Agent not later than 12:00 Noon (Charlotte, North Carolina time)

on the third Business Day prior to the date of the applicable borrowing, to

consist of a Base Rate Loan. The Administrative Agent shall give notice (a “New Delayed-Draw Term Loan Funding Notice”)

to the Fronting Bank and each affected Lender promptly upon the occurrence of

any request or deemed request for a New Delayed-Draw Term Loan pursuant to this

Section 2.5(b)(i), specifying the aggregate principal amount of such New

Delayed-Draw Term Loan, whether such New Delayed-Draw Term Loan shall be

comprised of Base Rate Loans, Eurodollar Loans or a combination thereof, and if

Eurodollar Loans are requested, the Interest Period(s) therefor and the portion

of such New Delayed-Draw Term Loan which each such Lender is required to

purchase. Notwithstanding any other provision of this Credit Agreement to the

contrary, the proceeds of any borrowing of New Delayed-Draw Term Loans deemed

to have been requested pursuant to clause (x) of this subsection

(i) shall be applied to the repayment of Revolving Loans.

 

10

 

(ii)  Minimum Amounts.  Each

Eurodollar Loan or Base Rate Loan that is a New Delayed-Draw Term Loan shall be

in a minimum aggregate principal amount of $10,000,000 and integral multiples

of $1,000,000 in excess thereof (or the remaining amount of the New

Delayed-Draw Term Loan Committed Amount, if less).

 

(iii)  Advances.  In respect of each

proposed New Delayed-Draw Term Loan advance, (A) each Lender will make

available to the Administrative Agent (for the account of the Fronting Bank) as

specified in Section 3.15(a), or in such other manner as the

Administrative Agent may specify in writing, by 2:00 P.M. (Charlotte,

North Carolina time) on the date specified in the applicable New Delayed-Draw

Term Loan Funding Notice in Dollars and in immediately available funds, an

amount equal to such Lender’s New Delayed-Draw Term Loan Commitment Percentage

of such proposed New Delayed-Draw Term Loan borrowing, as payment by such

Lender of the purchase price for the assignment by the Fronting Bank to such

Lender of such Lender’s ratable share of such New Delayed-Draw Term Loan

borrowing (which amounts shall be held in trust by the Administrative Agent

until (1) the Fronting Bank has made available to the Administrative Agent

corresponding funds representing the proceeds of the related New Delayed-Draw

Term Loan and (2) the Administrative Agent has made the proceeds of such

New Delayed-Draw Term Loan available to the Borrower in the manner provided

below) and (B) the Fronting Bank will make available to the Administrative

Agent (for the account of the Borrower) by 2:30 P.M. (Charlotte, North Carolina

time) on the applicable borrowing date in Dollars and in immediately available

funds, an amount equal to the amount of the proposed New Delayed-Draw Term Loan

or, if less, an amount corresponding to the aggregate amount of funds delivered

by other Lenders to the Administrative Agent (for the account of the Fronting

Bank) in connection with such New Delayed-Draw Term Loan. Funds so deposited

with the Administrative Agent by the Fronting Bank will then be made available

to the Borrower by the Administrative Agent by crediting the account of the

Borrower on the books of such office with the amount made available to the

Administrative Agent by the Fronting Bank and in like funds as received by the

Administrative Agent.

 

(c)    New Delayed-Draw Term Loan Assignments.    Concurrently

with making the proceeds of a New Delayed-Draw Term Loan borrowing available to

the Borrower pursuant to Section 2.5(b)(iii) above, the

Administrative Agent shall turn over to the Fronting Bank the funds deposited

with, and held in trust by, the Administrative Agent by the Lenders in

connection with such New Delayed-Draw Term Loan borrowing, whereupon, in each

case, automatically the Fronting Bank shall be deemed to have irrevocably sold

and assigned to each Lender holding at such time a New Delayed-Draw Term Loan

Commitment (each such Lender being referred to in this Section 2.5(c), an

“New Delayed-Draw Term Lender”),

without recourse to the Fronting Bank (except that the Fronting Bank shall be

deemed to represent to each New Delayed-Draw Term Lender that (i) the

Fronting Bank is the legal and beneficial owner of the interest in the New

Delayed-Draw Term Loan purported to be assigned to such New Delayed-Draw Term

Lender and (ii) such interest in the New Delayed-Draw Term Loan is free

and clear of any adverse claim), and each New Delayed-Draw Term Lender shall be

deemed to have purchased and assumed from the Fronting Bank, without recourse

to the Fronting Bank (except in respect of the deemed representations of the

Fronting Bank set forth above), an interest in the Fronting Bank’s rights and

obligations under the Credit Agreement with respect to such New Delayed-Draw

Term Loan in an amount equal to such Lender’s New Delayed-Draw Term Loan

Commitment Percentage of such New Delayed-Draw Term Loan. The Administrative

Agent shall make appropriate entries in the Register in respect of each

assignment of New Delayed-Draw Term Loans effected pursuant to the terms of

this Section 2.5(c).

 

11

 

(d)    Repayment of New Delayed-Draw

Term Loans.    The Borrower hereby promises to

pay the aggregate principal amount of the New Delayed-Draw Term Loans

outstanding as of the New Delayed-Draw Term Loan Commitment Termination Date in

fifteen (15) consecutive quarterly installments as follows (as such

installments may hereafter be adjusted as a result of prepayments made pursuant

to Section 3.3), unless accelerated sooner pursuant to Section 9.2:

 

	

  Principal

  Amortization Payment Dates

  	

   

  	

  New

  Delayed-Draw

  Term Loan

  Principal

  Amortization

  Payment

  (% of

  Total New

  Delayed-

  Draw Term

  Loans

  outstanding

  at the

  New

  Delayed-

  Draw Term

  Loan

  Commitment

  Termination Date)

  	

   

  
	

  Each

  March 31, June 30, September 30 and December 31 from and

  including March 31, 2005 through and including September 30, 2007

  	

   

  	

  0.25

  	

  %

  
	

   

  	

   

  	

   

  	

   

  
	

  December 31,

  2007, March 31, 2008, June 30, 2008 and Maturity Date

  	

   

  	

  24.31250

  	

  %

  

 

(e)    Interest.    Subject

to the provisions of Section 3.1, the New Delayed-Draw Term Loans shall

bear interest at a per annum rate equal to:

 

(i)  Base Rate Loans.  During such

periods as the New Delayed-Draw Term Loans shall be comprised in whole or in

part of Base Rate Loans, such Base Rate Loans shall bear interest at a per

annum rate equal to the Adjusted Base Rate.

 

(ii)  Eurodollar Loans.  During such

periods as the New Delayed-Draw Term Loans shall be comprised in whole or in

part of Eurodollar Loans, such Eurodollar Loans shall bear interest at a per

annum rate equal to the Adjusted Eurodollar Rate.

 

The Borrower hereby promises to pay interest on the

New Delayed-Draw Term Loans in arrears on each applicable Interest Payment Date

(or at such other times as may be specified herein).

 

(f)    New Delayed-Draw Term Notes.    The

Borrower hereby agrees that, upon the request to the Administrative Agent by

any Lender, the Borrower will execute and deliver to such Lender a promissory

note evidencing the New Delayed-Draw Term Loans of such Lender, substantially

in the form of Exhibit 2.5(f),

with appropriate insertions as to date and principal amount (a “New Delayed-Draw Term Note”).

 

(g)    New Delayed-Draw Term Loan Tranches.    Notwithstanding

any other provision to the contrary contained in this Credit Agreement, for

purposes of administration of the New Delayed-Draw Term Loans:

 

(i)  The term

loan facility described in this Section 2.5 shall be deemed to consist of

one (1) separate $20,000,000 tranche (“New

Delayed-Draw Term Loan Tranche 1”), one (1) separate tranche (“New Delayed-Draw Term Loan Tranche 2”) in

an amount equal to the amount by which the New Delayed Draw Term Loan Committed

Amount as of the first date that a New Delayed-Draw Term Loan advance is

requested or deemed to be requested under Section 2.5(b)(i) exceeds

$20,000,000 (but such tranche shall not exceed $20,000,000) and, if applicable,

one (1) separate tranche (“New

Delayed-Draw Term Loan Tranche 3” and,

collectively with New Delayed-Draw Term Loan Tranches 1 and 2, the “New Delayed Draw Term Loan Tranches”) in

an amount equal to the amount by which the New Delayed Draw

 

12

 

Term Loan Committed Amount as of the first date that a

New Delayed-Draw Term Loan advance is requested or deemed to be requested under

Section 2.5(b)(i) exceeds $40,000,000.

 

(ii)  Each

Lender’s New Delayed-Draw Term Loan Commitment shall be allocated ratably over

each of the New Delayed-Draw Term Loan Tranches.

 

(iii)  Advances

of New Delayed-Draw Term Loans

(A) shall be funded from the New Delayed-Draw Term Loan Tranches in

chronological order, beginning with New Delayed-Draw Term Loan

Tranche 1, and (B) shall not be funded under the next succeeding

chronologically higher New Delayed-Draw Term Loan Tranche until availability

under the chronologically lower New Delayed-Draw Term Loan Tranche shall have been

fully utilized.

 

SUBPART 2.7    New

Section 2.6.    The following new

Section 2.6 is hereby added to the Existing Credit Agreement immediately

following new Section 2.5 thereof:

 

2.6    Conversion of Delayed-Draw Term Loans into Tranche B

Term Loans.

 

Notwithstanding any other

provision to the contrary contained in this Credit Agreement, on each of

March 31, 2003 and the Delayed-Draw Term Loan Commitment Termination Date:

 

(a)  Automatically

(i) outstanding Delayed-Draw Term Loans in an aggregate principal amount

(derived ratably from all of the Lenders holding Delayed-Draw Term Loans) equal

to (x) in the case of the conversion occurring at March 31, 2003,

$50,000,000 or (y) in the case of the conversion occurring on the

Delayed-Draw Term Loan Commitment Termination Date, the aggregate then

outstanding principal balance of the Delayed-Draw Term Loans, shall be

converted into, and thereafter for all purposes of this Credit Agreement and

the other Credit Documents shall be deemed to be, Tranche B Term Loans,

(ii) the Tranche B Term Loan Committed Amount shall be increased by a

corresponding amount over the amount thereof then in effect, (iii) in the

case of the conversion occurring at March 31, 2003, the amortization table

set forth in Section 2.4(d) shall be replaced with the amortization table

set forth below:

 

	

  Principal

  Amortization Payment Dates

  	

   

  	

  Tranche B

  Term

  Loan

  Principal

  Amortization

  Payment

  	

   

  
	

  Each

  March 31, June 30, September 30 and December 31 from and

  including December 31, 2001 through and including March 31, 2003

  	

   

  	

  $

  	

  375,000.00

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Each

  March 31, June 30, September 30 and December 31 from and

  including June 30, 2003 through and including September 30, 2007

  	

   

  	

  $

  	

  502,285.00

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  December 31,

  2007, March 31, 2008 and June 30, 2008

  	

   

  	

  $

  	

  47,177,217.50

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Maturity Date

  	

   

  	

  Unpaid Balance

  	

   

  

 

and (iv) in the case of the conversion occurring

on the Delayed-Draw Term Loan Commitment Termination Date, (A) beginning

with the Principal Amortization Payment Date occurring on December 31,

2003, the amount of each Principal Amortization Payment on the Tranche B Term

Loan shall be increased to the smallest amount that, when allocated ratably

(based on outstandings) among all of the Lenders holding Tranche B Term Loans

immediately after giving effect to such conversion, would provide (assuming all

other things to be equal) for each of the Lenders under the Tranche B Term

Loans immediately prior to giving effect to such conversion to receive in

connection with such Principal Amortization Payment an amount at least equal to

the amount that such Lender would have received had such conversion (and the

corresponding adjustment to such Principal Amortization Payment pursuant to

this Section 2.6(a)(iv)) not taken

 

13

 

place and (B) the Principal Amortization Payment

for the Tranche B Term Loans on the Maturity Date thereof shall be in the

amount equal to the then unpaid balance thereof.

 

(b)  The

Borrower hereby agrees that, upon the request to the Administrative Agent by

any Lender who becomes a holder of Tranche B Term Loans pursuant to the

operation of clause (a), the Borrower will execute and deliver to such

Lender a Tranche B Term Note with appropriate insertions as to date and

principal amount.

 

SUBPART 2.8    Amendments

to Section 3.3.    Subsections (a) and

(b)(vii) of Section 3.3 of the Existing Credit Agreement are hereby

amended in their entireties to read as follows:

 

3.3    Prepayments.

 

(a)    Voluntary Prepayments.    The

Borrower shall have the right to prepay Loans in whole or in part from time to

time upon prior notice to the Administrative Agent; provided, however, that (i) each partial prepayment of

Loans shall be in a minimum principal amount of $1,000,000 and integral

multiples of $500,000 in excess thereof (or the then remaining principal

balance of the Revolving Loans, the Delayed-Draw Term Loans, the Tranche B Term

Loan or the New Delayed-Draw Term Loans, as applicable, if less) and

(ii) any prepayment of the Delayed-Draw Term Loans, the Tranche B Term

Loan or the New Delayed-Draw Term Loans shall be applied ratably to the

Delayed-Draw Term Loans, the Tranche B Term Loan and the New Delayed-Draw Term

Loans (in each case ratably to remaining Principal Amortization Payments).

Subject to the foregoing terms, amounts prepaid under this Section 3.3(a)

shall be applied as the Borrower may elect; provided

that if the Borrower shall fail to specify with respect to any voluntary

prepayment, such voluntary prepayment shall be applied first to Revolving Loans

and then ratably to the Delayed-Draw Term Loans, the Tranche B Term Loan and

the New Delayed-Draw Term Loans (in each case ratably to remaining Principal

Amortization Payments), in each case first to Base Rate Loans and then to

Eurodollar Loans in direct order of Interest Period maturities. All prepayments

under this Section 3.3(a) shall be subject to Section 3.12, but

otherwise without premium or penalty, and shall be accompanied by interest on

the principal amount prepaid through the date of prepayment. The Administrative

Agent shall promptly notify each affected Lender of receipt by the

Administrative Agent of any notice from the Borrower pursuant to this

Section 3.3(a).

 

(b)    Mandatory Prepayments.

 

*************

 

(vii)  Application of Mandatory Prepayments.  All

amounts required to be paid pursuant to this Section 3.3(b) shall be

applied as follows: (A) with respect to all amounts prepaid pursuant to

Section 3.3(b)(i)(A), to Revolving Loans and (after all Revolving Loans

have been repaid) to a cash collateral account in respect of LOC Obligations,

(B) with respect to all amounts prepaid pursuant to

Section 3.3(b)(i)(B), to a cash collateral account in respect of LOC

Obligations and (C) with respect to all amounts prepaid pursuant to

Section 3.3(b)(ii), (iii), (iv), (v) or (vi), pro rata to the

Delayed-Draw Term Loans, the Tranche B Term Loan and the New Delayed-Draw Term

Loans (in each case ratably to remaining Principal Amortization Payments).

Within the parameters of the applications set forth above, prepayments shall be

applied first to Base Rate Loans and then to Eurodollar Loans in direct order

of Interest Period maturities. All prepayments under this Section 3.3(b)

shall be subject to Section 3.12, but otherwise without premium or

penalty, and shall be accompanied by interest on the principal amount prepaid

through the date of prepayment.

 

SUBPART 2.9    Amendments

to Section 3.4.    The heading of

Section 3.4 of the Existing Credit Agreement is hereby amended to read as

follows, subsections (a), (c) and (e) of Section 3.4 of the

Existing Credit Agreement are hereby amended in their entireties to read as follows and the following

 

14

 

new subsections (f) and (g) are hereby added to

Section 3.4 of the Existing Credit Agreement immediately following

existing subsection (e) thereof:

 

3.4    Termination and Reduction of Commitments; Increase of

New Delayed-Draw Term Loan Commitments.

 

(a)    Voluntary Reductions.

 

(i)  Revolving Committed Amount.  The

Borrower from time to time may permanently reduce or terminate the Revolving

Committed Amount in whole or in part (in minimum aggregate amounts of

$2,000,000 or in integral multiples of $500,000 in excess thereof (or, if less,

the full remaining amount of the then applicable Revolving Committed Amount))

upon three (3) Business Days’ prior written notice to the Administrative

Agent; provided, however, that

(i) the Revolving Committed Amount may not be reduced or terminated prior

to the New Delayed-Draw Term Loan Commitment Termination Date and (ii) no

such termination or reduction of the Revolving Committed Amount shall be made

which would cause the sum of the aggregate outstanding principal amount of

Revolving Loans plus LOC

Obligations to exceed the Revolving Committed Amount, unless, concurrently with

such termination or reduction, the Revolving Loans are repaid to the extent

necessary to eliminate such excess. The Administrative Agent shall promptly

notify each affected Lender of receipt by the Administrative Agent of any

notice from the Borrower pursuant to this Section 3.4(a)(i).

 

(ii)  Delayed-Draw Term Loan Committed Amount.  The

Borrower from time to time after March 31, 2003 may permanently reduce or

terminate the Delayed-Draw Term Loan Committed Amount in whole or in part (in

minimum aggregate amounts of $2,000,000 or in integral multiples of $500,000 in

excess thereof (or, if less, the full remaining amount of the then applicable

Delayed-Draw Term Loan Committed Amount)) upon three (3) Business Days’ prior

written notice to the Administrative Agent. The Administrative Agent shall

promptly notify each affected Lender of receipt by the Administrative Agent of

any notice from the Borrower pursuant to this Section 3.4(a)(ii).

 

(iii)  New Delayed-Draw Term Loan Committed Amount.  The

Borrower from time to time may permanently reduce or terminate the New

Delayed-Draw Term Loan Committed Amount in whole or in part (in minimum

aggregate amounts of $2,000,000 or in integral multiples of $500,000 in excess

thereof (or, if less, the full remaining amount of the then applicable New

Delayed-Draw Term Loan Committed Amount)) upon three (3) Business Days’

prior written notice to the Administrative Agent; provided, however, that no such termination or reduction of

the New Delayed-Draw Term Loan Committed Amount shall be made which would cause

the New Delayed-Draw Term Loan Committed Amount to be less than the outstanding

principal amount of Revolving Loans with respect to which a request for a New

Delayed-Draw Term Loan to refinance such Revolving Loans is in effect pursuant

to Section 2.5(b)(i)(x). The Administrative Agent shall promptly notify

each affected Lender of receipt by the Administrative Agent of any notice from

the Borrower pursuant to this Section 3.4(a)(iii).

 

*************

 

(c)    (i)    Delayed-Draw Term Loan

Commitments.    Unless terminated sooner

pursuant to Section 3.4(a)(ii) or Section 9.2,

(A) concurrently with the making of each Delayed-Draw Term Loan, the

Delayed-Draw Term Loan Committed Amount automatically shall be permanently

reduced by the amount of such Delayed-Draw Term Loan and (B) the

Delayed-Draw Term Loan Commitments and the Fronting Commitment shall

automatically terminate on the Delayed-Draw Term Loan Commitment Termination

Date.

 

15

 

(ii)  New Delayed-Draw Term Loan Commitments.  Unless

terminated sooner pursuant to Section 3.4(a)(iii) or

Section 9.2, (A) concurrently with the making of each New

Delayed-Draw Term Loan, the New Delayed-Draw Term Loan Committed Amount

automatically shall be permanently reduced by the amount of such New

Delayed-Draw Term Loan and (B) the New Delayed-Draw Term Loan Commitments

and the New Fronting Commitment shall automatically terminate on the New

Delayed-Draw Term Loan Commitment Termination Date.

 

*************

 

(e)    General.    The

Borrower shall pay to the Administrative Agent for the account of the Lenders

in accordance with the terms of Section 3.5(a)(i),

Section 3.5(a)(ii) or Section 3.5(a)(iii), as applicable, (i) on

the date of each termination or reduction of the Revolving Committed Amount,

the Revolving Commitment Unused Fee accrued through the date of such

termination or reduction on the amount of the Revolving Committed Amount so

terminated or reduced, (ii) on the date of each termination or reduction

of the Delayed-Draw Term Loan Committed Amount, the Delayed-Draw Term Loan

Commitment Unused Fee accrued through the date of such termination or reduction

on the amount of the Delayed-Draw Term Loan Committed Amount so terminated or

reduced and (iii) on the date of each termination or reduction of the New

Delayed-Draw Term Loan Committed Amount, the New Delayed-Draw Term Loan

Commitment Unused Fee accrued through the date of such termination or reduction

on the amount of the New Delayed-Draw Term Loan Committed Amount so terminated

or reduced.

 

(f)    Increase in Credit

Facilities.    The Borrower shall have the right

on no more than five (5) separate occasions during the period from the

First Amendment Effective Date to cause the Revolving Committed Amount, the

Tranche B Term Loan Committed Amount and/or the New Delayed-Draw Term Loan

Committed Amount to be increased in an aggregate amount of not more than

$23,000,000, subject, however, in

any such case, to satisfaction of the following conditions precedent:

 

(1)  such

increase shall become effective (A) on or before the New Delayed-Draw Term

Loan Commitment Termination Date and (B) in the case of an increase in the

New Delayed-Draw Term Loan Committed Amount, prior to the first date that a New

Delayed-Draw Term Loan advance is requested or deemed to be requested under

Section 2.5(b)(i);

 

(2)  no Event

of Default shall have occurred and be continuing on the date on which such

increase is to become effective;

 

(3)  the

representations and warranties set forth in Section 6 of this Credit

Agreement shall be true and correct in all material respects on and as of the

date on which such increase is to become effective;

 

(4)  on or

before the date on which such increase is to become effective, the

Administrative Agent shall have received (1) for its own account, such

fees and expenses of the Administrative Agent paid in connection with such

increase as are mutually acceptable to the Administrative Agent and the Borrower

and (2) for the account of each Person providing an additional Commitment,

an upfront fee in an amount required such Person and mutually acceptable to the

Administrative Agent and the Borrower and to be determined at such time;

 

(5)  the

aggregate amount of any such increase hereunder shall be in a minimum amount of

$1,000,000 (and in integral multiples of $100,000 in excess thereof);

 

16

 

(6)  such

requested increase shall be effective on such date only to the extent that, on

or before such date, the Administrative Agent shall have (A) received and

accepted from one or more Eligible Assignees a New Commitment Agreement, with

respect to the additional Commitment of such Person and (B) in the case of

a proposed increase in the Tranche B Term Loan Committed Amount pursuant to

this Section 3.4(f), received from the Person providing such additional

Tranche B Term Loan Commitment proceeds in Dollars in an amount equal to

(1) in the case of an existing Lender with a Tranche B Term Loan

Commitment immediately prior to such increase, the applicable increase in such

Lender’s Tranche B Term Loan Percentage as a result of such increase in the

Tranche B Term Loan Committed Amount or (2) in the case of a Person not

previously a Lender hereunder with a Tranche B Term Loan Commitment, such

Person’s Tranche B Term Loan Percentage of the Tranche B Term Loan Committed

Amount after giving effect to such increase; and

 

(7)  upon the

execution of any New Commitment Agreement, the Borrower, if so requested by the

Person providing such additional Commitment, shall execute and deliver an

appropriate Note to such Person, which, in the case of an existing Lender shall

replace the Revolving Note, Tranche B Term Note or New Delayed-Draw Term Note,

as applicable, previously issued to such Lender, if any.

 

(g)  Upon the

effectiveness of the increase in the Revolving Committed Amount, Tranche B Term

Loan Committed Amount or the New Delayed-Draw Term Loan Committed Amount, as

applicable, pursuant to subsection (f), (i) the Revolving Commitment

Percentage, Tranche B Term Loan Percentage or New Delayed-Draw Term Loan

Commitment Percentage, as applicable, of each Lender shall be automatically

adjusted to give effect to such increase, provided

that (A) the amount of each Lender’s Revolving Commitment,

Tranche B Term Loan Commitment and New Delayed-Draw Term Loan Commitment (other

than a Lender whose Revolving Commitment, Tranche B Term Loan Commitment or New

Delayed-Draw Term Loan Commitment shall have been increased in connection with

such increase) shall remain unchanged and (B) the amount of Revolving

Loans, Tranche B Term Loans and New Delayed-Draw Term Loans held by each Lender

shall remain unchanged (excluding any subsequent extensions of credit in respect

of available Commitments), (ii) in the case of an increase in the

Revolving Committed Amount or the Tranche B Term Loan Committed Amount, the

Borrower, the Administrative Agent and the Lenders will use all commercially

reasonable efforts to assign and assume outstanding Loans of the affected

category to conform the respective amounts thereof held by each Lender to the

respective Revolving Commitment Percentages and/or Tranche B Term Loan

Percentages, as applicable, as so adjusted, it being understood that the

parties hereto shall use commercially reasonable efforts to avoid prepayment or

assignment of any affected Loan that is a Eurodollar Loan on a day other than

the last day of the Interest Period applicable thereto and (iii) in the

case of an increase in the Tranche B Term Loan Committed Amount,

(A) beginning with the Principal Amortization Payment Date next succeeding

the date of such increase, the amount of each Principal Amortization Payment on

the Tranche B Term Loans shall be increased by the minimum amount that, when

allocated ratably (based on outstandings) among all of the Lenders holding

Tranche B Term Loans immediately after giving effect to such increase in the

Tranche B Term Loan Committed Amount, would provide (assuming all other things to

be equal) for each of the Lenders under the Tranche B Term Loans immediately

prior to giving effect to such increase in the Tranche B Term Loan Committed

Amount to receive in connection with such Principal Amortization Payment an

amount at least equal to the amount that such Lender would have received had

such increase in the Tranche B Term Loan Committed Amount (and the

corresponding adjustment to such Principal Amortization Payment pursuant to

this Section 3.4(g)) not taken place and (B) the Principal Amortization

Payment for the Tranche B Term Loans on the Maturity Date thereof shall be in

the amount equal to the then unpaid balance thereof.

 

17

 

SUBPART 2.10    Amendments

to Section 3.5.    Clause (ii) of

Section 3.5(a) of the Existing Credit Agreement is hereby amended to read

as follows and the following new clause (iii) is hereby added to

Section 3.5(a) of the Existing Credit Agreement immediately following

existing clause (ii) thereof:

 

3.5    Fees.

 

(a)    Unused Fees.

 

*************

 

(ii)  Delayed-Draw Term Loan Commitment Unused Fee.  In

consideration of the Delayed-Draw Term Loan Commitments of the Lenders

hereunder, the Borrower promises to pay to the Administrative Agent for the

account of each Lender a fee (the “Delayed-Draw Term Loan Commitment Unused

Fee”) on the then applicable Delayed-Draw Term Loan Committed Amount computed

at a per annum rate for each day during the applicable Delayed-Draw Term Loan

Commitment Unused Fee Calculation Period (hereinafter defined) at a rate of

2.00%. The Delayed-Draw Term Loan Commitment Unused Fee shall commence to

accrue on the Closing Date and shall be due and payable in arrears on the last

Business Day of each March, June, September and December (and on any date that

the Delayed-Draw Term Loan Committed Amount is reduced and on the Delayed-Draw

Term Loan Commitment Termination Date) for the immediately preceding quarter

(or portion thereof) (each such quarter or portion thereof for which the

Delayed-Draw Term Loan Commitment Unused Fee is payable hereunder being herein

referred to as a “Delayed-Draw Term Loan Commitment Unused Fee Calculation

Period”), beginning with the payment due on December 31, 2001.

 

(iii)  New Delayed-Draw Term Loan Commitment Unused Fee.  In

consideration of the New Delayed-Draw Term Loan Commitments of the Lenders

hereunder, the Borrower promises to pay to the Administrative Agent for the

account of each Lender a fee (the “New

Delayed-Draw Term Loan Commitment Unused Fee”) on the then

applicable New Delayed-Draw Term Loan Committed Amount computed at a per annum

rate for each day during the applicable New Delayed-Draw Term Loan Commitment

Unused Fee Calculation Period (hereinafter defined) at a rate of 2.50%. The New

Delayed-Draw Term Loan Commitment Unused Fee shall commence to accrue on the

First Amendment Effective Date and shall be due and payable in arrears on the

last Business Day of each March,

June, September and December (and on any date that the New Delayed-Draw Term

Loan Committed Amount is reduced and on the New Delayed-Draw Term Loan

Commitment Termination Date) for the immediately preceding quarter (or portion

thereof) (each such quarter or portion thereof for which the New Delayed-Draw

Term Loan Commitment Unused Fee is payable hereunder being herein referred to

as a “New Delayed-Draw Term Loan Commitment

Unused Fee Calculation Period”), beginning with the payment due on

March 31, 2003.

 

SUBPART 2.11    Amendments

to Section 3.12.    Section 3.12 of

the Existing Credit Agreement is hereby amended in its entirety to read as

follows:

 

3.12    Compensation.

 

Upon demand of any Lender

(with a copy to the Administrative Agent) from time to time, the Borrower shall

promptly compensate such Lender for and hold such Lender harmless from any

loss, cost or expense incurred by it as a result of:

 

(a)  any

Continuation, Conversion, payment or prepayment of any Loan other than a Base

Rate Loan on a day other than the last day of the Interest Period for such Loan

 

18

 

(whether voluntary, mandatory, automatic, by reason of

acceleration, or otherwise), including, without limitation, any Conversion or

prepayment of any Eurodollar Loan associated with any conversion of

Delayed-Draw Loans into Tranche B Term Loans pursuant to Section 2.6 or

with any increase in the Revolving Committed Amount, Tranche B Term Loan

Committed Amount or the New Delayed-Draw Term Loan Committed Amount pursuant to

Section 3.4(f);

 

(b)  any

failure by the Borrower (for a reason other than the failure of such Lender to

make a Loan) to prepay, borrow, Continue or Convert any Loan other than a Base

Rate Loan on the date or in the amount notified by the Borrower; or

 

(c)  any

assignment of a Eurodollar Loan on a day other than the last day of the

Interest Period therefor as a result of a request by the Borrower pursuant to

Section 3.17 or in connection with any conversion of Delayed-Draw Loans

into Tranche B Term Loans pursuant to Section 2.6 or any increase in the Revolving

Committed Amount, Tranche B Term Loan Committed Amount or the New Delayed-Draw

Term Loan Committed Amount pursuant to Section 3.4(f);

 

including any loss of anticipated profits and any loss

or expense arising from the liquidation or reemployment of funds obtained by it

to maintain such Loan or from fees payable to terminate the deposits from which

such funds were obtained. The Borrower shall also pay any customary

administrative fees charged by such Lender in connection with the foregoing.

 

For purposes of calculating

amounts payable by the Borrower to the Lenders under this Section 3.12,

each Lender shall be deemed to have funded each Eurodollar Loan made by it at

the Interbank Offered Rate for such Loan by a matching deposit or other

borrowing in the applicable offshore Dollar interbank market for a comparable

amount and for a comparable period, whether or not such Eurodollar Loan was in

fact so funded. The covenants of the Borrower set forth in this

Section 3.12 shall survive the repayment of the Loans, LOC Obligations and

other obligations under the Credit Documents and the termination of the

Commitments hereunder.

 

SUBPART 2.12    Amendments

to Section 3.13. Section 3.13 of the Existing Credit

Agreement is hereby amended in its entirety to read as follows:

 

3.13    Pro Rata Treatment.

 

Except to the extent

otherwise provided herein:

 

(a)    Loans.    Each

payment or (subject to the terms of Section 3.3) prepayment of principal

of any Loan or reimbursement obligations arising from drawings under Letters of

Credit, each payment of interest on the Loans or reimbursement obligations

arising from drawings under Letters of Credit, each payment of Revolving

Commitment Unused Fees, each payment of Delayed-Draw Term Loan Commitment

Unused Fees, each payment of the Standby Letter of Credit Fee, each payment of

the Trade Letter of Credit Fee, each payment of New Delayed-Draw Term Loan

Commitment Unused Fees, each reduction of the Revolving Committed Amount and

each conversion or extension of any Loan, shall be allocated pro rata among the

Lenders in accordance with the respective principal amounts of their

outstanding Loans of the applicable type and Participation Interests in Loans

of the applicable type and Letters of Credit.

 

(b)    Advances.    No

Lender shall be responsible for the failure or delay by any other Lender in its

obligation to make its ratable share of a borrowing (or, in the case of a

Delayed-Draw Term Loan borrowing or a New Delayed-Draw Term Loan borrowing, a

purchase of assignments from the Fronting Bank) hereunder; provided, however, that the failure of any

Lender to fulfill its obligations hereunder shall not relieve any other Lender

of its obligations hereunder. Unless the Administrative Agent shall have been

notified by any

 

19

 

Lender prior to the date of any requested borrowing

that such Lender does not intend to make available to the Administrative Agent

its ratable share of such borrowing (and/or, in the case of a Delayed-Draw Term

Loan borrowing or a New Delayed-Draw Term Loan borrowing, a purchase of

assignments from the Fronting Bank) to be made on such date, the Administrative

Agent (and/or, in the case of a Delayed-Draw Term Loan borrowing or a New

Delayed-Draw Term Loan borrowing, the Fronting Bank) may assume that such

Lender has made such amount available to the Administrative Agent on the date

of such borrowing, and the Administrative Agent (and, in the case of a

Delayed-Draw Term Loan borrowing or a New Delayed-Draw Term Loan borrowing, the

Fronting Bank) in reliance upon such assumption, may (in its (or their, as

applicable) sole discretion but without any obligation to do so) make available

to the Borrower a corresponding amount. If such corresponding amount is not in

fact made available to the Administrative Agent (or, in the case of a

Delayed-Draw Term Loan borrowing or a New Delayed-Draw Term Loan borrowing, the

Fronting Bank), the Administrative Agent (or, in the case of a Delayed-Draw

Term Loan borrowing or a New Delayed-Draw Term Loan borrowing, the Fronting

Bank) shall be able to recover such corresponding amount from such Lender. If

such Lender does not pay such corresponding amount forthwith upon demand

therefor by the Administrative Agent (or, in the case of a Delayed-Draw Term Loan

borrowing or a New Delayed-Draw Term Loan borrowing, the Fronting Bank), the

Administrative Agent will promptly notify the Borrower, and the Borrower shall

immediately pay such corresponding amount to the Administrative Agent (or, in

the case of a Delayed-Draw Term Loan borrowing or a New Delayed-Draw Term Loan

borrowing, the Fronting Bank). The Administrative Agent (or, in the case of a

Delayed-Draw Term Loan borrowing or a New Delayed-Draw Term Loan borrowing, the

Fronting Bank) shall also be entitled to recover from the Lender or the

Borrower, as the case may be, interest on such corresponding amount in respect

of each day from the date such corresponding amount was made available by the

Administrative Agent (or the Fronting Bank, as applicable) to the Borrower to

the date such corresponding amount is recovered by the Administrative Agent (or

the Fronting Bank, as applicable) at a per annum rate equal to (i) from

the Borrower at the applicable rate for the applicable borrowing pursuant to

the Notice of Borrowing, the Delayed-Draw Term Loan Funding Notice or the New

Delayed-Draw Term Loan Funding Notice and (ii) from a Lender at the

Federal Funds Rate.

 

SUBPART 2.13    Amendments

to Section 3.17. Section 3.17 of the Existing Credit

Agreement is hereby amended in its entirety to read as follows:

 

3.17    Replacement of Affected Lenders.

 

If (i) any Lender

having a Revolving Commitment, a Delayed-Draw Term Loan Commitment or a New

Delayed-Draw Term Loan Commitment becomes a Defaulting Lender or otherwise

defaults in its Revolving Commitment, Delayed-Draw Term Loan Commitment or New

Delayed-Draw Term Loan Commitment, as applicable, (ii) any Credit Party is

required to make any payments to any Lender under Section 3.6,

Section 3.9 or Section 3.11 in excess of the proportionate amount

(based on the respective Commitments and/or Loans of the Lenders) of

corresponding payments required to be made to the other Lenders or

(iii) any Lender is unable or unwilling to make, maintain, and fund

Eurodollar Loans as contemplated by Section 3.8, the Borrower shall have

the right, if no Event of Default then exists, to replace such Lender (the “Replaced Lender”) with one or more other

Eligible Assignee or Eligible Assignees, none of whom shall constitute a

Defaulting Lender at the time of such replacement (collectively, the “Replacement Lender”), provided that (a) at the time of any

replacement pursuant to this Section 3.17, the Replaced Lender and

Replacement Lender shall enter into an Assignment and Acceptance pursuant to

which the Replacement Lender shall acquire all or a portion, as the case may

be, of the Commitments and outstanding Loans of, and participation in Letters

of Credit by,

 

20

 the Replaced

Lender and (b) all obligations of the Borrower owing to the Replaced

Lender relating to the Loans so replaced (including, without limitation, such

increased costs and excluding those specifically described in clause (a)

above in respect of which the assignment purchase price has been, or is

concurrently being paid) shall be paid in full to such Replaced Lender

concurrently with such replacement. Upon the execution of the appropriate

Assignment and Acceptance, the payment of amounts referred to in clauses

(a) and (b) above and, if so requested by the Replacement Lender,

delivery to the Replacement Lender of the appropriate Note or Notes executed by

the Borrower, the Replacement Lender shall become a Lender hereunder and the

Replaced Lender shall cease to constitute a Lender hereunder with respect to

such replaced Loans, except with respect to indemnification provisions under

this Credit Agreement, which shall survive as to such Replaced Lender.

Notwithstanding anything to the contrary contained above, (1) the Lender

that acts as the Issuing Lender may not be replaced hereunder at any time that

it has Letters of Credit outstanding hereunder unless arrangements reasonably

satisfactory to the Issuing Lender (including the furnishing of a back-up

standby letter of credit in form and substance, and issued by an issuer

reasonably satisfactory to such Issuing Lender or the depositing of cash

collateral into a cash collateral account maintained with the Administrative

Agent in amounts and pursuant to arrangements reasonably satisfactory to such Issuing

Lender) have been made with respect to such outstanding Letters of Credit and

(2) the Lender that acts as the Administrative Agent may not be replaced

hereunder except in accordance with the terms of Section 10.9. The

Replaced Lender shall be required to deliver for cancellation its applicable

Notes to be canceled on the date of replacement, or if any such Note is lost or

unavailable, such other assurances or indemnification therefor as the Borrower

may reasonably request.

 

SUBPART 2.14    Amendments

to Section 5.2.    Section 5.2 of the

Existing Credit Agreement is hereby amended in its entirety to read as follows:

 

5.2    Conditions to all Extensions of Credit.

 

The obligations of each

Lender to make, convert or extend any Loan and of the Issuing Lender to issue

or extend any Letter of Credit (including the initial Loans and the initial

Letter of Credit) are subject to satisfaction of the following conditions in

addition to satisfaction on the Closing Date of the conditions set forth in

Section 5.1:

 

(a)  The

Borrower shall have delivered (i) in the case of any Loan (or any portion

thereof), an appropriate Notice of Borrowing (or (x) in the case of a

request for a Delayed-Draw Term Loan, the Administrative Agent shall have

delivered a Delayed-Draw Term Loan Funding Notice and (y) in the case of a

request for a New Delayed-Draw Term Loan, the Administrative Agent shall have

delivered a New Delayed-Draw Term Loan Funding Notice) or Notice of

Continuation/Conversion or (ii) in the case of any Letter of Credit, the

Issuing Lender shall have received an appropriate request for issuance in

accordance with the provisions of Section 2.2(b);

 

(b)  The

representations and warranties set forth in Section 6 shall, subject to

the limitations set forth therein, be true and correct in all material respects

as of such date (except for those which expressly relate to an earlier date

which shall be true and correct as of such earlier date);

 

(c)  There

shall not have been commenced against any Consolidated Party an involuntary

case under any applicable bankruptcy, insolvency or other similar law now or

hereafter in effect, or any case, proceeding or other action for the

appointment of a receiver, liquidator, assignee, custodian, trustee,

sequestrator (or similar official) of such Person or for any substantial part

of its Property or for the winding up or liquidation of its affairs, and such

involuntary case or other case, proceeding or other action shall remain

undismissed;

 

21

 

(d)  No Default

or Event of Default shall exist and be continuing either prior to or after

giving effect thereto; and

 

(e)  Immediately

after giving effect to the making of such Loan, in the case of a request for a

Revolving Loan, (and the application of the proceeds thereof) or to the

issuance of such Letter of Credit, as the case may be, (i) the sum of the

aggregate outstanding principal amount of Revolving Loans plus LOC Obligations

shall not exceed the Revolving Committed Amount and (ii) the LOC Obligations

shall not exceed the LOC Committed Amount.

 

The delivery of each Notice of Borrowing, each

Delayed-Draw Term Loan Funding Notice, each New Delayed-Draw Term Loan Funding

Notice and each request for a Letter of Credit pursuant to Section 2.2(b)

shall constitute a representation and warranty by the Credit Parties of the

correctness of the matters specified in subsections (b), (c), (d) and

(e) above.

 

SUBPART 2.15    Amendments

to Section 7.9.    Subsection (a) of

Section 7.9 of the Existing Credit Agreement is hereby amended in its

entirety to read as follows:

 

7.9    Financial Covenants.

 

(a)    Senior Leverage Ratio.    The

Senior Leverage Ratio, as of the last day of each fiscal quarter of the

Consolidated Parties set forth below, shall be less than or equal to:

 

	

  Fiscal

  Year

  	

   

  	

  September 30

  	

   

  	

  December 31

  	

   

  	

  March 31

  	

   

  	

  June 30

  	

   

  
	

  2002

  	

   

  	

  NA

  	

   

  	

  2.50 to 1.00

  	

   

  	

  2.50 to 1.00

  	

   

  	

  2.50 to 1.00

  	

   

  
	

  2003

  	

   

  	

  2.50 to 1.00

  	

   

  	

  2.50 to 1.00

  	

   

  	

  2.85 to 1.00

  	

   

  	

  2.85 to 1.00

  	

   

  
	

  2004

  	

   

  	

  2.85 to 1.00

  	

   

  	

  2.85 to 1.00

  	

   

  	

  2.85 to 1.00

  	

   

  	

  2.65 to 1.00

  	

   

  
	

  2005

  	

   

  	

  2.65 to 1.00

  	

   

  	

  2.65 to 1.00

  	

   

  	

  2.65 to 1.00

  	

   

  	

  2.25 to 1.00

  	

   

  
	

  2006

  	

   

  	

  2.25 to 1.00

  	

   

  	

  2.25 to 1.00

  	

   

  	

  2.25 to 1.00

  	

   

  	

  2.00 to 1.00

  	

   

  
	

  2007

  	

   

  	

  2.00 to 1.00

  	

   

  	

  2.00 to 1.00

  	

   

  	

  2.00 to 1.00

  	

   

  	

  2.00 to 1.00

  	

   

  
	

  2008

  	

   

  	

  2.00 to 1.00

  	

   

  	

  2.00 to 1.00

  	

   

  	

  2.00 to 1.00

  	

   

  	

  1.75 to 1.00

  	

   

  
	

  Thereafter

  	

   

  	

  1.75 to 1.00

  	

   

  	

  1.75 to 1.00

  	

   

  	

  1.75 to 1.00

  	

   

  	

  1.75 to 1.00

  	

   

  

 

SUBPART 2.16    New

Section 7.16.    The following new

Section 7.16 is hereby added to the Existing Credit Agreement immediately following existing Section 7.15

thereof:

 

7.16    Additional Further Assurances.

 

Notwithstanding any

provision of this Credit Agreement to the contrary, the Borrower shall

(i) cause to be delivered to the Administrative Agent by August 30,

2003 (or such later date as the Administrative Agent shall reasonably determine)

all items in respect of the Property acquired in the CMI Acquisition required

to be delivered by the terms of Section 7.11 and (ii) cause the

outstanding principal balance of the Delayed-Draw Term Loans to be at least

$50,000,000 on March 31, 2003, immediately prior to giving effect to the

provisions of Section 2.6 on that date.

 

SUBPART 2.17    Amendments

to Section 8.1.    Subsection (c) of

Section 8.1 of the Existing Credit Agreement is hereby amended in its

entirety to read as follows:

 

8.1    Indebtedness.

 

The Credit Parties will

not permit any Consolidated Party to contract, create, incur, assume or permit

to exist any Indebtedness, except:

 

*************

 

(c)  (i)  purchase

money Indebtedness (including obligations in respect of Capital Leases or

Synthetic Leases) (A) hereafter incurred by the Borrower or any of its

Restricted

 

22

 

Subsidiaries to finance the purchase of fixed assets

or (B) assumed or acquired by the Borrower and its Restricted Subsidiaries

in connection with any transaction otherwise permitted by this Credit

Agreement, (ii) unsecured Indebtedness assumed by the Borrower and its

Restricted Subsidiaries in connection with a Permitted Acquisition and

(iii) unsecured Indebtedness (in addition to Indebtedness permitted

pursuant to Section 8.1(f)) of the Borrower issued to the seller to pay a

portion of the purchase price for any Person or Property acquired in a

Permitted Acquisition, provided

that (A) the aggregate principal amount of all such Indebtedness for all

such Persons shall not exceed $60,000,000 at any one time outstanding;

(B) the aggregate principal amount of all such Indebtedness for all such

Persons that are Joint Ventures shall not exceed at any one time outstanding (1) during

the period from the Closing Date through and including March 31, 2005,

$10,000,000, and (2) at any time thereafter, $15,000,000; (C) such

Indebtedness when incurred shall not exceed the purchase price of the asset(s)

financed; and (D) no such Indebtedness shall be refinanced for a principal

amount in excess of the principal balance outstanding thereon at the time of

such refinancing (plus premiums, accrued interest and costs of refinancing);

 

SUBPART 2.18    Amendments

to Section 8.2.    Subsection (c) of

Section 8.2 of the Existing Credit Agreement is hereby amended in its

entirety to read as follows:

 

8.2    Liens.

 

The Credit Parties will

not permit any Consolidated Party to contract, create, incur, assume or permit

to exist any Lien with respect to any of its Property, whether now owned or

hereafter acquired, except for:

 

*************

 

(c)  (i) statutory

Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen

and suppliers and other Liens imposed by law or pursuant to customary

reservations or retentions of title arising in the ordinary course of business

(other than with respect to obligations for the payment of borrowed money) and

(ii) the contractual Lien of the landlord under that certain Lease

Agreement dated June 26, 2000 for the diagnostic medical imaging center

located at 25775 West McBean Pkwy, Suite 100, Valencia, California 91355, which

lease agreement is being assumed by InSight Health Corp. in connection with the

CMI Acquisition, provided that,

in the case of both of clauses (i) and (ii) above, such Liens secure

only amounts not more than 30 days past due and payable or, if due and

payable, are unfiled and no other action has been taken to enforce the same or

are being contested in good faith by appropriate proceedings in a manner which

stays enforcement thereof for which adequate reserves determined in accordance

with GAAP have been established;

 

23

 

SUBPART 2.19    Amendments

to Section 8.13.    Section 8.13 of

the Existing Credit Agreement is hereby amended in its entirety to read as

follows:

 

8.13    Capital Expenditures.

 

The Credit Parties will

not permit Consolidated Capital Expenditures for any fiscal year (excluding

Consolidated Capital Expenditures to the extent funded with the proceeds of any

Equity Issuance by any Consolidated Party to any of the Sponsors or the Related

Parties in connection with such Consolidated Capital Expenditures) to exceed

the amount set forth below:

 

(i)  for each

of the fiscal years ending June 30, 2003 and June 30, 2004 the

greater of (A) $75,000,000 and (B) fifty percent (50%) of

Consolidated EBITDA for the most recently ended fiscal year preceding the date

of determination with respect to which the Administrative Agent shall have received

the Required Financial Information; and

 

(ii)  for the

fiscal year ending June 30, 2005 and for any fiscal year thereafter, the

greater of (A) $85,000,000 and (B) fifty percent (50%) of

Consolidated EBITDA for the most recently ended fiscal year preceding the date

of determination with respect to which the Administrative Agent shall have

received the Required Financial Information.

 

To the extent that any portion of the Consolidated

Capital Expenditures limitation (determined without giving effect to the

operation of this sentence) is not used during any fiscal year, such unused

available amount may be carried forward and used during the next fiscal year

only; provided, however, that

with respect to any fiscal year, Consolidated Capital Expenditures made during

such fiscal year shall be deemed to be made first with respect to the

applicable limitation for such fiscal year and then with respect to any

carry-forward from the preceding fiscal year.

 

SUBPART 2.20    Amendments

to Section 11.3.    Subsection (b) of

Section 11.3 of the Existing Credit Agreement is hereby amended in its

entirety to read as follows:

 

11.3    Successors and Assigns.

 

*************

 

(b)  Any Lender

may assign to one or more Eligible Assignees all or a portion of its rights and

obligations under this Credit Agreement (including all or a portion of its

Commitment and the Loans (including for purposes of this subsection (b), its

Participation Interests) at the time owing to it); provided that:

 

(i)  except in

the case of (A) an assignment of the entire remaining amount of the

assigning Lender’s Commitment and the Loans at the time owing to it,

(B) subject to the terms of Section 11.3(b)(ii), an assignment by any

Lender of all of such Lender’s New Delayed-Draw Term Loan Commitment and New

Delayed-Draw Term Loans outstanding under any particular New Delayed-Draw Term

Loan Tranche and (C) an assignment to a Lender or an Affiliate of a Lender

or an Approved Fund with respect to a Lender, the aggregate amount of the

Commitment or outstanding principal balance of Loans of the assigning Lender

subject to each such assignment, determined as of the date the Assignment and

Acceptance with respect to such assignment is delivered to the Administrative

Agent, shall not be less than $1,000,000, unless each of the Administrative

Agent and, so long as no Event of Default has occurred and is continuing, the

Borrower otherwise consents (each such consent not to be unreasonably withheld

or delayed);

 

(ii)  each

partial assignment shall be made as an assignment of a proportionate part of

all the assigning Lender’s rights and obligations under this Credit Agreement

with respect to the Loans or the Commitments assigned, except that this

clause (ii) shall not

 

24

 

prohibit any Lender which holds a New Delayed-Draw

Term Loan Commitment from assigning all or a portion of its outstanding New

Delayed-Draw Term Loans separate and apart from such Lender’s unfunded New

Delayed-Draw Term Loan Commitment, and vice versa; provided, however, that prior to the New Delayed-Draw Term

Loan Commitment Termination Date, no Lender may assign all or any portion of

its New Delayed-Draw Term Loans outstanding under any New Delayed-Draw Term

Loan Tranche unless such assignment is accompanied by an assignment of a

ratable percentage of the remaining New Delayed-Draw Term Loan Commitment of

the assigning Lender in respect of the applicable New Delayed-Draw Term Loan

Tranche; and

 

(iii)  the

parties to each assignment shall execute and deliver to the Administrative

Agent an Assignment and Acceptance, together with a processing and recordation

fee of $3,500.

 

Subject to acceptance and recording thereof by the

Administrative Agent pursuant to subsection (c), from and after the effective

date specified in each Assignment and Acceptance, the Eligible Assignee

thereunder shall be a party hereto and, to the extent of the interest assigned

by such Assignment and Acceptance, have the rights and obligations of a Lender

under this Credit Agreement, and the assigning Lender thereunder shall, to the

extent of the interest assigned by such Assignment and Acceptance, be released

from its obligations under this Credit Agreement (and, in the case of an

Assignment and Acceptance covering all of the assigning Lender’s rights and

obligations under this Credit Agreement, such Lender shall cease to be a party

hereto but shall continue to be entitled to the benefits of Sections 3.11, 3.12

and 11.5). Upon request, the Borrower (at its expense) shall execute and deliver

new or replacement Notes to the assigning Lender and the assignee Lender. Any

assignment or transfer by a Lender of rights or obligations under this Credit

Agreement that does not comply with this subsection shall be treated for

purposes of this Credit Agreement as a sale by such Lender of a participation

in such rights and obligations in accordance with subsection (d) of this

Section 11.3. Notwithstanding any provision to the contrary contained in

this Section 11.3 or elsewhere in this Credit Agreement, each assignment

of New Delayed-Draw Term Loans effected pursuant to the terms of

Section 2.5(c) shall constitute an assignment of Loans which is permitted

under this Section 11.

 

SUBPART 2.21    Amendments

to Section 11.6.    Section 11.6 of

the Existing Credit Agreement is hereby amended in its entirety to read as

follows:

 

11.6    Amendments, Waivers and

Consents.

 

Neither this Credit Agreement nor any other Credit

Document nor any of the terms hereof or thereof may be amended, changed,

waived, discharged or terminated unless such amendment, change, waiver,

discharge or termination is in writing entered into by, or approved in writing

by, each of the Credit Parties party thereto and the Required Lenders, provided, however, that:

 

(a)  without

the consent of each Lender affected thereby, neither this Credit Agreement nor

any other Credit Document may be amended, changed, waived, discharged or

terminated so as to

 

(i)  extend the

maturity of any Commitment or the final maturity of any Loan or of any

reimbursement obligation, or any portion thereof, arising from drawings under

Letters of Credit, or extend or waive any Principal Amortization Payment of any

Loan, or any portion thereof,

 

(ii)  reduce

the rate or extend the time of payment of interest on any Loan or of any

reimbursement obligation, or any portion thereof, arising from drawings under

Letters of

 

25

 

Credit (other than as a result of waiving the

applicability of any post-default increase in interest rates) or of any Fees,

 

(iii)  reduce

or waive the principal amount of any Loan or of any reimbursement obligation,

or any portion thereof, arising from drawings under Letters of Credit,

 

(iv)  increase

the Revolving Commitment, Delayed-Draw Term Loan Commitment, Tranche B Term

Loan Commitment or New Delayed-Draw Term Loan Commitment of a Lender over the

amount thereof in effect other than as provided in Section 3.4(f) (it

being understood and agreed that a waiver of any condition precedent set forth

in Section 5.2 or of any Default or Event of Default or mandatory

reduction in the Commitments shall not constitute a change in the terms of any

Commitment of any Lender),

 

(v)  except as

the result of or in connection with an Asset Disposition not prohibited by Section 8.5,

release all or substantially all of the Collateral,

 

(vi)  except as

the result of or in connection with a dissolution, merger or disposition of a

Consolidated Party not prohibited by Section 8.4 or Section 8.5,

release the Borrower or any other material Credit Party from its obligations

under the Credit Documents,

 

(vii)  amend,

modify or waive any provision of Section 3.13, Section 3.15(b) or

this Section 11.6(a),

 

(viii)  reduce

any percentage specified in the definition of Required Lenders,

 

(ix)  agree to

subordinate, in favor of any Person, any of the Credit Party Obligations or any

claims in respect thereof; or

 

(x)  consent to

the assignment or transfer by the Borrower or any other material Credit Party

of any of its rights and obligations under (or in respect of) the Credit

Documents except as permitted thereby;

 

(b)  without

the consent of the Required Revolving Lenders, no Default or Event of Default

may be waived for purposes of Section 5.2(d) in respect of any proposed

Revolving Loan borrowing or Letter of Credit issuance or extension;

 

(c)  without

the consent of the Required Unfunded Delayed-Draw Term Lenders, no Default or

Event of Default may be waived for purposes of Section 5.2(d) in respect

of any proposed Delayed-Draw Term Loan borrowing;

 

(d)  without

the consent of the Required Revolving Lenders and, prior to the Delayed-Draw

Term Loan Commitment Termination Date, the Required Unfunded Delayed-Draw Term

Lenders and, prior to the New Delayed-Draw Term Loan Commitment Termination

Date, the Required Unfunded New Delayed-Draw Term Lenders, no amendment,

change, waiver, discharge or termination of Section 5.2, Section 7.9,

Section 7.10, Section 7.11, Section 8 or this

Section 11.6(d) shall be effective;

 

(e)  without

the consent of the Administrative Agent, no provision of Section 10 or

this Section 11.6(e) may be amended, changed, waived, discharged or

terminated;

 

(f)    without

the consent of the Issuing Lender, (i) no provision of Section 2.2,

Section 3.5(b)(iii) or this Section 11.6(f) may be amended,

changed, waived, discharged or terminated in a manner that is adverse to the

Issuing Lender and (ii) the terms of the LOC Commitment may not be

changed;

 

(g)  without

the consent of the Fronting Bank, (ii) no provision of Section 2.5 or

this Section 11.6(g) may be amended, changed, waived, discharged or

terminated in a manner that

 

26

 

is adverse to the Fronting Bank, (ii) the terms

of the Fronting Commitment may not be changed and (iii) the terms of the

New Fronting Commitment may not be changed;

 

(h)  only

Lenders holding (i) Revolving Commitments (and/or Participation Interests

therein) or (ii) if the Revolving Commitments have been terminated,

Revolving Loans and/or LOC Obligations (and/or Participation Interests in the

Revolving Loans and LOC Obligations (including the Participation Interests of

the Issuing Lender in any Letters of Credit)), shall be entitled, subject to

Section 11.6(a) and Section 11.6(f), to approve any amendment, change,

waiver, discharge or termination of Section 2.1, Section 2.2,

Section 3.3(b)(i), Section 3.4(a)(i) or (e),

Section 3.5(a)(i), (b)(i) or (b)(ii), or Section 11.6(b) or (h),

and no such amendment, change, waiver, discharge or termination shall be effective

unless such amendment, change, waiver, discharge or termination is in writing

entered into by, or approved in writing by, each of the Credit Parties party

thereto and the Required Revolving Lenders; provided,

however, that no amendment,

change, waiver, discharge or termination pursuant to this Section 11.6(h)

that would increase the Revolving Committed Amount shall be effective unless

such amendment, change, waiver, discharge or termination has been approved by

the Required Lenders;

 

(i)    only

Lenders holding unfunded Delayed-Draw Term Loan Commitments (and/or

Participation Interests therein) and outstanding Delayed-Draw Term Loans (and

Participation Interests therein) shall be entitled, subject to

Section 11.6(a) and Section 11.6(g), to approve any amendment,

change, waiver, discharge or termination of Section 2.3 or this

Section 11.6(i), and no such amendment, change, waiver, discharge or

termination shall be effective unless such amendment, change, waiver, discharge

or termination is in writing entered into by, or approved in writing by, each

of the Credit Parties party thereto and the Required Delayed-Draw Term Lenders;

provided, however, that no

amendment, change, waiver, discharge or termination pursuant to this

Section 11.6(i) that would increase the Delayed-Draw Term Loan

Committed Amount shall be effective unless such amendment, change, waiver,

discharge or termination has been approved by the Required Lenders;

 

(j)    only

Lenders holding a portion of the Tranche B Term Loan (and/or Participation

Interests therein) shall be entitled, subject to Section 11.6(a), to

approve any amendment, change, waiver, discharge or termination of

Section 2.4 or this Section 11.6(j), and no such amendment, change,

waiver, discharge or termination shall be effective unless such amendment,

change, waiver, discharge or termination is in writing entered into by, or

approved in writing by, each of the Credit Parties party thereto and the

Required Tranche B Term Lenders; provided,

however, that no amendment, change, waiver, discharge or termination

pursuant to this Section 11.6(j) that would increase the Tranche B Term

Loan Committed Amount other than as provided in Section 3.4(f) shall be

effective unless such amendment, change, waiver, discharge or termination has

been approved by the Required Lenders;

 

(k)  only

Lenders holding unfunded Delayed-Draw Term Loan Commitments (and/or

Participation Interests therein) shall be entitled, subject to

Section 11.6(a) and Section 11.6(g), to approve any amendment,

change, waiver, discharge or termination of Section 11.6(c) or (k), and no

such amendment, change, waiver, discharge or termination shall be effective

unless such amendment, change, waiver, discharge or termination is in writing

entered into by, or approved in writing by, each of the Credit Parties party

thereto and the Required Unfunded Delayed-Draw Term Lenders;

 

(l)    only

Lenders holding (i) Revolving Commitments (and/or Participation Interests

therein) or (if the Revolving Commitments have been terminated) Revolving Loans

and/or LOC Obligations (and/or Participation Interests in the Revolving Loans

and LOC Obligations (including the Participation Interests of the Issuing

Lender in any Letters of Credit)) and/or

 

27

 

(ii) unfunded Delayed-Draw Term Loan Commitments

(and/or Participation Interests therein) and/or (iii) unfunded New

Delayed-Draw Term Loan Commitments (and/or Participation Interests therein),

shall be entitled, subject to Section 11.6(a), to approve any amendment,

change, waiver, discharge or termination of Section 11.6(d) or (l), and no

such amendment, change, waiver, discharge or termination shall be effective

unless such amendment, change, waiver, discharge or termination is in writing

entered into by, or approved in writing by, each of the Credit Parties party

thereto, the Required Revolving Lenders, the Required Unfunded Delayed-Draw

Term Lenders and the Required Unfunded New Delayed-Draw Term Lenders; and

 

(m)  only

Lenders holding (i) unfunded Delayed-Draw Term Loan Commitments (and/or

Participation Interests therein), (ii) a portion of the Delayed-Draw Term

Loans (and Participation Interests therein), (iii) a portion of the

Tranche B Term Loan (and/or Participation Interests therein), (iv) unfunded

New Delayed-Draw Term Loan Commitments (and/or Participation Interests

therein), (v) a portion of the New Delayed-Draw Term Loans (and

Participation Interests therein), shall be entitled, subject to

Section 11.6(a), to approve any amendment, change, waiver, discharge or

termination of Section 3.3(b)(ii), (iii), (iv), (v), or (vi) or of

this Section 11.6(m), and no such amendment, change, waiver, discharge or

termination shall be effective unless such amendment, change, waiver, discharge

or termination is in writing entered into by, or approved in writing by, each

of the Credit Parties party thereto, the Required Unfunded Delayed-Draw Term

Lenders, the Required Tranche B Term Lenders and the Required Unfunded

Delayed-Draw Term Lenders;

 

(n)  no

amendment, change, waiver, discharge or termination of

Section 3.3(b)(vii) shall be effective unless such amendment, change,

waiver, discharge or termination is in writing entered into by, or approved in

writing by, each of the Credit Parties party thereto, the Required Revolving

Lenders, the Required Delayed-Draw Term Lenders, the Required Tranche B Term

Lenders and the Required New Delayed-Draw Term Lenders;

 

(o)  without

the consent of the Required Unfunded Delayed-Draw Term Lenders, no Default or

Event of Default may be waived for purposes of Section 5.2(d) in respect

of any proposed Delayed-Draw Term Loan borrowing;

 

(p)  only

Lenders holding unfunded New Delayed-Draw Term Loan Commitments (and/or

Participation Interests therein) and outstanding New Delayed-Draw Term Loans

(and Participation Interests therein) shall be entitled, subject to

Section 11.6(a) and Section 11.6(g), to approve any amendment,

change, waiver, discharge or termination of Section 2.5 or this

Section 11.6(p), and no such amendment, change, waiver, discharge or

termination shall be effective unless such amendment, change, waiver, discharge

or termination is in writing entered into by, or approved in writing by, each

of the Credit Parties party thereto and the Required New Delayed-Draw Term

Lenders; provided, however, that

no amendment, change, waiver, discharge or termination pursuant to this

Section 11.6(p) that would increase the New Delayed-Draw Term Loan

Committed Amount other than as provided in Section 3.4(f) shall be

effective unless such amendment, change, waiver, discharge or termination has

been approved by the Required Lenders; and

 

(q)  only

Lenders holding unfunded New Delayed-Draw Term Loan Commitments (and/or

Participation Interests therein) shall be entitled, subject to

Section 11.6(a) and Section 11.6(g), to approve any amendment,

change, waiver, discharge or termination of Section 11.6(o) or (q), and no

such amendment, change, waiver, discharge or termination shall be effective

unless such amendment, change, waiver, discharge or termination is in writing

entered into by, or approved in writing by, each of the Credit Parties party

thereto and the Required Unfunded New Delayed-Draw Term Lenders;

 

28

 

Notwithstanding the fact

that the consent of all the Lenders is required in certain circumstances as set

forth above, (x) each Lender is entitled to vote as such Lender sees fit

on any bankruptcy reorganization plan that affects the Loans, and each Lender

acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code

supersedes the unanimous consent provisions set forth herein and (y) the

Required Lenders shall determine whether or not to allow a Credit Party to use

cash collateral in the context of a bankruptcy or insolvency proceeding and

such determination shall be binding on all of the Lenders.

 

SUBPART 2.22    Replacement

of Schedule 2.1(a).    Schedule 2.1(a) to the Existing

Credit Agreement is hereby deleted in its entirety and a new Schedule 2.1(a) in the form of Schedule 2.1(a) attached hereto is

substituted therefor.

 

SUBPART 2.23    New

Exhibit 1.1E.    A new Exhibit 1.1E in the form of Exhibit 1.1E attached hereto is

hereby added to the Existing Credit Agreement immediately following existing Exhibit 1.1D thereof:

 

SUBPART 2.24    New

Exhibit 2.5(f).    A new Exhibit 2.5(f) in the form of Exhibit 2.5(f) attached hereto is

hereby added to the Existing Credit Agreement immediately following existing Exhibit 2.4(f) thereof:

 

 

PART 3

WAIVERS

AND CONSENT

 

Subject to the occurrence of the First Amendment

Effective Date, the Required Lenders agree as follows:

 

SUBPART 3.1    CMI

Acquisition.    Provided that the Initial CMI

Acquisition Closing Conditions shall have been satisfied for the Initial CMI

Acquisition Closing and the Subsequent CMI Acquisition Closing Conditions shall

have been satisfied for each Subsequent CMI Acquisition Closing, if any (in

each case as reasonably determined by the Administrative Agent):

 

(a)  The

requirement that the aggregate consideration (including cash and non-cash

consideration, any assumption of Indebtedness, any earn-out payments, and any

proceeds of any Equity Issuance by any Consolidated Party to any of the

Sponsors or the Related Parties in connection with such Acquisition) paid by

the Consolidated Parties in respect of the CMI Acquisition not exceed

$30,000,000, as set forth in clause (i)(vii)(A) of Section 8.6 of the

Amended Credit Agreement, is hereby waived; provided,

however, that the aggregate purchase price (excluding fees and

expenses associated with the CMI Acquisition and the financing thereof) paid by

the Consolidated Parties for all of the CMI Assets is not in excess of

$45,000,000;

 

(b)  The

requirement that the aggregate consideration (including cash and non-cash

consideration, any assumption of Indebtedness and any earn-out payments, but

excluding the proceeds of any Equity Issuance by any Consolidated Party to any

of the Sponsors or the Related Parties in connection with such Acquisition)

paid by the Consolidated Parties in respect of all Acquisitions consummated

during the period from October 18, 2002 to October 17, 2003 not

exceed $45,000,000, as set forth in clause (i)(viii)(2) of

Section 8.6 of the Amended Credit Agreement, is hereby waived solely with

respect to the CMI Acquisition; provided,

however, that the aggregate purchase price (excluding fees and

expenses associated with the CMI Acquisition and the financing thereof) paid by

the Consolidated Parties for all of the CMI Assets is not in excess of

$45,000,000; and

 

(c)  The consideration

paid by the Consolidated Parties in respect of the CMI Acquisition shall be

excluded from any future calculation under Section 8.6(i)(viii)(2) of the

Amended Credit Agreement.

 

29

 

(d)  The capital

expenditures associated with the 2002 Lease Conversion shall be excluded from

any calculation of Consolidated Capital Expenditures under Section 8.13 of

the Amended Credit Agreement. In addition, in connection with, and as a

consequence of, the 2002 Lease Buyout and the 2002 Lease Conversion,

Consolidated EBITDA determined pursuant to the definition thereof set forth in

Section 1.1 of the Amended Credit Agreement shall be increased by an

amount equal to (i) for the four fiscal quarter period ending on December 31,

2002, $3,934,000 and (ii) for the four fiscal quarter period ending on

March 31, 2003, $1,967,000.

 

(e)  The

requirements of Section 7.15(a)-(f) of the Amended Credit Agreement are

hereby waived with respect to the Real Properties set forth as items 2, 4 and 5

in Part IV of Schedule 6.20(a)

to the Existing Credit Agreement.

 

The waivers set forth in this Part III one-time

waivers and are granted only for the limited purposes set forth herein and

shall be effective only in the specific circumstances provided for above and

only for the purposes for which given. Except as waived pursuant to the terms

of this Part III or amended

pursuant to Part II, the

Existing Credit Agreement and all other Credit Documents shall continue in full

force and effect.

 

 

PART 4

CONDITIONS

TO EFFECTIVENESS

 

This Amendment shall be and become effective as of the

date hereof (the “First Amendment Effective

Date”) when all of the conditions set forth in this Part 4

shall have been satisfied, and thereafter this Amendment shall be known, and

may be referred to, as “Amendment

No. 1.”

 

SUBPART 4.1    Counterparts

of Amendment.    The Administrative Agent shall

have received counterparts (or other evidence of execution, including

telephonic message, satisfactory to the Administrative Agent) of this

Amendment, which collectively shall have been duly executed on behalf of each

of the Borrower, the Guarantors, the Required Lenders, the Required Revolving

Lenders, the Required Delayed-Draw Term Lenders, the Required Unfunded Delayed-Draw

Term Lenders and the Required Tranche B Term Lenders.

 

SUBPART 4.2    New

Commitment Agreements.    The Administrative

Agent shall have received a New Commitment Agreement from each Lender which has

agreed to provide a New Delayed-Draw Term Loan Commitment as of the First

Amendment Effective Date.

 

SUBPART 4.3    Opinion

of Counsel.    The Agent shall have received a

legal opinion of Kaye Scholer LLP, counsel for the Credit Parties, dated as of

the First Amendment Effective Date, addressed to the Administrative Agent and

the Lenders and in form and substance reasonably satisfactory to the

Administrative Agent.

 

SUBPART 4.4    Amendments

to Mortgage Instruments; Endorsements to Title Policies.    The

Administrative Agent shall have received fully executed and acknowledged

amendments to the Mortgage Instruments revising the description of the

indebtedness secured thereby, together with corresponding endorsements to the

Mortgagee Policies effective as of the First Amendment Effective Date, in each

case in form and substance satisfactory to the Administrative Agent.

 

SUBPART 4.5    Amendment

Fee.    For the account of each Lender approving

this Amendment on before 12:00 noon Charlotte, North Carolina time on

January 24, 2003, the Administrative Agent shall have received an

amendment fee equal to 12.5 basis points on the amount equal to the sum of

(i) such Lender’s Revolving Commitment plus

(ii) such Lender’s Delayed-Draw Term Loan Commitment plus (iii) the outstanding Tranche B

Term Loans held by such Lender.

 

30

 

SUBPART 4.6    Upfront

Fee.    The Administrative Agent shall have

received, for the account of each Lender having a New Delayed-Draw Term Loan

Commitment, an upfront fee in an amount required by such Lender and mutually

acceptable to the Administrative Agent and the Borrower.

 

SUBPART 4.7    Other

Fees and Out of Pocket Costs.    The Borrower

shall have paid any and all reasonable out-of-pocket costs (to the extent

invoiced) incurred by the Administrative Agent or Banc of America Securities

LLC (including the reasonable fees and expenses of the Administrative Agent’s

legal counsel), and all other fees and other amounts payable to the

Administrative Agent or Banc of America Securities LLC, in each case in connection

with the arrangement, negotiation, preparation, execution and delivery of this

Amendment.

 

 

PART 5

MISCELLANEOUS

 

SUBPART 5.1    Representations

and Warranties.    The Credit Parties hereby

represent and warrant to the Administrative Agent and the Lenders that

(a) after giving effect to this Amendment, (i) no Default or Event of

Default exists under the Credit Agreement or any of the other Credit Documents

and (ii) the representations and warranties set forth in Section 6 of

the Amended Credit Agreement are, subject to the limitations set forth therein,

true and correct in all material respects as of the date hereof (except for

those which expressly relate to an earlier date) and (b) the transactions

contemplated in this Amendment are not prohibited by the Subordinated Note

Indenture (as in effect immediately prior to the First Amendment Effective

Date.

 

SUBPART 5.2    Reaffirmation

of Credit Party Obligations.    Each Credit

Party hereby ratifies the Amended Credit Agreement and acknowledges and reaffirms

(i) that it is bound by all terms of the Amended Credit Agreement and

(ii) that it is responsible for the observance and full performance of the

Credit Party Obligations. Without limiting the generality of the proceeding

sentence, (i) each of the Guarantors restates that it jointly and

severally guarantees the prompt payment when due of all Credit Party

Obligations (including, without limitation, those Credit Party Obligations

relating to the New Delayed-Draw Term Loan), in accordance with, and pursuant

to the terms of, Section 4 of the Existing Credit Agreement and

(ii) each of the Credit Parties agrees that all references in the

Collateral Documents to the term “Credit Party Obligations” shall be deemed to

include all of the obligations of the Credit Parties to the Lenders and the

Administrative Agent, whenever arising, under the Amended Credit Agreement, the

New Delayed-Draw Term Notes, the Collateral Documents or any of the other

Credit Documents (including, but not limited to, any interest accruing after

the occurrence of a Bankruptcy Event with respect to any Credit Party,

regardless of whether such interest is an allowed claim under the Bankruptcy

Code) relating to the New Delayed-Draw Term Loan.

 

SUBPART 5.3    Cross-References.    References

in this Amendment to any Part or Subpart are, unless otherwise specified, to

such Part or Subpart of this Amendment.

 

SUBPART 5.4    Instrument

Pursuant to Existing Credit Agreement.    This

Amendment is a Credit Document executed pursuant to the Existing Credit

Agreement and shall (unless otherwise expressly indicated therein) be

construed, administered and applied in accordance with the terms and provisions

of the Existing Credit Agreement.

 

SUBPART 5.5    References

in Other Credit Documents.    At such time as

this Amendment No. 1 shall become effective pursuant to the terms of Subpart 4.1, all references in the

Existing Credit Documents to the “Credit Agreement” shall be deemed to refer to

the Credit Agreement as amended by this Amendment No. 1.

 

SUBPART 5.6    Counterparts.    This

Amendment may be executed by the parties hereto in several counterparts, each

of which shall be deemed to be an original and all of which shall constitute

together but one and the same agreement.

 

31

 

SUBPART 5.7    Governing

Law.    THIS AMENDMENT SHALL BE DEEMED TO BE A

CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

SUBPART 5.8    Successors

and Assigns.    This Amendment shall be binding

upon and inure to the benefit of the parties hereto and their respective

successors and assigns.

 

SUBPART 5.9    Costs,

Expenses.    The Borrower agrees to pay on

demand all reasonable costs and expenses of the Administrative Agent in

connection with the preparation, execution, delivery and administration of this

Amendment (including, without limitation, the fees and expenses of counsel to

the Administrative Agent) in accordance with the terms of Section 11.5 of

the Existing Credit Agreement.

 

[The remainder of this

page has been left blank intentionally]

 

32

 

IN WITNESS WHEREOF, each of the parties hereto has

caused a counterpart of this Amendment to be duly executed and delivered as of

the date first above written.

 

	

  BORROWER:

  	

  INSIGHT HEALTH SERVICES CORP.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  STEVEN T. PLOCHOCKI

  	

   

  
	

   

  	

  Name:

  	

  Steven T. Plochocki

  	

   

  
	

   

  	

  Title:

  	

  President and Chief Executive Officer

  	

   

  
	

   

  	

   

  
	

  PARENT:

  	

  INSIGHT HEALTH SERVICES

  HOLDINGS CORP.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  STEVEN T. PLOCHOCKI

  	

   

  
	

   

  	

  Name:

  	

  Steven T. Plochocki

  	

   

  
	

   

  	

  Title:

  	

  President and Chief Executive Officer

  	

   

  
	

   

  	

   

  
	

  SUBSIDIARY GUARANTORS:

  	

  INSIGHT HEALTH CORP.

  OPEN MRI, INC.

  MAXUM HEALTH CORP.

  RADIOSURGERY CENTERS, INC.

  MAXUM HEALTH SERVICES CORP.

  DIAGNOSTIC SOLUTIONS CORP.

  MAXUM HEALTH SERVICES OF NORTH

  TEXAS, INC.

  MAXUM HEALTH SERVICES OF

  DALLAS, INC.

  NDDC, INC.

  SIGNAL MEDICAL SERVICES, INC.

  MRI-ASSOCIATES, L.P.

  WILKES-BARRE IMAGING, L.L.C.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  STEVEN T. PLOCHOCKI

  	

   

  
	

   

  	

  Name:

  	

  Steven T. Plochocki

  	

   

  
	

   

  	

  Title:

  	

  President and Chief Executive Officer

  	

   

  

 

 

	

  ADMINISTRATIVE AGENT:

  	

  BANK OF AMERICA, N.A.,

  in its capacity as Administrative Agent

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  KATHLEEN M. CARRY

  	

   

  
	

   

  	

  Name:

  	

  Kathleen M. Carry

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  
	

   

  	

   

  
	

  LENDERS:

  	

  BANK OF AMERICA, N.A.,

  individually in its capacity as a Lender and in its

  capacity as Issuing Lender

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  PETER D. GRIFFITH

  	

   

  
	

   

  	

  Name:

  	

  Peter D. Griffith

  	

   

  
	

   

  	

  Title:

  	

  Managing Director

  	

   

  

 

 

	

  LENDERS AND OTHER AGENTS:

  	

  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as Syndication Agent and as a

  Lender

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  HARRY E. ELLIS

  	

   

  
	

   

  	

  Name:

  	

  Harry E. Ellis

  	

   

  
	

   

  	

  Title:

  	

  Managing Director

  Senior Vice President

  	

   

  
	

   

  	

   

  
	

   

  	

  THE CIT GROUP/BUSINESS CREDIT,

  INC.,

  as Documentation Agent and as a Lender

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JOHN P. SIRICO, II

  	

   

  
	

   

  	

  Name:

  	

  John P. Sirico, II

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  Addison CDO, Limited (#1279)

  
	

   

  	

  By:

  	

  Pacific Investment Management Company

  LLC, as its Investment Advisor

  
	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/  MOHAN V. PHANSALKAR

  	

   

  
	

   

  	

   

  	

   

  	

  Mohan V. Phansalkar

  
	

   

  	

   

  	

   

  	

  Executive Vice President

  

 

 

	

  LENDERS:

  	

  AIMCO CLO SERIES 2001-A

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  CHRIS GOERGEN

  	

   

  
	

   

  	

  Name:

  	

  CHRIS GOERGEN

  	

   

  
	

   

  	

  Title:

  	

  Authorized Signatory

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JERRY D. ZINKULA

  	

   

  
	

   

  	

  Name:

  	

  JERRY D. ZINKULA

  	

   

  
	

   

  	

  Title:

  	

  Authorized Signatory

  	

   

  

 

 

	

  LENDERS:

  	

  Allfirst Bank

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  TERENCE S. DOUGHERTY

  	

   

  
	

   

  	

  Name:

  	

  Terence S. Dougherty

  	

   

  
	

   

  	

  Title:

  	

  Officer

  	

   

  

 

 

	

  LENDERS:

  	

  ALLSTATE LIFE INSURANCE COMPANY

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  CHRIS GOERGEN

  	

   

  
	

   

  	

  Name:

  	

  CHRIS GOERGEN

  	

   

  
	

   

  	

  Title:

  	

  Authorized Signatory

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JERRY D. ZINKULA

  	

   

  
	

   

  	

  Name:

  	

  JERRY D. ZINKULA

  	

   

  
	

   

  	

  Title:

  	

  Authorized Signatory

  	

   

  

 

 

	

  LENDERS:

  	

  Ares IV CLO Ltd.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Ares CLO Management IV, L.P.,

  Investment Manager

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Ares CLO GP IV, L.L.C.

  Its Managing Member

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JEFF MOORE

  	

   

  
	

   

  	

  Name:

  	

  JEFF MOORE

  	

   

  
	

   

  	

  Title:

  	

  VICE PRESIDENT

  	

   

  
	

   

  	

   

  
	

   

  	

  ARES V CLO Ltd.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  ARES CLO Management V, L.P.,

  Investment Manager

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  ARES CLO GP V, L.L.C.

  Its Managing Member

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JEFF MOORE

  	

   

  
	

   

  	

  Name:

  	

  JEFF MOORE

  	

   

  
	

   

  	

  Title:

  	

  VICE PRESIDENT

  	

   

  

 

 

	

  LENDERS:

  	

  ARES Leveraged Investment Fund II,

  L.P.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  ARES Management II, L.P.

  
	

   

  	

  Its:

  	

  General Partner

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JEFF MOORE

  	

   

  
	

   

  	

  Name:

  	

  JEFF MOORE

  	

   

  
	

   

  	

  Title:

  	

  VICE PRESIDENT

  	

   

  

 

 

	

  LENDERS:

  	

  BRYN MAWR CLO, Ltd.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Deerfield Capital Management LLC as its

  Collateral Manager

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  DALE BURROW

  	

   

  
	

   

  	

  Name:

  	

  Dale Burrow

  	

   

  
	

   

  	

  Title:

  	

  Senior Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  Sankaty Advisors, LLC as Collateral

  Manager

  for Castle Hill II-INGOTS, Ltd., as

  Term

  Lender

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  DIANE J. EXTER

  	

   

  
	

   

  	

  Name:

  	

  Diane J. Exter

  	

   

  
	

   

  	

  Title:

  	

  Managing Director Portfolio Manager

  	

   

  

 

 

	

  LENDERS:

  	

  Clydesdale CLO 2001-1, Ltd.

  
	

   

  	

   

  
	

   

  	

  Nomura Corporate Research and Asset

  Management Inc. as Collateral

  Manager

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  ELIZABETH MACLEAN

  	

   

  
	

   

  	

  Name:

  	

  Elizabeth MacLean

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  Denali Capital LLC, managing member

  of DC

  Funding Partners, portfolio manager

  for

  DENALI CAPITAL CLO I, LTD., or an

  affiliate

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JOHN P. THACKER

  	

   

  
	

   

  	

  Name:

  	

  John P. Thacker

  	

   

  
	

   

  	

  Title:

  	

  Chief Credit Officer

  	

   

  

 

 

	

  LENDERS:

  	

  Denali Capital LLC, managing member

  of DC

  Funding Partners, portfolio manager

  for

  DENALI CAPITAL CLO II, LTD., or an

  affiliate

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JOHN P. THACKER

  	

   

  
	

   

  	

  Name:

  	

  John Thacker

  	

   

  
	

   

  	

  Title:

  	

  Chief Credit Officer

  	

   

  

 

 

	

  LENDERS:

  	

  Denali Capital LLC, managing member

  of DC

  Funding Partners, portfolio manager

  for

  DENALI CAPITAL CLO III, LTD., or an

  affiliate

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JOHN P. THACKER

  	

   

  
	

   

  	

  Name:

  	

  John P. Thacker

  	

   

  
	

   

  	

  Title:

  	

  Chief Credit Officer

  	

   

  

 

 

	

  LENDERS:

  	

  Flagship CLO II

  By: Flagship Capital Management,

  Inc.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  COLLEEN CUNNIFFE

  	

   

  
	

   

  	

  Name:

  	

  Colleen Cunniffe

  	

   

  
	

   

  	

  Title:

  	

  Director

  	

   

  

 

 

	

  LENDERS:

  	

  Franklin CLO II, Limited

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  RICHARD D’ADDARIO

  	

   

  
	

   

  	

  Name:

  	

  Richard D’Addario

  	

   

  
	

   

  	

  Title:

  	

  Senior Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  Franklin Floating Rate Master

  Series

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  RICHARD D’ADDARIO

  	

   

  
	

   

  	

  Name:

  	

  Richard D’Addario

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  Franklin Floating Rate Daily Access

  Fund

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  RICHARD D’ADDARIO

  	

   

  
	

   

  	

  Name:

  	

  Richard D’Addario

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  General Electric Capital

  Corporation

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  DAN MORSE

  	

   

  
	

   

  	

  Name:

  	

  Dan Morse

  	

   

  
	

   

  	

  Title:

  	

  Global Risk Manager

  	

   

  

 

 

	

  LENDERS:

  	

  Goldman Sachs Credit Partners, L.P.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  ROBERT S. FANELLI

  	

   

  
	

   

  	

  Name:

  	

  Robert S. Fanelli

  	

   

  
	

   

  	

  Title:

  	

  Authorized Signatory

  	

   

  

 

 

	

  LENDERS:

  	

  Harbour Town Funding LLC

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  ANN E. MORRIS

  	

   

  
	

   

  	

  Name:

  	

  Ann E. Morris

  	

   

  
	

   

  	

  Title:

  	

  Asst Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  HarbourView CLO IV, Ltd.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  BILL CAMPBELL

  	

   

  
	

   

  	

  Name:

  	

  Bill Campbell

  	

   

  
	

   

  	

  Title:

  	

  Manager

  	

   

  

 

 

	

  LENDERS:

  	

  ING PRIME RATE TRUST

  
	

   

  	

  By:

  	

  ING Investments, LLC

  as its investment manager

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  MICHEL PRINCE

  	

   

  
	

   

  	

  Name:

  	

  Michel Prince, CFA

  	

   

  
	

   

  	

  Title:

  	

  VICE PRESIDENT

  	

   

  
	

   

  	

   

  
	

  ML CLO XX PILGRIM AMERICA

  (CAYMAN) LTD,

  	

   

  
	

  By:

  	

  ING Investments, LLC

  as its investment manager

  	

   

  
	

   

  	

   

  
	

   

  	

  SEQUILS-PILGRIM I, LTD

  	

   

  
	

   

  	

  By:

  	

  ING Investments, LLC

  as its investment manager

  	

   

  
	

   

  	

   

  
	

  PILGRIM CLO 1999-1 LTD,

  	

   

  
	

  By:

  	

  ING Investments, LLC

  as its investment manager

  	

   

  
	

   

  	

   

  
	

   

  	

  PILGRIM AMERICA HIGH

  INCOME INVESTMENTS LTD,

  	

   

  
	

   

  	

  By:

  	

  ING Investments, LLC

  as its investment manager

  	

   

  
							

 

 

	

  LENDERS:

  	

  Jissekikun Funding, Ltd. (#1288)

  
	

   

  	

  By:

  	

  Pacific Investment Management Company

  LLC, as its Investment Advisor

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/  MOHAN V. PHANSALKAR

  	

   

  
	

   

  	

   

  	

   

  	

  Mohan V. Phansalkar

  
	

   

  	

   

  	

   

  	

  Executive Vice President

  

 

 

	

  LENDERS:

  	

  KZH ING-2 LLC

  	

   

  
	

   

  	

  By:

  	

  /s/  JOYCE FRASER-BRYANT

  	

   

  
	

   

  	

  Name:

  	

  Joyce Fraser-Bryant

  	

   

  
	

   

  	

  Title:

  	

  AUTHORIZED AGENT

  	

   

  

 

 

	

  LENDERS:

  	

  KZH SOLEIL-2 LLC

  	

   

  
	

   

  	

  By:

  	

  /s/  JOYCE FRASER-BRYANT

  	

   

  
	

   

  	

  Name:

  	

  Joyce Fraser-Bryant

  	

   

  
	

   

  	

  Title:

  	

  AUTHORIZED AGENT

  	

   

  

 

 

	

  LENDERS:

  	

  KZH WATERSIDE LLC

  	

   

  
	

   

  	

  By:

  	

  /s/  JOYCE FRASER-BRYANT

  	

   

  
	

   

  	

  Name:

  	

  Joyce Fraser-Bryant

  	

   

  
	

   

  	

  Title:

  	

  AUTHORIZED AGENT

  	

   

  

 

 

	

  LENDERS:

  	

  LIBERTY FLOATING RATE

  ADVANTAGE FUND

  
	

   

  	

   

  
	

   

  	

  BY:

  	

  STEIN ROE & FARNHAM

  INCORPORATED, AS ADVISOR

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JAMES R. FELLOWS

  	

   

  
	

   

  	

  Name:

  	

  James R. Fellows

  	

   

  
	

   

  	

  Title:

  	

  Sr. Vice President & Portfolio Manager

  	

   

  
					

 

 

	

   

  	

  Acknowledged and Agreed

  
	

   

  	

   

  
	

   

  	

  Monument Capital Ltd., as Assignee

  By: Alliance Capital Management L.P.,

  as Investment Manager

  By: Alliance Capital Management Corporation,

  as General Partner

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ TERESA McCARTHY

  	

   

  
	

   

  	

  Name:

  	

  Teresa McCarthy

  	

   

  
	

   

  	

  Title:

  	

  VICE PRESIDENT

  	

   

  
	

   

  	

   

  
	

   

  	

  New Alliance Global CDO, Limited

  By: Alliance Capital Management L.P.,

  as Sub-advisor

  By: Alliance Capital Management Corporation,

  as General Partner

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ TERESA McCARTHY

  	

   

  
	

   

  	

  Name:

  	

  Teresa McCarthy

  	

   

  
	

   

  	

  Title:

  	

  VICE PRESIDENT

  	

   

  

 

 

	

  LENDERS:

  	

  Morgan Stanley Prime Income Trust

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  PETER GEWIRTZ

  	

   

  
	

   

  	

  Name:

  	

  Peter Gewirtz

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  MUIRFIELD TRADING LLC

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  ANN E. MORRIS

  	

   

  
	

   

  	

  Name:

  	

  Ann E. Morris

  	

   

  
	

   

  	

  Title:

  	

  ASST VICE PRESIDENT

  	

   

  

 

 

	

  LENDERS:

  	

  Nomura Bond & Loan Fund

  
	

   

  	

   

  
	

  By:

  	

  UFJ Trust Company of New York

  as Trustee

  	

   

  
	

  By:

  	

  Nomura Corporate Research and

  Asset Management Inc.

  Attorney In Fact

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  ELIZABETH MACLEAN

  	

   

  
	

   

  	

  Name:

  	

  Elizabeth MacLean

  	

   

  
	

   

  	

  Title:

  	

  Vice President

  	

   

  

 

 

	

   

  	

  NORSE CBO, LTD.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Regiment Capital Management, LLC

  as its Investment Advisor

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Regiment Capital Advisors, LLC

  its Manager and pursuant to delegated

  authority

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  TIMOTHY S. PETERSON

  	

   

  
	

   

  	

   

  	

  Timothy S. Peterson

  
	

   

  	

   

  	

  President

  

 

 

	

  LENDERS:

  	

  OLYMPIC FUNDING TRUST, SERIES

  1999-1

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  ANN E. MORRIS

  	

   

  
	

   

  	

  Name:

  	

  Ann E. Morris

  	

   

  
	

   

  	

  Title:

  	

  AUTHORIZED AGENT

  	

   

  

 

 

	

  LENDERS:

  	

  OPPENHEIMER SENIOR FLOATING RATE

  FUND

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  BILL CAMPBELL

  	

   

  
	

   

  	

  Name:

  	

  Bill Campbell

  	

   

  
	

   

  	

  Title:

  	

  Manager

  	

   

  

 

 

	

  LENDERS:

  	

  SANKATY ADVISORS, LLC AS COLLATERAL

  MANAGER FOR RACE POINT CLO,

  LIMITED,

  AS TERM LENDER

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  DIANE J. EXTER

  	

   

  
	

   

  	

  Name:

  	

  Diane J. Exter

  	

   

  
	

   

  	

  Title:

  	

  Managing Director

  Portfolio Manager

  	

   

  

 

 

	

  LENDERS:

  	

  ROSEMONT CLO, LTD.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Deerfield Capital Management LLC as its Collateral

  Manager

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  DALE BURROW

  	

   

  
	

   

  	

  Name:

  	

  Dale Burrow

  	

   

  
	

   

  	

  Title

  	

  Senior Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  SAN JOAQUIN CDO I LIMITED (#1282)

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Pacific Investment Management Company LLC, as its

  Investment Advisor

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  MOHAN V. PHANSALKAR

  	

   

  
	

   

  	

  Name:

  	

  Mohan V. Phansalkar

  	

   

  
	

   

  	

  Title:

  	

  Executive Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  SANKATY HIGH YIELD PARTNERS III,

  L.P.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  DIANE J. EXTER

  	

   

  
	

   

  	

  Name:

  	

  Diane J. Exter

  	

   

  
	

   

  	

  Title:

  	

  Managing Director

  Portfolio Manager

  	

   

  

 

 

	

  LENDERS:

  	

  SEQUILS-CUMBERLAND I, LTD.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Deerfield Capital Management LLC as its Collateral

  Manager

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  DALE BURROW

  	

   

  
	

   

  	

  Name:

  	

  Dale Burrow

  	

   

  
	

   

  	

  Title:

  	

  Senior Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  SEQUILS-MAGNUM, LTD. (#1280)

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Pacific Investment Management Company LLC, as its

  Investment Advisor

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  MOHAN V. PHANSALKAR

  	

   

  
	

   

  	

  Name:

  	

  Mohan V. Phansalkar

  	

   

  
	

   

  	

  Title:

  	

  Executive Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  STANWICH LOAN FUNDING LLC

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  ANN E. MORRIS

  	

   

  
	

   

  	

  Name:

  	

  Ann E. Morris

  	

   

  
	

   

  	

  Title:

  	

  Asst Vice President

  	

   

  

 

 

	

  LENDERS:

  	

  STEIN ROE FLOATING RATE LIMITED

  LIABILITY COMPANY

  
	

   

  	

   

  
	

   

  	

  By:

  	

  STEIN ROE & FARNHAM INCORPORATED, AS

  ADVISOR

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  JAMES R. FELLOWS

  	

   

  
	

   

  	

  Name:

  	

  James R. Fellows

  	

   

  
	

   

  	

  Title:

  	

  Sr. Vice President & Portfolio Manager

  	

   

  

 

 

	

  LENDERS:

  	

  VAN KAMPEN PRIME RATE INCOME TRUST

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Van Kampen Investment Advisory Corp.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  BRAD LANGS

  	

   

  
	

   

  	

  Name:

  	

  Brad Langs

  	

   

  
	

   

  	

  Title:

  	

  Executive Director

  	

   

  

 

 

	

  LENDERS:

  	

  VAN KAMPEN SENIOR INCOME TRUST

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Van Kampen Investment Advisory Corp.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  BRAD LANGS

  	

   

  
	

   

  	

  Name:

  	

  Brad Langs

  	

   

  
	

   

  	

  Title:

  	

  Executive Director

  	

   

  

 

 

	

  LENDERS:

  	

  WRIGLEY CDO, LTD. (#1285)

  
	

   

  	

   

  
	

   

  	

  By:

  	

  Pacific Investment Management Company LLC, as its

  Investment Advisor

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/  MOHAN V. PHANSALKAR

  	

   

  
	

   

  	

  Name:

  	

  Mohan V. Phansalkar

  	

   

  
	

   

  	

  Title:

  	

  Executive Vice PresidentExhibit 4.1

 

THE AES CORPORATION

as the Company

 

 

and

 

 

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

 

as Trustee

 

 

 

 

83/4 % Second Priority Senior Secured Notes due 2013

9% Second Priority Senior Secured Notes due 2015

 

Senior Indenture

 

Dated as of May 8, 2003

 

 

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE
  1

  
	
  DEFINITIONS
  AND INCORPORATION BY REFERENCE

  
	
   

  
	
  Section
  1.01.  Definitions.

  
	
  Section
  1.02.  Other Definitions

  
	
  Section
  1.03.  Rules of Construction

  
	
   

  
	
  ARTICLE
  2

  
	
  THE
  NOTES

  
	
   

  
	
  Section
  2.01. 
  Forms Generally, Certain Issues Regarding Preconditions for Transfer
  and Payment

  
	
  Section
  2.02. 
  Execution and Authentication

  
	
  Section
  2.03. 
  Amount Unlimited

  
	
  Section
  2.04. 
  Denomination and Date of Securities; Payment of Interest

  
	
  Section
  2.05 . Registrar and Paying Agent; Agents
  Generally

  
	
  Section
  2.06. 
  Paying Agent to Hold Money in Trust

  
	
  Section
  2.07. 
  Restrictions on Transfer and Exchange

  
	
  Section
  2.08. 
  Registration, Transfer and Exchange

  
	
  Section
  2.09. 
  Replacement Notes

  
	
  Section
  2.10. 
  Outstanding Notes

  
	
  Section
  2.11. 
  Temporary Notes

  
	
  Section
  2.12. 
  Cancellation

  
	
  Section
  2.13. 
  CUSIP Numbers

  
	
  Section
  2.14. 
  Defaulted Interest

  
	
   

  
	
  ARTICLE
  3

  
	
  REDEMPTION

  
	
   

  
	
  Section
  3.01. 
  Optional Redemption

  
	
  Section
  3.02. 
  Notice of Redemption; Partial Redemptions

  
	
  Section
  3.03. 
  Payment of Notes Called for Redemption

  
	
  Section
  3.04. 
  Exclusion of Certain Notes from Eligibility for Selection for
  Redemption

  

 

(1) Note:  The Table of Contents shall not for any
purposes be deemed to be a part of the Indenture.

 

i

 

	
  ARTICLE
  4

  
	
  COVENANTS

  
	
   

  
	
  Section
  4.01. 
  Payment of Notes

  
	
  Section
  4.02. 
  Maintenance of Office or Agency

  
	
  Section
  4.03. 
  Noteholders’ Lists

  
	
  Section
  4.04. 
  Certificate to Trustee

  
	
  Section
  4.05. 
  Reports by the Company

  
	
  Section
  4.06. 
  Limitation on Liens

  
	
  Section
  4.07. 
  Limitation on the Incurrence of Debt Secured by the Collateral Assets

  
	
  Section
  4.08. 
  Limitations on Restricted Payments

  
	
  Section
  4.09. 
  Limitations on Asset Dispositions

  
	
  Section
  4.10. 
  Repurchase of Notes Upon a Change of Control

  
	
  Section
  4.11. 
  Limitations on Transactions with Affiliates

  
	
  Section
  4.12. 
  Second-Priority Liens

  
	
  Section
  4.13. 
  Limitation on Sale Leaseback Transactions

  
	
  Section
  4.14. 
  Restrictions on Securing or Guaranteeing Outstanding AES Notes

  
	
  Section
  4.15. 
  Use of Proceeds from the Notes

  
	
  Section
  4.16. 
  Investment Grade Fallaway

  
	
   

  
	
  ARTICLE
  5

  
	
  SUCCESSOR
  CORPORATION

  
	
   

  
	
  Section
  5.01.  When Company May Merge, Etc

  
	
  Section
  5.02.  Successor Substituted

  
	
   

  
	
  ARTICLE
  6

  
	
  DEFAULT
  AND REMEDIES

  
	
   

  
	
  Section
  6.01. 
  Events of Default

  
	
  Section
  6.02. 
  Acceleration

  
	
  Section
  6.03. 
  Other Remedies

  
	
  Section
  6.04. 
  Waiver of Past Defaults

  
	
  Section
  6.05. 
  Control by Majority

  
	
  Section
  6.06. 
  Limitation on Suits

  
	
  Section
  6.07. 
  Rights of Holders to Receive Payment

  
	
  Section
  6.08. 
  Collection Suit by Trustee

  
	
  Section
  6.09. 
  Trustee May File Proofs of Claim

  
	
  Section
  6.10. 
  Application of Proceeds

  
	
  Section
  6.11. 
  Restoration of Rights and Remedies

  
	
  Section
  6.12. 
  Undertaking for Costs

  
	
  Section
  6.13. 
  Rights and Remedies Cumulative

  
	
  Section
  6.14. 
  Delay or Omission Not Waiver

  

 

ii

 

	
  ARTICLE
  7

  
	
  TRUSTEE

  
	
   

  
	
  Section
  7.01. 
  General

  
	
  Section
  7.02. 
  Certain Rights of Trustee

  
	
  Section
  7.03. 
  Individual Rights of Trustee

  
	
  Section
  7.04. 
  Trustee’s Disclaimer

  
	
  Section
  7.05. 
  Notice of Default

  
	
  Section
  7.06. 
  Compensation and Indemnity

  
	
  Section
  7.07. 
  Replacement of Trustee

  
	
  Section
  7.08. 
  Successor Trustee by Merger, Etc

  
	
  Section
  7.09. 
  Money Held in Trust

  
	
   

  
	
  ARTICLE
  8

  
	
  SATISFACTION
  AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

  
	
   

  
	
  Section
  8.01. 
  Satisfaction and Discharge of Indenture

  
	
  Section
  8.02. 
  Application by Trustee of Funds Deposited for Payment of Notes

  
	
  Section
  8.03. 
  Repayment of Moneys Held by Paying Agent

  
	
  Section
  8.04. 
  Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two
  Years

  
	
  Section
  8.05. 
  Defeasance and Discharge of Indenture

  
	
  Section
  8.06. 
  Defeasance of Certain Obligations

  
	
  Section
  8.07. 
  Reinstatement

  
	
   

  
	
  ARTICLE
  9

  
	
  AMENDMENTS,
  SUPPLEMENTS AND WAIVERS

  
	
   

  
	
  Section
  9.01. 
  Without Consent of Holders

  
	
  Section
  9.02. 
  With Consent of Holders

  
	
  Section
  9.03. 
  Revocation and Effect of Consent

  
	
  Section
  9.04. 
  Notation on or Exchange of Notes

  
	
  Section
  9.05. 
  Trustee to Sign Amendments, Etc

  
	
   

  
	
  ARTICLE
  10

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section
  10.01. 
  Notices

  
	
  Section
  10.02. 
  Certificate and Opinion as to Conditions Precedent

  
	
  Section
  10.03. 
  Statements Required in Certificate or Opinion

  
	
  Section
  10.04. 
  Evidence of Ownership.

  
	
  Section
  10.05. 
  Rules by Trustee, Paying Agent or Registrar

  
	
  Section
  10.06. 
  Payment Date Other Than a Business Day

  
	
  Section
  10.07. 
  Governing Law

  

 

iii

 

	
  Section
  10.08. 
  No Adverse Interpretation of Other Agreements

  
	
  Section
  10.09. 
  Successors

  
	
  Section
  10.10. 
  Duplicate Originals

  
	
  Section
  10.11. 
  Separability

  
	
  Section
  10.12. 
  Table of Contents, Headings, Etc

  
	
  Section
  10.13. 
  Incorporators, Stockholders, Officers and Directors of Company Exempt
  from Individual Liability

  
	
  Section
  10.14. 
  Judgment Currency

  
	
   

  
	
  ARTICLE
  11

  
	
  SECURITY
  ARRANGEMENTS

  
	
   

  
	
  Section
  11.01.  Security

  
	
  Section
  11.02.  Notice of Payment, Discharge or Defeasance

  

 

iv

 

INDENTURE,
dated as of May 8, 2003, between The AES Corporation (the “Company”), a Delaware
corporation, as the issuer, and Wells Fargo Bank Minnesota, National
Association, a national banking association, as trustee (the “Trustee”).

 

RECITALS OF
THE COMPANY

 

WHEREAS, the Company has duly authorized the
execution and delivery of the Indenture to provide for the issuance from time
to time of up to such Principal amount or amounts as may from time to time be
authorized of the Company’s 83⁄4% Second Priority Senior Secured Notes Due 2013
(the “Notes
due 2013”) and the Company’s 9% Second Priority Senior Secured Notes
Due 2015 (the “Notes due 2015” and collectively with the Notes due 2013, the
“Notes”)
in accordance with the terms of this Indenture; and

 

WHEREAS, all things necessary to make this
Indenture a valid agreement of the Company, in accordance with its terms, have
been done, and the Company has done all things necessary to make the Notes,
when executed by the Company and authenticated and delivered by the Trustee,
the valid obligations of the Company as hereinafter provided;

 

NOW, THEREFORE THIS
INDENTURE WITNESSETH

 

For and in consideration of the premises and
the purchases of the Notes by the Holders thereof, the Company and the Trustee
mutually covenant and agree for the equal and proportionate benefit of the
respective Holders as follows:

 

ARTICLE
1

DEFINITIONS AND
INCORPORATION BY REFERENCE

 

Section 1.01. 
Definitions.

 

“Additional Collateral Trust Agreement Collateral”
means the “Additional Second Priority Collateral Trust Agreement Collateral”
referred to in the Collateral Trust Agreement.

 

“Additional Notes” means any notes issued
under the Indenture in addition to the Original Notes having the same terms in
all respects as the Original Notes due 2013 or the Original Notes due 2015, as
the case may be, except that interest will accrue on the Additional Notes from
the most recent date to which interest has been paid on the Notes of the
applicable Series (other than Additional Notes) or, if no interest has been
paid, from the Original Issue Date.

 

 

“Affiliate” means, as applied
to any Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person.  For the purposes of this definition,
“control” (including, with correlative meanings, the terms “controlling,” “controlled
by” and “under common control with”) when used with respect to any Person is
defined to mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Agent” means any Registrar, Paying Agent,
transfer agent or Authenticating Agent.

 

“Agent Member” means a member of, or a
participant in, the Depositary.

 

“Announced Asset Sale” means the sale by the Company of (i) its majority
ownership of Songas Limited, a gas-to-electricity business currently under
construction in Tanzania, (ii) its ownership interest in two generation
businesses in Bangladesh (AES Haripur Private Limited, a 360 MW gas fired combined
cycle power plant and AES Meghnaghat Limited, a 450 MW gas fired combined cycle
power plant) and (iii) approximately 32% of the ownership interest in AES Oasis
Limited, a newly created company that will own two electric generation and
desalination plants in Oman and Qatar, the oil-fired generating facilities AES
LalPir and AES PakGen in Pakistan and other future power projects in the Middle
East.

 

“Asset Disposition” means, with respect to any Person, any sale, transfer,
conveyance, lease or other disposition (including by way of merger,
consolidation or sale-leaseback) by such Person or any of its Subsidiaries to
any Person (other than to the Company or a Consolidated Subsidiary of the
Company and other than in the ordinary course of business) of (i) any assets
(excluding cash and cash equivalents) of such Person or any of its Subsidiaries
or (ii) any shares of Capital Stock of such Person’s Subsidiaries.

 

For purposes of
this definition, any disposition in connection with directors’ qualifying shares
or investments by foreign nationals mandated by applicable law shall not
constitute an Asset Disposition.  In
addition, the term “Asset Disposition” shall not include any sale, transfer,
conveyance, lease or other disposition of assets governed by Article 5. The
term “Asset Disposition” also shall not include (i) any sale of shares of
Preferred Stock of a Subsidiary other than a Collateral Subsidiary, (ii) the
grant of a security interest by any Person in any assets or shares of Capital
Stock securing a borrowing by, or contractual performance obligation of, such
Person or any Subsidiary of such Person, (iii) a sale-leaseback transaction
involving substantially all of the assets of a Power Supply Business where a
Subsidiary of the Company sells the Power Supply Business to a Person in
exchange for the assumption by that Person of the Debt financing the Power
Supply Business and the Subsidiary leases the Power Supply Business from such
Person, (iv) dispositions of

 

2

 

contract rights, development
rights and resource data made in connection with the initial development of a
Power Supply Business, made prior to the commencement of commercial operation
of such Power Supply Business, (v) transactions made in order to enhance the
repatriation of cash proceeds in connection with a Foreign Asset Disposition or
in order to increase the after-tax proceeds thereof available for immediate
distribution, (vi) any dividend or other distribution on any shares of such
Person’s Capital Stock, (vii) any payment on account of the purchase,
redemption, retirement or acquisition for value of such Person’s Capital Stock
or any option, warrant or other right to purchase shares of such Person’s
Capital Stock, (viii) any defeasance, redemption, repurchase or other
acquisition or retirement for value of any First-Priority Secured Debt or
Debt of any Subsidiary of the Company or (ix) any conversion of such Person’s
Debt into Capital Stock of such Person or its Subsidiaries. Notwithstanding the
foregoing, any sale, transfer, conveyance, lease or other disposition of assets
(excluding cash and cash-equivalents or any grant of a security interest) by a
Collateral Subsidiary to the Company or a Subsidiary of the Company that is not
a Collateral Subsidiary shall be an Asset Disposition unless such Subsidiary
becomes a Collateral Subsidiary or such assets are pledged as Collateral under
the Second-Priority Security Documents, in each case, substantially
concurrently with such sale, transfer, conveyance, lease or other disposition.

 

“Attributable Debt” means the present value
(discounted at the rate of  83⁄4 % per
annum compounded monthly) of the obligations for rental payments required to be
paid during the remaining term of any lease of more than 12 months.

 

“Board of Directors” means either the Board
of Directors of the Company or (except for the purposes of clause (iii) of the
definition of “Change of Control”) any committee of such Board duly authorized
to act hereunder.

 

“Board Resolution” means one or more
resolutions of the Board of Directors, certified by the secretary or an
assistant secretary to have been duly adopted and to be in full force and
effect on the date of certification, and delivered to the Trustee.

 

“Business Day” means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or required by law or regulation to close in the
City of New York.

 

“BVI Cayman Pledge Agreement” means the
Second-Priority Charge and Assignment over Shares dated May 8, 2003 between AES
International Holdings II, Ltd., as Chargor, Wells Fargo Bank Minnesota,
National Association, as Corporate Trustee and Jeffery T. Rose, as Individual
Trustee.

 

3

 

“BVI Collateral” means the “Collateral”
referred to in the BVI Cayman Pledge Agreement.

 

“Capital Stock” means, with respect to any Person,
any and all shares, interests, participants or other equivalents (however
designated, whether voting or non-voting) of, or interests in (however
designated), the equity of such Person which is outstanding or issued on or
after the date hereof, including, without limitation, all Common Stock and
Preferred Stock and partnership and joint venture interests of such Person.

 

“Capitalized Lease” means, as applied to any Person, any lease of any
Property of which the discounted present value of the rental obligations of
such Person as lessee, in conformity with GAAP, is required to be capitalized
on the balance sheet of such Person; and “Capitalized Lease Obligation” is defined to
mean the rental obligations, as aforesaid, under such lease.

 

“Change of
Control” means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets
of the Company (determined on a consolidated basis) to any Person or group (as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended) of Persons, (ii) a Person or group (as so defined) of Persons
(other than management of the Company on the date of the Indenture or their
Affiliates) shall have become the beneficial owner of more than 35% of the
outstanding Voting Stock of the Company, or (iii) during any one-year period,
individuals who at the beginning of such period constitute the Board of
Directors (together with any new director whose election or nomination was
approved by a majority of the directors then in office who were either
directors at the beginning of such period or who were previously so approved)
cease to constitute a majority of the Board of Directors

 

“Clearstream” means Clearstream Banking S.A.

 

“Collateral”
means the Security Agreement Collateral, the Additional Collateral Trust
Agreement Collateral and the BVI Collateral and any other assets pledged to
secure the Notes.

 

“Collateral Assets” means the Collateral and any and all assets and Capital
Stock of or owned by any Collateral Subsidiary.

 

“Collateral Subsidiary” means a Consolidated
Subsidiary of the Company all or a portion of the Capital Stock of which has
been pledged as Collateral pursuant to the Second-Priority Security
Documents and any Subsidiary thereof.

 

4

 

“Collateral Trust Agreement” means the
agreement dated May 8, 2003 among the Grantors referred to therein and the
Collateral Trustees.

 

“Collateral Trustees” means Wells Fargo Bank
Minnesota, National Association, as Corporate Trustee and Jeffery T. Rose, as
Individual Trustee under the Collateral Trust Agreement (or their respective
successors in such capacities).

 

“Commission” means the Securities and
Exchange Commission, as from time to time constituted, created under the
Exchange Act.

 

“Common Stock” means, with respect to any
Person, any and all shares, interests, participations or other equivalents
(however designated, whether voting or non-voting) of common stock of such
Person which is outstanding or issued on or after the date of the Indenture,
including, without limitation, all series and classes of such common stock.

 

“Company” means the party named as such in
the first paragraph of this Indenture until a successor replaces it pursuant to
Article 5 of this Indenture and thereafter means the successor.

 

“Consolidated Fixed Charge Ratio” means the ratio of (i) Parent Operating Cash Flow for
the Reference Period immediately prior to the date of the transaction giving
rise to the need to calculate the Consolidated Fixed Charge Ratio (the “Transaction
Date”) to (ii) the aggregate Consolidated Fixed Charges of the
Company during such Reference Period; provided that in calculating the
Consolidated Fixed Charges pro forma effect shall be given to (A) the
acquisition or disposition of companies, divisions or lines of business by the
Company and its Subsidiaries during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date (or any person that
became a Subsidiary of the Company or was merged into the Company or any
Subsidiary of the Company during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date) and (B) the
incurrence or repayment of any Debt during the Reference Period or subsequent
to the Reference Period and on or prior to the Transaction Date and, in the
case of any incurrence, the application of the proceeds therefrom, in each case
as if such events had occurred on the first day of the Reference Period.

 

“Consolidated Fixed Charges” means, with
respect to any Person, for any period, the aggregate of (i) Consolidated
Interest Expense, (ii) the interest component of Capitalized Leases, determined
on a consolidated basis for such Person and its Consolidated Subsidiaries in
accordance with GAAP, excluding any interest component of Capitalized Leases in
respect of that portion of a Capitalized Lease Obligation of a Subsidiary that
is Non-Recourse to such Person and (iii) cash and non-cash dividends due
(whether or not declared) on any

 

5

 

Redeemable Stock of such Person
or on any Preferred Stock of a Subsidiary of such Person.

 

“Consolidated
Interest Expense” means, with respect to any Person, for any period,
the aggregate interest expense in respect of Debt (including amortization of
original issue discount and non-cash payments or accruals) of such Person and
its Consolidated Subsidiaries, determined on a consolidated basis in accordance
with GAAP, including all commissions, discounts, other fees and charges owed
with respect to letters of credit and bankers’ acceptance and net costs
associated with Interest Rate Agreements and any amounts paid during such
period in respect of such interest expense, commissions, discounts, other fees
and charges that have been capitalized; provided that Consolidated Interest
Expense of the Company shall not include any interest expense (including all
commissions, discounts, other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing and net costs associated with Interest
Rate Agreements) in respect of that portion of Debt of a Subsidiary of the
Company that is Non-Recourse to the Company; and provided  further
that Consolidated Interest Expense of the Company in respect of a Guarantee by
the Company of any Debt of a Subsidiary shall be equal to the commissions,
discounts, other fees and charges that would be due with respect to a
hypothetical letter of credit issued under the Senior Secured Credit Facilities
that can be drawn by the beneficiary thereof in the amount of the Debt so
guaranteed if (i) the Company is not actually making directly or indirectly
interest payments on such Debt and (ii) GAAP does not require the Company on an
unconsolidated basis to record such Debt as a liability of the Company.

 

“Consolidated Net Assets” means the
aggregate amount of assets (less reserves and other deductible items) after
deducting current liabilities, as shown on the consolidated balance sheet of
the Company and its Subsidiaries contained in the latest annual report to the
stockholders of the Company and prepared in accordance with GAAP.

 

“Consolidated Subsidiary” means, at any date
with respect to any Person, any Subsidiary of such Person or other entity the
accounts of which would be consolidated with those of such Person in its
consolidated financial statements if such statements were prepared as of such
date.

 

“Corporate Trust Office” means the office of
the Trustee at which the corporate trust business of the Trustee in Minnesota,
shall, at any particular time, be principally administered, which office is, at
the date of this Indenture, located at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota.

 

“Currency
Agreement” means with, respect to any Person, any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries against

 

6

 

fluctuations in currency values
to or under which such Person or any of its Subsidiaries is a party or a
beneficiary on the date hereof or becomes a party or a beneficiary thereafter.

 

“Debt”  of any Person means at any date,
without duplication, (i) all indebtedness of such Person for borrowed money;
(ii) all Obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) all Obligations of such Person in respect of
letters of credit or bankers acceptance or other similar instruments (or
reimbursement Obligations with respect thereto); (iv) all Obligations of such
Person to pay the deferred purchase price of property or services, except Trade
Payables; (v) all Obligations of such Person as lessee under Capitalized
Leases; (vi) all Debt of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such
Person; provided
that, for purposes of determining the amount of any Debt of the type described
in this clause, if recourse with respect to such Debt is limited to such asset,
the amount of such Debt shall be limited to the lesser of the fair market value
of such asset or the amount of such Debt; (vii) all Debt of others
Guaranteed by such Person to the extent such Debt is Guaranteed by such Person;
(viii) all Redeemable Stock valued at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends; and (ix) to the
extent not otherwise included in this definition, all Obligations of such
Person under Currency Agreements and Interest Rate Agreements.

 

“Default” means any Event of Default as
defined in Section 6.01 and any event that is, or after notice or passage of
time or both would be, an Event of Default.

 

“Depositary” means the depositary of each
Global Note, which initially will be DTC or, as to an Offshore Global Note, a
common depositary for Euroclear and Clearstream, unless and until a successor
Depositary shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Depositary” shall mean or include each Person who is
then a Depositary hereunder.

 

“DTC” means The Depository Trust Company, a
New York corporation.

 

“DTC Legend” means the legend set forth in
Exhibit C.

 

“Equity
Interest” means, with respect to any Person, shares of Capital Stock
of (or other ownership or profit interests in) such Person, warrants, options
or other rights for the purchase or other acquisition from such Person of
shares of Capital Stock of (or other ownership or profit interests in) such
Person, securities convertible into or exchangeable for shares of Capital Stock
of (or other ownership or profit interests in) such Person or warrants, rights
or options for the purchase or other acquisition from such Person of such
shares of (or such other

 

7

 

interests in), such Person (including,
without limitation, partnership, member or trust interests therein), whether
voting or nonvoting, and whether or not such shares, warrants, options, rights
or other interests are authorized or otherwise existing on any date of
determination.

 

“Euroclear” means Euroclear Bank S.A./N.V.,
and its successors or assigns, as operator of the Euroclear system.

 

“Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

“First-Priority Collateral Documents”
means (i) the security agreement dated December 12, 2002 by and among the
Company, the other Persons listed on the signature page thereof and the
Additional Grantors (as defined therein), as grantors, to Wilmington Trust
Company, as corporate trustee and Bruce L. Bisson, as individual trustee, under
the collateral trust agreement referred to in the following clause (ii), (ii)
the collateral trust agreement dated December 12, 2002 among the grantors
referred to therein, as grantors and the collateral trustees, (iii) the charge
and assignment over shares dated December 12, 2002 between AES International
Holdings II, Ltd., as chargor, Wilmington Trust Company, as corporate trustee
and Bruce L. Bisson, as individual trustee, each as amended from time to time,
and (iv) any other agreement that creates a first-priority Lien on the
Collateral securing Debt of the Company that is permitted to be secured by a
first-priority Lien on the Collateral pursuant to Section 4.07 and Section 4.06
hereof.

 

“First-Priority Secured Debt” means Debt of
the Company secured by a first-priority lien on the Collateral pursuant
to the First-Priority Collateral Documents; provided that Debt owed to an Affiliate of
the Company shall not be First-Priority Secured Debt.

 

“Foreign Asset Disposition” means any Asset
Disposition in respect of the Capital Stock and/or Property of any Subsidiary
of any Person where such Subsidiary is organized under the laws of any
jurisdiction other than the U.S. or any state thereof or any Subsidiary of the
type described in Section 936 of the Internal Revenue Code of 1986, as amended,
to the extent that the proceeds of such Asset Disposition are received by a
Person subject in respect of such proceeds to the tax laws of a jurisdiction
other than the U.S. or any state thereof.

 

“Funded Debt”
means indebtedness for borrowed money having a maturity of, or by its terms
extendible or renewable for, a period of more than 12 months after the
determination of the amount thereof.

 

“GAAP” means generally accepted accounting
principles in the U.S. as in effect, as of the date hereof applied on a basis
consistent with the principles, methods,
procedures and practices employed in the preparation of the Company’s

 

8

 

audited financial statements,
including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
is approved by a significant segment of the accounting profession.

 

“Global Note” means a Registered Note in
global form without interest coupons.

 

“Guarantee”by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation of such Person (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided
that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business. 
The term “Guarantee” used as a verb has a corresponding meaning.

 

“Holder” or “Noteholder” means the
registered holder of any Note.

 

“Incur”
means with respect to any Debt, to incur, create, issue, assume, Guarantee or
otherwise become liable for or with respect to, or become responsible for, the
payment of, contingently or otherwise, such Debt; provided that neither the
accrual of interest (whether such interest is payable in cash or kind) nor the
accretion of original issue discount shall be considered an Incurrence of Debt.

 

“Independent
Financial Advisor” means a nationally recognized investment banking
firm (i) which does not (and whose directors, officers, employees and
Affiliates do not) have a direct or indirect material financial interest in the
Company and (ii) which, in the sole judgment of the Board of Directors, is
otherwise independent and qualified to perform the task for which such firm is
being engaged.

 

“Indenture” means this Indenture as
originally executed and delivered or as it may be amended or supplemented from
time to time by one or more indentures supplemental to this Indenture entered
into pursuant to the applicable provisions of this Indenture.

 

9

 

“Interest Payment Date” means each May 15
and November 15 of each year, commencing with November 15, 2003.

 

“Interest
Rate Agreement” means with respect to any Person, any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement designed to protect such Person or any of its Subsidiaries
against fluctuations in interest rates to or under which such Person or any of
its Subsidiaries is a party or a beneficiary on the date hereof or becomes a
party or a beneficiary thereafter.

 

“Investment”
means:

 

(i)                                     any direct or indirect advance, loan or other
extension of credit to another Person,

 

(ii)                                  any capital contribution to another Person, by
means of any transfer of cash or other property or in any other form,

 

(iii)                               any purchase or acquisition of Capital Stock,
bonds, notes or other Debt, or other instruments or securities issued by
another Person, including the receipt of any of the above as consideration for
the disposition of assets or rendering of services, or

 

(iv)                              any Guarantee of any obligation of another Person.

 

“Investment
Grade” means with respect to any security, a rating of Baa3 or
higher of such security by Moody’s Investors Service Inc. (or any successor)
together with a rating of BBB- or higher of such security by Standard &
Poor’s, a division of the McGraw-Hill Companies, Inc. (or any successor).

 

“Joint
Venture” means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that, as to any such arrangement in corporate form, such corporation shall not,
as to any Person of which such corporation is a Subsidiary, be considered to be
a Joint Venture to which such Person is a party.

 

“Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind, or any other type of preferential
arrangement that has the practical effect of creating a security interest, in
respect of such asset.  For the purposes
of this Indenture, the Company or any of its Subsidiaries shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any

 

10

 

conditional sale agreement,
capital lease or other title retention agreement relating to such asset.

 

“Make-Whole Amount” means, the excess, if
any, of (i) the aggregate present value as of the date of such redemption of
each dollar of Principal being redeemed and the amount of interest (exclusive
of interest accrued to the redemption date) that would have been payable in
respect of such dollar if such prepayment had not been made, determined by
discounting, on a semi-annual basis, such Principal and interest at the
Reinvestment Rate (determined on the Business Day preceding the date of such
redemption) from the respective dates on which such Principal and interest
would have been payable if such payment had not been made, over (ii) the
aggregate Principal amount of the applicable series of Notes being redeemed.

 

“Material Subsidiary” of the Company means,
as of any date, any Subsidiary of which the Company’s proportionate share of
such Subsidiary’s total assets (after intercompany eliminations) exceeds 15
percent of the total assets of the Company on a consolidated basis.

 

“Net Cash Proceeds” from an Asset Disposition, means cash payments received (including any
cash payments received by way of deferred payment of principal pursuant to a
note or installment receivable or otherwise, but only as and when received
(including any cash received upon sale or disposition of such note or
receivable), excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to the
Property disposed of in such Asset Disposition or received in any other noncash
form) therefrom, in each case, net of all legal, title and recording tax
expenses, commissions and other fees and expenses incurred (including, without
limitation, consent and waiver fees and any applicable premiums, earn-out or
working interest payments or payments in lieu or in termination thereof), and
all federal, state, provincial, foreign and local taxes required to be accrued
as a liability under GAAP (i) as a consequence of such Asset Disposition, (ii)
as a result of the repayment of any Debt in any jurisdiction other than the
jurisdiction where the Property disposed of was located or (iii) as a result of
any repatriation to the U.S. of any proceeds of such Asset Disposition and, in
each case, net of a reasonable reserve for the after tax-cost of any
indemnification payments (fixed and contingent) attributable to seller’s
indemnities to the purchaser undertaken by the Company or any of its
Subsidiaries in connection with such Asset Disposition (but excluding any
payments, which by the terms of the indemnities will not, under any
circumstances, be made during the term of the Notes), and net of all payments
made on any Debt which is secured by such Property, in accordance with the
terms of any lien upon or with respect to such Property or which must by its
terms or by applicable law be repaid out of the proceeds from such Asset
Disposition and net of all distributions and other payments made to minority
interest holders in Subsidiaries or Joint Ventures as a result of such Asset
Disposition.

 

11

 

“Net Income”
of any Person for any period means the net income (loss) of such Person for
such period, determined in accordance with GAAP, except that extraordinary and
non-recurring gains and losses as determined in accordance with GAAP shall be
excluded.

 

“Non-Recourse”
to a Person as applied to any Debt (or portion thereof) means that such Person
is not directly or indirectly liable to make any payments with respect to such
Debt (or portion thereof), that no Guarantee of such Debt (or portion thereof)
has been made by such Person and that such Debt (or portion thereof) is not
secured by a Lien on any asset of such Person.

 

“Notes” means any of the notes, as defined
in the first paragraph of the recitals hereof, that are authenticated and
delivered under this Indenture including any Additional Notes.

 

“Obligation”
means, with respect to any Person, any payment, performance or other obligation
of such Person of any kind, including, without limitation, any liability of
such Person on any claim, whether or not the right of any creditor to payment
in respect of such claim is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding referred to in Section 6.01(f) or (g) of this
Indenture.  Without limiting the
generality of the foregoing, the Obligations of the Company under the Indenture
include (a) the obligation to pay principal, interest, charges, expenses,
fees, attorneys’ fees and disbursements, indemnities and other amounts payable
by the Company under the Indenture and (b) the obligation of the Company
to reimburse any amount in respect of any of the foregoing that the Trustee, in
its sole discretion, may elect to pay or advance on behalf of the Company.

 

“Officer” means, with respect to the
Company, the chairman of the Board of Directors, the president or chief
executive officer, any vice president, the chief financial officer, the
treasurer or any assistant treasurer, or the secretary or any assistant
secretary.

 

“Officers’ Certificate” means a certificate
signed in the name of the Company (i) by the chairman of the board of
directors, the president or chief executive officer or a vice president and
(ii) by the chief financial officer, the treasurer or any assistant treasurer,
or the secretary or any assistant secretary, complying with Section 10.03 and
delivered to the Trustee.  Each such
certificate shall include (except as otherwise expressly provided in this
Indenture) the statements provided in Section 10.03.

 

“Offshore Global Note” means a Global Note
representing Notes issued and sold pursuant to Regulation S.

 

12

 

“Opinion of Counsel” means a written opinion
signed by legal counsel, who may be an employee of or counsel to the Company,
satisfactory to the Trustee and complying with Section 10.03.  Each such opinion shall include the
statements provided in Section 10.03, if and to the extent required thereby.

 

“Original Issue Date” means the date on
which the Original Notes are first issued under the Indenture.

 

“Original Notes” means collectively, the
Original Notes due 2013 and the Original Notes due 2015.

 

“Original Notes due 2013” means the Notes
due 2013 issued on the Original Issue Date and any Notes issued in replacement
thereof.

 

“Original Notes due 2015” means the Notes
due 2015 issued on the Original Issue Date and any Notes issued in replacement
thereof.

 

“Outstanding
AES Notes” means (i) the Company’s outstanding 8.00% Senior Notes,
Series A, Due 2008, 8.75% Senior Notes, Series G, Due 2008, 9.50% Senior Notes,
Series B, Due 2009, 9.375% Senior Notes, Series C, Due 2010, 8.875% Senior
Notes, Series E, Due 2011, 8.375% Senior Notes, Series F, Due 2011, 7.375%
Remarketable or Redeemable Securities Due 2013, 8.375% Senior Subordinated
Notes Due 2007, 10.25% Senior Subordinated Notes Due 2006, 8.50% Senior
Subordinated Notes Due 2007, 8.875% Senior Subordinated Notes Due 2027 and
4.50% Convertible Junior Subordinated Debentures Due 2005 and (ii) the 6.75%
Trust Convertible Preferred Securities of AES Trust III and 6.0% Trust
Convertible Preferred Securities of AES Trust VII and any of the Company’s
subordinated debentures related thereto and, in each case, any Debt of the
Company (other than First-Priority Secured Debt) issued in exchange
therefor or the proceeds of which were used to refinance such obligations.

 

“Parent
Operating Cash Flow” means for any period, the sum of the following
amounts (determined without duplication), but only to the extent received in
cash by the Company from a Person during such period:

 

(i)                                     dividends paid to the Company by its Subsidiaries
during such period;

 

(ii)                                  consulting and management fees paid to the Company
for such period;

 

(iii)                               tax sharing payments made to the Company during
such period;

 

(iv)                              interest and other distributions paid during such
period with respect to cash and other temporary cash investments other than
amounts on deposit to secure contingent exposure under letters of credit issued

 

13

 

under the Senior Secured Credit Facilities or
any successor facility or facilities; and

 

(v)                                 other cash payments made to the Company by its
Subsidiaries other than (A) returns of invested capital; (B) payments of the
principal of Debt of any such Subsidiary to the Company; and (C) payments in an
amount equal to the aggregate amount released from debt service reserve
accounts upon the issuance of letters of credit for the account of the Company
and for the benefit of the beneficiaries of such accounts.

 

For purposes of determining Parent Operating
Cash Flow:

 

(1)                                  net cash payments received by a Qualified Holding
Company whose Equity Interests have been pledged to the Collateral Trustees
under the Second Priority Collateral Documents during any period which could
have been (without regard for any cash held by such Qualified Holding Company
at the beginning of such period), but were not, paid as a dividend to the
Company during such period due to tax or other cash management considerations
may be included in Parent Operating Cash Flow for such period; provided
that any amounts so included will not be included in Parent Operating Cash Flow
if and when paid to the Company in any subsequent period; and

 

(2)                                  Net Cash Proceeds from asset sales, equity
issuances or the incurrence of Debt received by the Company shall not be
included in Parent Operating Cash Flow for any period.

 

“Permitted
Payments” means with respect to the Company or any of its
Subsidiaries:

 

(i)                                     any dividend on shares of Capital Stock payable
(or to the extent paid) solely in shares of Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to purchase Capital
Stock (other than Redeemable Stock) and any distribution of Capital Stock
(other than Redeemable Stock) in respect of the exercise of any right to
convert or exchange any instrument (whether Debt or equity and including
Redeemable Stock);

 

(ii)                                  the repurchase or other acquisition or retirement
for value of any shares of Capital Stock of the Company, or any option, warrant
or other right to purchase shares of Capital Stock of the Company, in each
case, with additional shares of, or out of the proceeds of a substantially
contemporaneous issuance of, Capital Stock of the Company other than Redeemable
Stock (unless the redemption

 

14

 

provisions of
such Redeemable Stock prohibit the redemption thereof prior to the date on
which the Capital Stock to be acquired or retired was by its terms required to
be redeemed);

 

(iii)                               the declaration and payment of dividends to
holders, or any payment on account of the purchase, redemption, retirement or
acquisition for value, of any class or series of Redeemable Stock; and

 

(iv)                              any other Restricted Payment that, together with
all other Restricted Payments made pursuant to this clause (iv) after the date
hereof, does not exceed $50 million.

 

“Person” means an individual, a corporation,
a partnership, a limited liability company, an association, a trust or any
other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.

 

“Power Supply Business”  means an electric power or
thermal energy generation or cogeneration facility or related facilities, or
electric power transmission, distribution, fuel supply and fuel transportation
facilities, or any combination thereof (all subject to relevant security
interests, if any, under related project financing arrangements), together with
its or their related power supply, thermal energy and fuel contracts as well as
other contractual arrangements with customers, suppliers and contractors.

 

“Preferred
Stock” means with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of preferred or preference stock of such Person which is
outstanding or issued on or after the date hereof.

 

“Principal” of a Note means the principal
amount of, and, unless the context indicates otherwise, includes any premium
payable on, the Note.

 

“Principal Property” means any building,
structure or other facility (together with the land on which it is erected and
fixtures comprising a part thereof) used primarily for manufacturing,
processing, research, warehousing or distribution owned or leased by the
Company and having a net book value in excess of 2% of Consolidated Net Assets,
other than any such building, structure or other facility or portion thereof
which is a pollution control facility financed by state or local governmental
obligations or which the principal executive officer, president and principal
financial officer of the Company determine in good faith is not of material
importance to the total business conducted or assets owned by the Company and
its Subsidiaries as an entirety.

 

15

 

“Property”
of any Person means all types of real, personal, tangible, intangible or mixed
property owned by such Person whether or not included in the most recent
consolidated balance sheet of such Person under GAAP.

 

“Qualified
Capital Stock” means any Capital Stock of a Person that is not
Redeemable Stock.

 

“Qualified
Holding Company” means any Wholly-Owned Consolidated
Subsidiary of the Company and any direct or indirect holding company (other
than the Company) of such Wholly-Owned Consolidated Subsidiary, which is
also a Wholly-Owned Consolidated Subsidiary of the Company, whose direct
and indirect interest in any Power Supply Business is limited to the ownership
of Capital Stock or Debt obligations of a Person with a direct or indirect
interest in such Power Supply Business.

 

“Redeemable
Stock” means any class or series of Capital Stock of any Person that
by its terms or otherwise is (i) required to be redeemed prior to the Stated
Maturity of the Notes, (ii) redeemable at the option of the holder of such class
or series of Capital Stock at any time prior to the Stated Maturity of the
Notes or (iii) convertible into or exchangeable for (unless solely at the
option of the Company) Capital Stock referred to in clause (i) or (ii) above or
Debt having a scheduled maturity prior to the Stated Maturity of the Notes; provided
that any Capital Stock that would not constitute Redeemable Stock but for
provisions thereof giving holders thereof the right to require the Company to
repurchase or redeem such Capital Stock upon the occurrence of an “asset sale”
or a “change of control” occurring prior to the Stated Maturity of the Notes
shall not constitute Redeemable Stock if the “asset sale” or “change of
control” provision applicable to such Capital Stock is no more favorable to the
holders of such Capital Stock than the provisions contained in Sections 4.09
and 4.10 hereof, and such Capital Stock specifically provides that the Company
will not repurchase or redeem any such Capital Stock pursuant to such
provisions prior to the Company’s repurchase of Notes required to be
repurchased by the Company under Sections 4.09 and 4.10 hereof.

 

“Reference
Period” means the four fiscal quarters for which financial
information is available immediately preceding the date of a transaction giving
rise to the need to make a financial calculation.

 

“Registered Note” means any Note registered
on the Note Register (as defined in Section 2.05).

 

“Regular Record Date” for the interest
payable on any Interest Payment Date means the fifteenth calendar day preceding
such Interest Payment Date.

 

“Regulation S” means Regulation S under the
Securities Act.

 

16

 

“Regulation S Certificate” means a
certificate substantially in the form of Exhibit D hereto.

 

“Reinvestment Rate” means 1.00% (one
percent) plus the arithmetic mean of the yields under the respective headings
“This Week” and “Last Week” published in the Statistical Release under the
caption “Treasury Constant Maturities” for the applicable maturity (rounded to
the nearest month) corresponding to the date on which the applicable Series of
Notes are first redeemable at par.  If
no maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month.  For the purpose of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.

 

“Responsible Officer” means, when used with
respect to the Trustee, any senior trust officer, any vice president, any trust
officer, any assistant trust officer, or any other officer or assistant officer
of the Trustee customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of his knowledge of and
familiarity with the particular subject.

 

“Restricted Legend” means the legend set
forth in Exhibit B hereto.

 

“Restricted
Payment” means (i) the declaration or payment of any dividend or
other distribution on any shares of the Company’s Capital Stock, (ii) any
payment on account of the purchase, redemption, retirement or acquisition for
value of the Company’s Capital Stock, (iii) any Investment (excluding any
Investment of cash or cash-equivalents or any direct or indirect advance, loan
or other extension of credit to any Person or Guarantee of any obligation of
another Person) by the Company or a Collateral Subsidiary in any Subsidiary of
the Company that is not a Collateral Subsidiary unless such Subsidiary becomes
a Collateral Subsidiary or the assets invested are pledged as Collateral under
the Second-Priority Security Documents, in each case, substantially
concurrently with the making of such Investment and (iv) any dividend or other
distribution (excluding any dividend or other distribution of cash or
cash-equivalents) on any shares of Capital Stock of a Collateral Subsidiary
payable to the Company or a Subsidiary of the Company that is not a Collateral
Subsidiary unless such Subsidiary becomes a Collateral Subsidiary or the assets
subject to such dividend or other distribution are pledged as Collateral under
the Second-Priority Security Documents, in each case, substantially
concurrently with the payment of such dividend or other distribution.
Notwithstanding the foregoing, “Restricted Payment” shall not include any
Permitted Payment.

 

17

 

“Restricted Period” means the relevant 40
day distribution compliance period as defined in Regulation S.

 

“Rule 144A” means Rule 144A under the
Securities Act.

 

“Rule 144A Certificate” means a written
certification addressed to the Company and the Trustee to the effect that the
Person making such certification (i) is acquiring such Note (or beneficial
interest) for its own account or one or more accounts with respect to which it
exercises sole investment discretion and that it and each such account is a
qualified institutional buyer within the meaning of Rule 144A, (ii) is aware
that the transfer to it or exchange, as applicable, is being made in reliance
upon the exemption from the provisions of Section 5 of the Securities Act
provided by Rule 144A and (iii) acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A(d)(4) or has determined not to request such information.

 

“Second Priority Collateral Documents” means
(i) the Security Agreement, the Collateral Trust Agreement, the BVI Cayman
Pledge Agreement and any other agreement that creates or purports to create a
Lien in favor of the Collateral Trustees (as defined in the Collateral Trust
Agreement) for the benefit of the Secured Holders (including the Holders of the
Notes), each as amended from time to time and (ii) any other agreement that
creates a second-priority Lien on the Collateral securing Debt of the Company
that is permitted to be secured by a second-priority Lien on the Collateral
pursuant to Section 4.07 and Section 4.06 hereof.

 

“Second-Priority
Secured Debt” means Debt of the Company that is secured by a Lien on
the Collateral that is pari passu with the Lien securing the
Notes.

 

“Secured
Holders” has the meaning set forth in the Collateral Trust
Agreement.

 

“Secured
Leverage Ratio” means, on any date, the ratio of

 

(x)                                   the sum of the First-Priority Secured Debt
and the Second-Priority Secured Debt outstanding on such date to

 

(y)                                 the aggregate amount of Parent Operating Cash Flow
for the Reference Period.

 

In making the
foregoing calculation, pro forma effect will be given to the acquisition or
disposition of companies, divisions or lines of business by the Company and its
Subsidiaries, including any acquisition or disposition of a company, division
or line of business since the beginning of the Reference Period

 

18

 

by a Person that became a
Subsidiary after the beginning of the Reference Period, as if such events had
occurred, and, in the case of any disposition, the proceeds thereof applied, on
the first day of the Reference Period. To the extent that pro forma effect is
to be given to an acquisition or disposition of a company, division or line of
business, the pro forma calculation will be based upon the most recent four
full fiscal quarters for which the relevant financial information is available.

 

“Securities Act” means the Securities Act of
1933, as amended.

 

“Security Agreement” means the security
agreement dated May 8, 2003 by the Company, the other Persons listed on the
signature page thereof and the Additional Grantors (as defined therein), as
Grantors, to Wells Fargo Bank Minnesota, National Association, as Corporate
Trustee and Jeffery T. Rose, as Individual Trustee, under the Collateral Trust
Agreement, as amended from time to time.

 

“Security
Agreement Collateral” means the “Collateral” referred to in the
Security Agreement.

 

“Senior Secured Credit Facilities” means the
Amended and Restated Credit and Reimbursement Agreement dated as of December
12, 2002, as further amended between the Company, as Borrower, the Subsidiary
Guarantors (as defined therein), as Subsidiary Guarantors, Citicorp USA, Inc.,
as Administrative Agent and Collateral Agent, Salomon Smith Barney, Inc., as
Lead Arranger and Book Runner, Bank of America, N.A., as Lead Arranger and Book
Runner and as Syndication Agent, Union Bank of California, N.A., as Lead
Arranger and Book Runner and as Syndication Agent, the Banks listed therein,
the Revolving Banks (as defined therein) and the Drax LOC Fronting Banks (as
defined therein) listed therein and any related notes, guarantees, letters of
credit, collateral documents, rate protection or hedging arrangements,
instruments and agreements executed in connection therewith, and in each case,
as amended, modified, renewed, refunded, replaced or refinanced from time to
time, including any agreement (i) extending or shortening the maturity of any
indebtedness incurred thereunder or contemplated thereby; (ii) adding or
deleting borrowers or guarantors thereunder; or (iii) otherwise altering the
terms and conditions thereof.

 

“Senior Secured Credit Facility Obligations”
means all Obligations of the Company and its Subsidiaries outstanding under the
Senior Secured Credit Facilities, including, without limitation, interest
accruing subsequent to the filing of, or which would have accrued but for the
filing of, a petition for bankruptcy, whether or not such interest is an
allowable claim in such bankruptcy proceeding.

 

“Series” means either the Notes due 2013 or
the Notes due 2015, but not both, as the context requires.

 

19

 

“Stated Maturity” means , with respect to any debt security or any
installment of interest thereon, the date specified in such debt security as
the fixed date on which any principal of such debt security or any such
installment of interest is due and payable.

 

“Statistical Release” means the statistical
release designated “H.15(519)” or any successor publication
which is published weekly by the Federal Reserve System and which establishes
yields on actively traded U.S. government securities adjusted to constant
maturities or, if such statistical release is not published at the time of any
determination under the Indenture, then such other reasonably comparable index
which shall be designated by the Company.

 

“Subsidiary” means, with respect to any
Person, any corporation, association or other business entity of which a
majority of the Voting Stock is at the time directly or indirectly owned by
such Person.

 

“Trade
Payables” means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Restricted Subsidiaries
arising in the ordinary course of business in connection with the acquisition
of goods or services.

 

“Trustee” means the party named as such in
the first paragraph of this Indenture until a successor replaces it in
accordance with the provisions of Article 7 and thereafter means such
successor.

 

“Unrelated
Business” means any business not of the same general type now
conducted by the Company and its Subsidiaries.

 

“U.S. Global Note” means a Global Note that
bears the Restricted Legend representing Notes issued and sold pursuant to Rule
144A.

 

“U.S. Government Obligations” means securities
that are (i) direct obligations of the United States of America for the payment
of which its full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the payment of which is unconditionally guaranteed as
a full faith and credit obligation by the United States of America, which, in
either case, are not collectible or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the

 

20

 

custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.

 

“Voting Stock”
means, with respect to any Person, Capital Stock of any class or kind
ordinarily having the power to vote for the election of directors of such
Person or other Persons performing similar functions.

 

“Wholly-Owned
Consolidated Subsidiary” means any Subsidiary all of the shares
of Capital Stock or other ownership interests of which (except directors’
qualifying shares) are at the time directly or indirectly owned by the Company.

 

“Wholly-Owned
Subsidiary” means, with respect to any Person, any Subsidiary of
such Person if all the Voting Stock in such Subsidiary (other than any
director’s qualifying shares or Investments by foreign nationals mandated by
applicable law) is owned directly or indirectly by such Person.

 

Section 1.02. 
Other Definitions.  Each
of the following terms is defined in the section set forth opposite such term:

 

	
  Term

  	
   

  	
  Section

  	
   

  
	
  Authenticating Agent

  	
   

  	
  2.02

  	
   

  
	
  Change of Control Offer

  	
   

  	
  4.10

  	
   

  
	
  Event of Default

  	
   

  	
  6.01

  	
   

  
	
  Extinguished Covenants

  	
   

  	
  4.16

  	
   

  
	
  Judgment Currency

  	
   

  	
  10.14

  	
   

  
	
  Note Register

  	
   

  	
  2.05

  	
   

  
	
  Paying Agent

  	
   

  	
  2.05

  	
   

  
	
  Purchase Date

  	
   

  	
  4.09

  	
   

  
	
  Registrar

  	
   

  	
  2.05

  	
   

  
	
  Repurchase Date

  	
   

  	
  4.10

  	
   

  
	
  Required Currency

  	
   

  	
  10.14

  	
   

  
	
  special record date

  	
   

  	
  2.14

  	
   

  
	
  Tender Offer

  	
   

  	
  4.15

  	
   

  

 

Section 1.03. 
Rules of Construction.  Unless
the context otherwise requires:

 

(i)         an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

 

(ii)        words
in the singular include the plural, and words in the plural include the
singular;

 

21

 

(iii)       “herein,”
“hereof” and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision;

 

(iv)       all
references to Sections or Articles refer to Sections or Articles of this
Indenture unless otherwise indicated; and

 

(v)        use
of masculine, feminine or neuter pronouns should not be deemed a limitation,
and the use of any such pronouns should be construed to include, where
appropriate, the other pronouns.

 

ARTICLE
2

THE NOTES

 

Section 2.01. 
Forms Generally, Certain Issues Regarding Preconditions for Transfer and
Payment.  (a)  Each Note due 2013 and the related Trustee’s certificate of
authentication will be substantially in the form attached hereto as
Exhibit A-1 and each Note due 2015 and the related Trustee’s certificate of
authentication will be substantially in the form attached as Exhibit A-2.  The terms and provisions contained in the
form of the Notes annexed as Exhibits A-1 and A-2 constitute, and are hereby
expressly made, a part of the Indenture. 
The Notes may have notations, legends or endorsements required by law,
rules of or agreements with national securities exchanges to which the Company
is subject, or usage.

 

(b)        Except as otherwise provided in
paragraph (c), each Note will bear the Restricted Legend.

 

(c)        If the Company determines (upon the
advice of counsel and such other certifications and evidence as the Company may
reasonably require) that any Note is eligible for resale pursuant to Rule
144(k) under the Securities Act (or a successor provision) and that the
Restricted Legend is no longer necessary or appropriate in order to ensure that
subsequent transfers of the Note (or a beneficial interest therein) are
effected in compliance with the Securities Act, the Company may instruct the
Trustee to cancel the Note and issue to the Holder thereof (or to its
transferee) a new Note of like tenor and amount, registered in the name of the
Holder thereof (or its transferee), that does not bear the Restricted Legend,
and the Trustee will comply with such instruction.

 

(d)        By its acceptance of any Note bearing
the Restricted Legend (or any beneficial interest in such a Note), each Holder
thereof and each owner of a beneficial interest therein acknowledges the
restrictions on transfer of such Note (and any such beneficial interest) set forth
in the Indenture and in the Restricted

 

22

 

Legend and agrees that it will
transfer such Note (and any such beneficial interest) only in accordance with
the Indenture and such legend.

 

Section 2.02. 
Execution and Authentication.  Two
Officers shall execute the Notes for the Company by facsimile or manual
signature in the name and on behalf of the Company.  If an Officer whose signature is on a Note no longer holds that
office at the time the Note is authenticated, the Note shall nevertheless be
valid.

 

The Trustee, at the expense of the Company,
may appoint an authenticating agent (the “Authenticating Agent”) to authenticate
Notes.  The Authenticating Agent may
authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee
includes authentication by such Authenticating Agent.

 

A Note shall not be valid until the Trustee
or Authenticating Agent manually signs the certificate of authentication on the
Note.  The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.  In authenticating the Notes, the Trustee
shall be entitled to receive prior to the first authentication of any Notes and
(subject to Article 7) shall be fully protected in relying upon, unless and
until such documents have been superseded or revoked:

 

(a)        any Board Resolution by or pursuant to
which the form and terms of the Notes were established;

 

(b)        an Officers’ Certificate setting forth
the form and terms of the Notes, stating that the form and terms of the Notes
have been, or will be when established in accordance with such procedures as
shall be referred to therein, established in compliance with this Indenture;
and

 

(c)        an Opinion of Counsel in form and
substance reasonably satisfactory to the Trustee.

 

Section 2.03. 
Amount Unlimited.  The
aggregate principal amount of Notes which may be authenticated and delivered
under this Indenture is unlimited.  The
Company may issue Additional Notes under the Indenture from time to time.

 

Section 2.04. 
Denomination and Date of Securities; Payment of Interest.  The Notes shall be issuable in
denominations of $1,000 and any integral multiple thereof.  If as a result of the exchange or redemption
in part of any Notes issued hereunder any Holder is entitled to receive Notes
in an aggregate principal amount that is not an integral multiple of $1,000,
the principal amount of such Holder’s notes shall be reduced to the nearest
$1,000 and such Holder shall receive a substitute cash payment equal to the
principal amount by which that

 

23

 

Holder’s Notes are
reduced.  The Notes shall be numbered,
lettered or otherwise distinguished in such manner or in accordance with such
plan as the Officers of the Company executing the same may determine, as
evidenced by their execution thereof.

 

Each Note shall be dated the date of its
authentication.  The Notes of each
Series shall bear interest from the most recent date to which interest has been
paid on the Notes of such Series or, if no interest has been paid, from the
Original Issue Date.  Interest on the
Notes shall be payable on each Interest Payment Date.

 

The person in whose name any Note is
registered at the close of business on any Regular Record Date with respect to
any Interest Payment Date shall be entitled to receive the interest, if any,
payable on such Interest Payment Date notwithstanding any transfer or exchange
of such Note subsequent to the Regular Record Date and prior to such Interest
Payment Date, except if and to the extent the Company shall default in the
payment of the interest due on such Interest Payment Date for such Series, in
which case the provisions of Section 2.14 shall apply.

 

Section 2.05. Registrar and Paying Agent; Agents
Generally.  The Company shall
maintain an office or agency where Notes may be presented for registration,
registration of transfer or for exchange (the “Registrar”) and an office or
agency where Notes may be presented for payment (the “Paying Agent”), which shall
be in the Borough of Manhattan, The City of New York. The Company shall cause
the Registrar to keep a register of the Notes due 2013 and the Notes due 2015
and of their registration, transfer and exchange (each a “Note Register”).  The Company may have one or more additional
Paying Agents or transfer agents with respect to the Notes.

 

The Company shall enter into an appropriate
agency agreement with any Agent not a party to this Indenture.  The agreement shall implement the provisions
of this Indenture that relate to such Agent. The Company shall give prompt
written notice to the Trustee of the name and address of any Agent and any
change in the name or address of an Agent. 
If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.  The Company
may remove any Agent upon written notice to such Agent and the Trustee; provided
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Company and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. 
The Company or any Affiliate of the Company may act as Paying Agent or
Registrar; provided
that neither the Company nor an Affiliate of the Company shall act as Paying
Agent in connection with the defeasance of the Notes or the discharge of this
Indenture under Article 8.

 

24

 

The Company initially appoints the Trustee as
Registrar, Paying Agent and Authenticating Agent.  If, at any time, the Trustee is not the Registrar, the Registrar
shall make available to the Trustee ten days prior to each Interest Payment
Date and at such other times as the Trustee may reasonably request the names
and addresses of the Holders as they appear in the Note Register.

 

Section 2.06. 
Paying Agent to Hold Money in Trust. 
Not later than 10:00 a.m. New York City time on each due
date of any Principal or interest on any Notes, the Company shall deposit with
the Paying Agent money in immediately available funds sufficient to pay such Principal
or interest.  The Company shall require
each Paying Agent other than the Trustee to agree in writing that such Paying
Agent shall hold in trust for the benefit of the Holders of such Notes or the
Trustee all money held by the Paying Agent for the payment of Principal of and
interest on such Notes and shall promptly notify the Trustee of any default by
the Company in making any such payment. 
The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and account for any funds disbursed, and the Trustee may
at any time during the continuance of any payment default, upon written request
to a Paying Agent, require such Paying Agent to pay all money held by it to the
Trustee and to account for any funds disbursed.  Upon doing so, the Paying Agent shall have no further liability
for the money so paid over to the Trustee. 
If the Company or any Affiliate of the Company acts as Paying Agent, it
will, on or before each due date of any Principal of or interest on the Notes,
segregate and hold in a separate trust fund for the benefit of the Holders
thereof a sum of money sufficient to pay such Principal or interest so becoming
due until such sum of money shall be paid to such Holders or otherwise disposed
of as provided in this Indenture, and will promptly notify the Trustee in
writing of its action or failure to act as required by this Section.

 

Section 2.07. 
Restrictions on Transfer and Exchange. 
(a) The transfer or exchange of any Note (or a beneficial
interest therein) may only be made in accordance with this Section, Section
2.08 and in the case of a Global Note (or a beneficial interest therein), the
applicable rules and procedures of the Depositary. The Trustee shall refuse to
register any requested transfer or exchange that does not comply with the
preceding sentence.

 

(b)        The transfer or exchange of any Note (or
a beneficial interest therein) that bears the Restricted Legend may only be
made in compliance with the provisions of the Restricted Legend.

 

(c)        The transfer or exchange of a beneficial
interest in an Offshore Global Note for a beneficial interest in a U.S. Global
Note may only be made upon receipt by the Trustee of a duly completed Rule 144A
Certificate.

 

25

 

(d)        The transfer or exchange of a beneficial
interest in a U.S. Global Note for a beneficial interest in an Offshore Global
Note may only be made upon receipt by the Trustee of a duly completed
Regulation S Certificate.

 

(e)        During the Restricted Period, beneficial
interests in an Offshore Global Note may be held through the Depositary only
through Euroclear and Clearstream, and their respective direct and indirect
participants.

 

(f)         The Trustee will retain copies of all
certificates, opinions and other documents received in connection with the
transfer or exchange of a Note (or a beneficial interest therein), and the
Company will have the right to inspect and make copies thereof at any
reasonable time upon written notice to the Trustee.

 

Section 2.08. 
Registration, Transfer and Exchange. 
(a) Registered Global Form Only. The Notes
will be issued in registered form only, without coupons.  The Notes will be issued in global form only
except for Notes to be issued under the circumstances described in clause
(b)(iv) of this Section which shall be issued as certificated notes.

 

(b)           Global Notes. (i)  Each Global Note will be registered in the
name of the Depositary or its nominee and, so long as DTC is serving as the
Depositary thereof, will bear the DTC Legend.

 

(ii)           Each Global Note will be delivered to the Trustee as
custodian for the Depositary. Transfers of a Global Note (but not a beneficial
interest therein) will be limited to transfers thereof in whole, but not in
part, to the Depositary, its successors or their respective nominees, except as
set forth in paragraph (b)(iv) of this Section.

 

(iii)          Agent Members will have no rights under the Indenture with
respect to any Global Note held on their behalf by the Depositary, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner and Holder of such Global Note for
all purposes whatsoever. Notwithstanding the foregoing, the Depositary or its
nominee may grant proxies and otherwise authorize any person (including any
Agent Member and any Person that holds a beneficial interest in a Global Note
through an Agent Member) to take any action which a Holder is entitled to take
under the Indenture or the Notes, and nothing herein will impair, as between the
Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a holder of any security.

 

(iv)          If (x) the Depositary (1) notifies the Company that it is
unwilling or unable to continue as Depositary for a Global Note and a successor
depositary is not appointed by the Company within 90 days of

 

26

 

the notice or (2) has ceased to be a clearing
agency registered under the Exchange Act, (y) an Event of Default has occurred
and is continuing and the Trustee has received a request from the Depositary,
or (z) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of certificated notes, the Trustee will promptly
exchange each beneficial interest in a Global Note for one or more certificated
notes of the applicable Series in authorized denominations having an equal
aggregate principal amount registered in the name of the owner of such
beneficial interest, as identified to the Trustee by the Depositary, and
thereupon the Global Note will be deemed canceled.  Each certificated note issued in exchange therefor will bear the
Restricted Legend.

 

(c)        Transfers and Exchanges Generally. A
Holder may transfer a Note (or a beneficial interest therein) to another Person
or exchange a Note (or a beneficial interest therein) for another Note or Notes
of the same Series of any authorized denomination by presenting to the Trustee
a written request therefor stating the name of the proposed transferee or
requesting such an exchange, accompanied by any certification, opinion or other
document required by Section 2.07. The Trustee will promptly register any such
transfer or exchange that meets the requirements of this Section by noting the
same in the register maintained by the Trustee for the purpose; provided that
(x) no transfer or exchange will be effective until the transfer or exchange is
registered in such register and (y) the Trustee will not be required (i) to
issue, register the transfer of or exchange any Note for a period of 15 days
before a selection of Notes to be redeemed, (ii) to register the transfer of or
exchange any Note so selected for redemption in whole or in part, except, in
the case of a partial redemption, that portion of any such Note not being
redeemed, or (iii) if a redemption is to occur after a Regular Record Date but
on or before the corresponding Interest Payment Date, to register the transfer
of or exchange any Note on or after such Regular Record Date and before the date
of redemption. Prior to the registration of any transfer, the Company, the
Trustee and their agents will treat the person in whose name a Note is
registered as the owner and Holder thereof for all purposes (whether or not any
Note is overdue), and will not be affected by notice to the contrary.

 

From time to time the Company will execute
and the Trustee will authenticate replacement or substitute Notes of the
applicable Series as necessary in order to permit the registration of a
transfer or exchange in accordance with this Section.

 

No service charge will be imposed in
connection with any transfer or exchange of any Note, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer tax or other similar governmental charge payable upon exchange
pursuant to paragraph (b)(iv) of this Section).

 

27

 

(d)        Procedures to Be Followed by the Trustee.  Global Note to Global Note.  A beneficial interest in a Global Note may
only be transferred or exchanged for a beneficial interest in another Global
Note of the same Series.  If a
beneficial interest in a Global Note is transferred or exchanged for a beneficial
interest in another Global Note of the same Series, the Trustee will (x) record
a decrease in the principal amount of the Global Note of the same Series being
transferred or exchanged equal to the principal amount of such transfer or
exchange and (y) record a like increase in the principal amount of the other
Global Note of the same Series. Any beneficial interest in one Global Note that
is transferred to a Person who takes delivery in the form of an interest in
another Global Note of the same Series, or exchanged for an interest in another
Global Note of the same Series, will, upon transfer or exchange, cease to be an
interest in such Global Note and become an interest in the other Global Note of
the same Series and, accordingly, will thereafter be subject to all transfer
and exchange restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Note of the same Series for as long
as it remains such an interest.

 

Section 2.09. 
Replacement Notes.  If
a defaced or mutilated Note is surrendered to the Trustee or if a Holder claims
that its Note has been lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement Note of the same Series
and of such tenor and principal amount bearing a number not contemporaneously
outstanding.  If required by the Trustee
or the Company, an indemnity bond must be furnished that is sufficient in the
judgment of both the Trustee and the Company to protect the Company, the
Trustee and any Agent from any loss that any of them may suffer if a Note is
replaced.  The Company may charge such
Holder for its expenses and the expenses of the Trustee (including without
limitation attorneys’  fees and
expenses) in replacing a Note.  In case
any such mutilated, defaced, lost, destroyed or wrongfully taken Note has
become or is about to become due and payable, the Company in its discretion may
pay such Note of the same Series instead of issuing a new Note in replacement
thereof.

 

Every replacement Note is an additional
obligation of the Company and shall be entitled to the benefits of this
Indenture.

 

To the extent permitted by law, the foregoing
provisions of this Section are exclusive with respect to the replacement or
payment of mutilated, destroyed, lost or wrongfully taken Notes.

 

Section 2.10. 
Outstanding Notes.  Notes
outstanding at any time are all Notes that have been authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section as not outstanding.

 

28

 

If a Note is replaced pursuant to Section
2.09, it ceases to be outstanding unless and until the Trustee and the Company
receive proof satisfactory to them that the replaced Note is held by a holder
in due course.

 

If the Paying Agent (other than the Company
or an Affiliate of the Company) holds on the maturity date or any redemption
date or date for repurchase of Notes of either or both Series money sufficient
to pay Notes of such Series payable or to be redeemed or repurchased on that
date, then on and after that date such Notes cease to be outstanding and
interest on them shall cease to accrue.

 

A Note does not cease to be outstanding
because the Company or one of its Affiliates holds such Note, provided,
however, that, in determining whether the Holders of the requisite principal
amount of the outstanding Notes of such Series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any Affiliate of the Company shall be disregarded and deemed not
to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes as to which a Responsible Officer of the
Trustee has received written notice to be so owned shall be so
disregarded.  Any Notes so owned which
are pledged by the Company, or by any Affiliate of the Company, as security for
loans or other obligations, otherwise than to another such Affiliate of the
Company, shall be deemed to be outstanding, if the pledgee is entitled pursuant
to the terms of its pledge agreement and is free to exercise in its or his
discretion the right to vote such Notes, uncontrolled by the Company or by any
such Affiliate.

 

Section 2.11. 
Temporary Notes.  Until
definitive Notes of the respective Series are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Notes of such
Series.  Temporary Notes of the
respective Series shall be substantially in the form of definitive Notes of
such Series but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the Officers executing the temporary
Notes, as evidenced by their execution of such temporary Notes.  If temporary Notes are issued, the Company
will cause definitive Notes of such Series to be prepared without unreasonable
delay.  After the preparation of
definitive Notes, the temporary Notes of such Series shall be exchangeable for
definitive Notes of such Series of such tenor upon surrender of such temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder.  Upon surrender for cancellation of any one
or more temporary Notes the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Notes of such Series and of such tenor and authorized denominations.  Until so exchanged, any temporary Notes
shall be entitled to the same benefits under this Indenture as definitive
Notes.

 

29

 

Section 2.12. 
Cancellation.  The
Company at any time may deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee for
cancellation any Notes previously authenticated hereunder which the Company has
not issued and sold.  The Registrar, any
transfer agent and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for transfer, exchange or payment.  The Trustee shall retain, cancel and destroy
all Notes surrendered for transfer, exchange, payment or cancellation and shall
deliver a certificate of destruction, or copies of the cancelled Notes to the
Company.  The Company may not issue new
Notes of any Series to replace Notes of such Series it has paid in full or
delivered to the Trustee for cancellation.

 

Section 2.13. 
CUSIP Numbers.  The
Company in issuing the Notes may use “CUSIP” and “CINS” numbers for each
Series, and the Trustee shall use CUSIP numbers or CINS numbers, as the case
may be, in notices of redemption or exchange as a convenience to Holders and no
representation shall be made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of redemption or exchange.

 

Section 2.14. 
Defaulted Interest.  If
the Company defaults in a payment of interest on the Notes of either or both
Series, it shall pay, or shall deposit with the Paying Agent money in
immediately available funds sufficient to pay, the defaulted interest plus (to
the extent lawful) any interest payable on the defaulted interest to the
Persons who are Holders on a subsequent special record date, which shall mean
the 15th day next preceding the date fixed by the Company for the payment of
defaulted interest, whether or not such day is a Business Day.  At least 15 days before such special record
date, the Company shall mail to each Holder of such Series of Notes and to the
Trustee a notice that states the special record date, the payment date and the
amount of defaulted interest to be paid on such Notes.

 

ARTICLE
3

REDEMPTION

 

Section 3.01. 
Optional
Redemption.  With respect to
each Series of Notes, at any time and from time to time, the Company may redeem
the Notes of either or both Series in whole or in part at a redemption price
equal to (a) the sum of (i) 100% of the Principal amount thereof plus accrued
and unpaid interest to the redemption date plus (ii) a Make-Whole Amount, if
any, if redeemed prior to May 15, 2008; or (b) if redeemed on or after May 15,
2008, at a redemption price equal to the percentage of Principal amount set
forth below for the applicable Series, plus accrued and unpaid interest to the
redemption date if redeemed during the 12 month period commencing on May 15, of
the years set forth below ; provided that if the date fixed for
redemption is May 15 or November 15, then the interest

 

30

 

payable on such date shall be
paid to the holder of record on the immediately preceding Regular Record Date.

 

8 3/4% Second Priority Senior Secured Notes due 2013

 

	
  12-month
  period

  commencing May 15 in

  Year

  	
   

  	
  Percentage

  	
   

  
	
  2008

  	
   

  	
  104.375

  	
  %

  
	
  2009

  	
   

  	
  102.917

  	
  %

  
	
  2010

  	
   

  	
  101.458

  	
  %

  
	
  2011 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

9% Second Priority Senior Secured Notes due 2015

 

	
  12-month
  period

  commencing May 15 in

  Year

  	
   

  	
  Percentage

  	
   

  
	
  2008

  	
   

  	
  104.500

  	
  %

  
	
  2009

  	
   

  	
  103.000

  	
  %

  
	
  2010

  	
   

  	
  101.500

  	
  %

  
	
  2011 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Section 3.02. 
Notice of Redemption; Partial Redemptions.  Notice of redemption to the Holders of the Notes to be
redeemed as a whole or in part shall be given by mailing notice of such redemption
by first class mail, postage prepaid, at least 30 days and not more than 60
days prior to the date fixed for redemption to the Holders of such Notes at
their last addresses as they shall appear upon the Note Register.  Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Note designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note.

 

The notice of redemption to each such Holder
shall specify the principal amount of each Note held by such Holder to be
redeemed, the CUSIP numbers of the Notes to be redeemed, the date fixed for
redemption, the redemption price, the place or places of payment, that payment
will be made upon presentation and surrender of such Notes, that interest
accrued to the date fixed for redemption will be paid as specified in such
notice and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. 
In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes of such

 

31

 

Series and in such tenor and in
principal amount equal to the unredeemed portion thereof will be issued.

 

The notice of redemption of Notes to be
redeemed at the option of the Company shall be given by the Company or, at the
Company’s request, by the Trustee in the name and at the expense of the
Company.

 

On or before 10:00 a.m. New York City time on
the redemption date specified in the notice of redemption given as provided in
this Section, the Company will deposit with the Trustee or with one or more
Paying Agents (or, if the Company is acting as its own Paying Agent, set aside,
segregate and hold in trust as provided in Section 2.06) an amount of money
sufficient to redeem on the redemption date all the Notes so called for
redemption at the appropriate redemption price, together with accrued interest
to the date fixed for redemption.  If
all of the outstanding Notes of either or both Series are to be redeemed, the
Company will deliver to the Trustee at least 10 days prior to the last date on
which notice of redemption may be given to Holders pursuant to the first paragraph
of this Section 3.02 (or such shorter period as shall be acceptable to the
Trustee) an Officers’ Certificate stating that all such Notes are to be
redeemed.  If less than all the
outstanding Notes of either or both Series are to be redeemed, the Company will
deliver to the Trustee at least 15 days prior to the last date on which notice
of redemption may be given to Holders pursuant to the first paragraph of this
Section 3.02 (or such shorter period as shall be acceptable to the Trustee) an
Officers’ Certificate stating the aggregate principal amount of such Notes to
be redeemed.  In case of a redemption at
the election of the Company prior to the expiration of any restriction on such
redemption, the Company shall deliver to the Trustee, prior to the giving of
any notice of redemption to Holders pursuant to this Section, an Officers’
Certificate stating that such redemption is not prohibited by such restriction.

 

If less than all the Notes of either or both
Series are to be redeemed, the Trustee shall select, pro rata, by lot or in
such manner as it shall deem appropriate and fair, Notes of the applicable
Series to be redeemed in whole or in part. 
Notes may be redeemed in part in multiples equal to the minimum authorized
denomination for Notes or any multiple thereof.  The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed.  For all purposes of this Indenture, unless
the context otherwise requires, all provisions relating to the redemption of
Notes shall relate, in the case of any Note redeemed or to be redeemed only in
part, to the portion of the principal amount of such Note which has been or is
to be redeemed.

 

Section 3.03. 
Payment of Notes Called for Redemption. 
If notice of redemption has been given as above provided, the
Notes or portions of Notes specified in such notice shall become due and
payable on the date and at the place

 

32

 

stated in such notice at the
applicable redemption price, together with interest accrued to the date fixed
for redemption, and on and after such date (unless the Company shall default in
the payment of such Notes at the redemption price, together with interest
accrued to such date) interest on the Notes or portions of Notes so called for
redemption shall cease to accrue, and, except as provided in Section 7.09 and
Section 8.02, such Notes shall cease from and after the date fixed for
redemption to be entitled to any benefit under this Indenture, and the Holders
thereof shall have no right in respect of such Notes except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption.  On presentation and
surrender of such Notes at a place of payment specified in said notice, said
Notes or the specified portions thereof shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that payment of interest becoming
due on or prior to the date fixed for redemption, shall be payable to the
Holders of such Notes registered as such on the relevant record date subject to
the terms and provisions of Section 2.01 and Section 2.14 hereof.

 

If any Note called for redemption shall not
be so paid upon surrender thereof for redemption, the Principal shall, until
paid or duly provided for, bear interest from the date fixed for redemption at
the rate of interest borne by such Note.

 

Upon presentation of any Note redeemed in
part only, the Company shall execute and the Trustee shall authenticate and
deliver to or on the order of the Holder thereof, at the expense of the
Company, a new Note or Notes of such Series and of such tenor, of authorized
denominations, in principal amount equal to the unredeemed portion of the Note
so presented.

 

Section 3.04. 
Exclusion of Certain Notes from Eligibility for Selection for
Redemption.  Notes shall be
excluded from eligibility for selection for redemption if they are identified
by registration and certificate number in a written statement signed by an
authorized officer of the Company and delivered to the Trustee at least 40 days
prior to the last date on which notice of redemption may be given as being
owned of record and beneficially by, and not pledged or hypothecated by, either
(a) the Company or (b) an entity specifically identified in such written
statement as directly or indirectly controlling or controlled by or under direct
or indirect common control with the Company.

 

ARTICLE
4

COVENANTS

 

Section 4.01. 
Payment of Notes.  The
Company shall pay the Principal of and interest on the Notes on the dates and
in the manner provided in the Notes and this Indenture.  The interest on the Notes shall be payable
only to the Holders

 

33

 

thereof and at the option of
the Company may be paid by mailing checks for such interest payable to or upon
the written order of such Holders at their last addresses as they appear on the
Note Register of the Company.

 

Notwithstanding any provisions of this
Indenture and the Notes to the contrary, if the Company and a Holder of any
Note so agree, payments of interest on, and any portion of the Principal of,
such Holder’s Note (other than interest payable at maturity or on any
redemption or repayment date or the final payment of Principal on such Note)
shall be made by the Paying Agent, upon receipt from the Company of immediately
available funds by 11:00 A.M., New York City time (or such other time as may be
agreed to between the Company and the Paying Agent), directly to the Holder of
such Note (by Federal funds wire transfer or otherwise) if the Holder has
delivered written instructions to the Trustee 15 days prior to such payment
date requesting that such payment will be so made and designating the bank
account to which such payments shall be so made and in the case of payments of
Principal, surrenders the same to the Trustee in exchange for a Note or Notes
aggregating the same principal amount as the unredeemed principal amount of the
Notes surrendered.  The Trustee shall be
entitled to rely on the last instruction delivered by the Holder pursuant to
this Section 4.01 unless a new instruction is delivered 15 days prior to a
payment date.  The Company will
indemnify and hold each of the Trustee and any Paying Agent harmless against
any loss, liability or expense (including attorneys’ fees) resulting from any
act or omission to act on the part of the Company or any such Holder in
connection with any such agreement or from making any payment in accordance
with any such agreement.

 

The Company shall pay interest on overdue
Principal, and interest on overdue installments of interest, to the extent
lawful, at the rate per annum specified in the Notes.

 

Section 4.02. 
Maintenance of Office or Agency. 
The Company will maintain in the Borough of Manhattan, The
City of New York, an office or agency where Notes may be surrendered for
registration of transfer or exchange or for presentation for payment and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served. The Company hereby initially designates Wells Fargo
Corporate Trust, c/o The Depository Trust Company, the corporate trust office
of the Trustee’s Agent, located at 55 Water Street, 1st Floor, TADS Department,
New York, NY 10041, in the Borough of Manhattan, The City of New York, as such
office or agency of the Company.  The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency.  If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 10.01.

 

34

 

The Company may also from time to time
designate one or more other offices or agencies where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York
for such purposes.  The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

 

Section 4.03. 
Noteholders’ Lists.  Unless
the Trustee is acting as registrar for the Notes, the Company will furnish or
cause to be furnished to the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the holders of the Notes (a)
semi-annually not more than 15 days after each Regular Record Date, as
hereinabove specified, as of such record date and (b) at such other times as
the Trustee may request in writing, within thirty days after receipt by the
Company of any such request as of a date not more than 15 days prior to the
time such information is furnished.

 

Section 4.04. 
Certificate to Trustee.  The
Company will furnish to the Trustee annually, on or before a date not more than
four months after the end of its fiscal year (which, on the date hereof, is a
calendar year), a brief certificate (which need not contain the statements
required by Section 10.03) from its principal executive, financial or
accounting officers to his or her knowledge of the compliance of the Company
with all conditions and covenants under this Indenture (such compliance to be
determined without regard to any period of grace or requirement of notice
provided under this Indenture).

 

Section 4.05. 
Reports by the Company.  The
Company covenants to file with the Trustee, within 15 days after the Company
has filed the same with the Commission, copies of the annual reports and of the
information, documents, and other reports which the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act.

 

Section 4.06. 
Limitation on Liens.  (a)
If the Company shall incur, issue, assume or Guarantee any indebtedness for
borrowed money represented by notes, bonds, debentures or other similar
evidences of indebtedness, secured by a mortgage, pledge or other Lien on any
Principal Property or any Capital Stock or indebtedness held directly by the
Company of any Subsidiary of the Company, the Company shall secure the Notes
equally and ratably with (or prior to) such indebtedness, so long as such
indebtedness shall be so secured, unless after giving effect thereto the
aggregate amount of all such indebtedness so secured, together with all
Attributable Debt in respect of sale and leaseback transactions involving Principal
Properties, would not exceed 15% of the Consolidated Net Assets of the
Company.  This restriction will not
apply to, and there shall be excluded in computing secured indebtedness for the
purpose of this restriction, indebtedness

 

35

 

secured by (i) property of any
Subsidiary of the Company, (ii) Liens on property of, or on any shares of stock
or Debt of, any corporation existing at the time such corporation becomes a
Subsidiary of the Company, (iii) Liens in favor of the Company or any
Subsidiary of the Company, (iv) Liens in favor of U.S. or foreign governmental
bodies to secure partial, progress, advance or other payments, (v) Liens on
property, shares of stock or Debt existing at the time of acquisition thereof
(including acquisition through merger or consolidation), purchase money
mortgages and construction cost mortgages existing at or incurred within 180
days of the time of acquisition thereof, (vi) Liens existing on the Original
Issue Date, (vii) Liens under one or more credit facilities for indebtedness in
an aggregate principal amount not to exceed $900 million at any time
outstanding, (viii) Liens incurred in connection with pollution control,
industrial revenue or similar financings, and (ix) any extension, renewal or
replacement of any Debt secured by any Liens referred to in the foregoing
clauses (i) through (viii), inclusive.

 

(b)           Notwithstanding
the foregoing, the Company shall not permit any Lien on any Collateral Assets
to secure Debt of the Company that would violate Section 4.07.

 

Section 4.07. 
Limitation
on the Incurrence of Debt Secured by the Collateral Assets.  (a) The Company shall not incur
any Debt secured by a Lien on Collateral Assets unless the Notes are secured by
at least a second-priority Lien on such Collateral Assets under the
Second Priority Collateral Documents. In addition, the Company shall not incur
any First-Priority Secured Debt or Second-Priority Secured Debt,
if, on the date of incurrence, after giving effect to such incurrence, the
Secured Leverage Ratio would have been greater than 2.75 to 1.0.

 

(b)        Notwithstanding the foregoing, the
Company will be permitted to incur any of the following:

 

(i)            First-Priority Secured Debt and Second-Priority
Secured Debt if, on the date of incurrence, after giving effect to such
incurrence the aggregate principal amount (or accreted value, if applicable) of
First-Priority Secured Debt and Second-Priority Secured Debt
(excluding First-Priority Secured Debt and Second-Priority Secured
Debt described in clauses (ii) through (v) below) does not exceed $3.0 billion
reduced by the aggregate principal amount (or accreted value, if applicable) of
First-Priority Secured Debt and Second-Priority Secured Debt (other
than First-Priority Secured Debt and Second-Priority Secured Debt
described in clauses (ii) through (v) below) repaid, repurchased or otherwise
retired pursuant to Section 4.09; provided that no such reduction will be
required with respect to any repayment, repurchase or other retirement of First-Priority
Secured Debt or Second-Priority Secured Debt out of the Net

 

36

 

Cash Proceeds of any Announced Asset Sale or
with respect to the first $500 million aggregate principal amount (or accreted
value, if applicable) of other First-Priority Secured Debt or Second-Priority
Secured Debt repaid, repurchased or otherwise retired that but for this proviso
would have required a reduction;

 

(ii)           Obligations under interest rate and foreign currency hedging
agreements, and cash management services arrangements;

 

(iii)          Obligations relating to the secured equity linked loans
outstanding on the date hereof issued by AES New York Funding LLC;

 

(iv)          Obligations relating to the Guarantee by the Company of
certain obligations of AES Sul outstanding on the date hereof; and

 

(v)           Obligations the net proceeds of which are used to
refinance any of the obligations listed in the foregoing clauses (ii) through
(iv).

 

(c)        Notwithstanding the foregoing, to the
extent that the Company incurs Debt that is secured by a Lien on any Collateral
Assets that is not First-Priority Secured Debt or Second-Priority
Secured Debt, the security documents or other agreements creating, or related
to, the Lien securing such Debt shall provide that (i) such Lien shall be
subordinate to the Lien securing the Notes, (ii) the holders of such Debt will
not be entitled to any proceeds from any sale or liquidation of any of the
Collateral after the Notes are due and payable until the Notes have been paid
in full, (iii) prior to the time that the Notes have been paid in full and are
no longer outstanding, the Holders of the Notes, or the Trustee on behalf of
the Holders of the Notes, or the lenders under the Senior Secured Credit
Facilities, or the holders of a majority of other First-Priority Secured
Debt, as the case may be, will have the sole ability to control remedies
(including any sale or liquidation after the Notes are due and payable) with
respect to the Collateral and, prior to such time, neither the holders of such
Debt or any of their representatives will have any authority to, or to direct
any collateral agent to, foreclose or otherwise realize upon any of the
Collateral pursuant to any of the security documents and (iv) such junior Liens
shall automatically be released if the second-priority Lien is released
under the Second Priority Collateral Documents or (except with respect to the
proceeds thereof) upon any sale or liquidation in connection with any
foreclosure on the Collateral by or on behalf of the Holders of the Notes.

 

Section 4.08.  Limitations on Restricted Payments.  (a) The Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any Restricted
Payment if, after giving effect to such Restricted Payment:

 

37

 

(i)            an Event of Default or event that, after the giving of
notice or lapse of time or both would become an Event of Default, shall have
occurred and be continuing;

 

(ii)           the Consolidated Fixed Charge Ratio of the Company would
be less than 1.75 to 1.0; or

 

(iii)          the aggregate amount expended by the Company and its
Subsidiaries for all Restricted Payments (the amount of any single or related
series of Restricted Payments so expended or distributed, if in excess of $15
million and other than in cash, to be determined in good faith by the Board of
Directors, as evidenced by a Board resolution) after the date hereof shall
exceed the sum of:

 

(A)             50% of the Net Income of the
Company and its Consolidated Subsidiaries for the period (taken as one
accounting period) beginning on April 1, 2003 and ending on the last day of the
fiscal quarter for which financial information is available immediately prior
to the date of such calculation; provided that if Net Income for such
period is less than zero, then minus 100% of such net loss; plus

 

(B)              the aggregate net proceeds
(including the fair market value of proceeds other than cash, as determined in
good faith by the Board of Directors, as evidenced by a Board resolution if the
fair market value of such non-cash proceeds is in excess of $15 million)
received by the Company from and after the date hereof from the issuance and
sale (other than to a Subsidiary) of its Capital Stock (excluding Redeemable
Stock, but including Capital Stock other than Redeemable Stock issued upon
conversion of, or in exchange for, Redeemable Stock or securities other than
its Capital Stock), and warrants, options and rights to purchase its Capital
Stock (other than Redeemable Stock), but excluding the net proceeds from the
issuance, sale, exchange, conversion or other disposition of its Capital Stock
convertible (unless solely at the option of the Company) into (x) any security
other than its Capital Stock or (y) its Redeemable Stock; less

 

(C)              the aggregate amount expended by
the Company and its Subsidiaries after the date hereof to optionally repay,
repurchase or otherwise retire for value any Debt of the Company other than
First-Priority Secured Debt, Second-Priority Secured Debt or any revolving
credit facility (it being understood that the repurchase of senior and senior
subordinated notes pursuant to the Tender Offer as required by Section 4.15 is
not optional);

 

38

 

provided that the
foregoing clause (iii) shall not prevent the payment of any dividend within 60
days after the date of its declaration if such dividend could have been made on
the date of its declaration without violation of the provisions of this
covenant.

 

(b)        For purposes of clause (a)(iii)(B)
above, the aggregate net proceeds received by the Company (i) from the issuance
of its Capital Stock upon the conversion of, or exchange for, securities
evidencing Debt of the Company, shall be calculated on the assumption that the gross
proceeds from such issuance are equal to the aggregate principal amount (or, if
discount Debt, the accreted principal amount) of the Debt evidenced by such
securities converted or exchanged and (ii) upon the conversion or exchange of
other securities of the Company shall be equal to the aggregate net proceeds of
the original sale of the securities so converted or exchanged if such proceeds
of such original sale were not previously included in any calculation for the
purposes of clause (a)(iii)(B) above plus any additional sums payable to the
Company upon conversion or exchange.

 

Section 4.09. 
Limitations
on Asset Dispositions.  (a)
The Company shall not make, and shall not permit any of its Subsidiaries to
make, any Asset Disposition unless:

 

(i)            the Company (or the Subsidiary, as the case may be)
receives consideration at the time of each such Asset Disposition at least
equal to the fair market value of the shares or assets sold or otherwise
disposed of (such amounts in excess of $50 million determined in good faith by
the Board of Directors, as evidenced by a Board resolution);

 

(ii)           not less than 75% of the consideration received by the
Company (or such Subsidiary, as the case may be) is in the form of cash or
property or assets used or useful in a Power Supply Business or Capital Stock
of a Person primarily engaged in a Power Supply Business, provided that any note or
other obligation received by the Company (or such Subsidiary, as the case may
be) that is converted into cash within 180 days of such Asset Disposition and
any liabilities (as shown on the Company’s or such Subsidiary’s most recent
balance sheet) of the Company or any Subsidiary that are assumed by the
transferee of any such assets shall be deemed to be cash for purposes of this
clause (ii); provided further that any property or assets received from
Asset Dispositions of Collateral Assets shall be either (x) pledged as
Collateral under the Second-Priority Security Documents or (y) received
by a Collateral Subsidiary; and

 

(iii)          (A) first, the Net Cash Proceeds of such Asset Disposition
are applied within 90 days from the later of the date of such Asset

 

39

 

Disposition or the receipt of Net Cash
Proceeds related thereto, to the payment of the principal of, premium and
interest on any First-Priority Secured Debt of the Company (including to
cash collateralize letters of credit) and, in connection with any such payment,
any related loan commitment, standby facility or the like shall be permanently
reduced in an amount equal to the principal amount so repaid; provided
that no such permanent reduction will be required with respect to any such
payment out of the Net Cash Proceeds of any Announced Asset Sale or with
respect to the first $500 million aggregate principal amount (or accreted
value, if applicable) of other repaid Debt that but for this proviso would be
required to be permanently reduced; and second, (B) to the extent such Net Cash
Proceeds are not required by the lenders, or the terms, of the First-Priority
Secured Debt to be applied in accordance with the foregoing or, if after being
so applied there remain Net Cash Proceeds, then at the Company’s election, such
Net Cash Proceeds are either:

 

(x)            invested in the business or
businesses of the Company or any of its Subsidiaries; provided that (1) such
investment is made within 365 days from the later of the date of such Asset
Disposition or the receipt of the Net Cash Proceeds related thereto and (2) the
Net Cash Proceeds from Asset Dispositions of Collateral Assets may only be
invested pursuant to this clause (x) in (I) assets (including Capital Stock)
that are pledged as Collateral under the Second Priority Collateral Documents
substantially concurrently with such acquisition or (II) a business or
businesses owned by a Collateral Subsidiary; or

 

(y)           applied to the
payment, repurchase or other retirement of any First-Priority Secured
Debt of the Company, Second-Priority Secured Debt of the Company
(provided that payment, repurchase or other retirement of any Second-Priority
Secured Debt shall be pro rata with the Notes) or Debt of any Consolidated
Subsidiary of the Company (other than Debt owed to the Company or another
Subsidiary of the Company), and in connection with any such payment, repurchase
or other retirement, any related loan commitment, standby facility or the like
shall be permanently reduced in an amount equal to the principal amount so
repaid; provided
that (1) such Net Cash Proceeds are so applied within three months after the
expiration of the 365-day period referred to in clause (x) above, (2) the Net
Cash Proceeds from Asset Dispositions of Collateral Assets may only be used
pursuant to this clause (y) to pay, repurchase or retire First-Priority Secured
Debt of the Company, Second-Priority Secured Debt of the Company or Debt
of any Collateral Subsidiary (other than Debt owed to the Company or another
Subsidiary of the Company) and

 

40

 

(3) no such permanent reduction will be
required with respect to any such payment out of the Net Cash Proceeds of any
Announced Asset Sale or with respect to the first $500 million aggregate
principal amount (or accreted value, if applicable) of other repaid,
repurchased or retired Debt that but for this proviso would be required to be
permanently reduced; or

 

(z)            applied to make a
tender offer (the “Offer”) to purchase the Notes and other
First-Priority Secured Debt or Second-Priority Secured Debt of the
Company secured by the Collateral from time to time outstanding with similar
provisions requiring the Company to make an offer to purchase or to redeem such
Debt with the proceeds from assets sales, pro rata in proportion to the
respective principal amounts (or accreted values in the case of Debt issued
with an original issue discount) of the Notes and such other Debt then
outstanding at a purchase price of 100% of their principal amount (or accreted
value in the case of Debt issued with an original issue discount), plus accrued
interest (subject to proration in the event of oversubscription in the manner
set forth below).

 

(b)        Notwithstanding the foregoing, to the
extent that any or all of the Net Cash Proceeds of any Foreign Asset
Disposition are prohibited or delayed by applicable local law from being
repatriated to the U.S., the Company (or such Subsidiary, as the case may be)
shall not be required to apply the portion of such Net Cash Proceeds so
affected in accordance with clauses (a)(ii) and (a)(iii) above (the Company
hereby agrees to cause the applicable Subsidiary to promptly take all actions
required by the applicable local law to permit such repatriation); provided
that (i) in the case of Net Cash Proceeds from Asset Dispositions of Collateral
Assets, such Net Cash Proceeds shall be held by a Collateral Subsidiary pending
such repatriation or application in accordance with clauses (a)(ii) and
(a)(iii) above and (ii) once such repatriation of any such affected Net Cash
Proceeds is permitted under the applicable local law, such repatriation will be
immediately effected and such repatriated Net Cash Proceeds will be applied in
the manner set forth in this Section 4.09. To the extent that dividends or
distributions of any or all of the Net Cash Proceeds of any Foreign Asset
Disposition would result in a tax liability greater than that which would be
incurred if such Net Cash Proceeds were not so dividended or distributed, the
Net Cash Proceeds so affected may be retained by the applicable Subsidiary for
so long as such adverse tax liability would continue to be incurred.

 

(c)        Notwithstanding anything in this Section
4.09 to the contrary, the Company and any Subsidiary may make the following
Asset Dispositions:

 

41

 

(i)            a disposition resulting from the bona fide exercise by
governmental authority of its claimed or actual power of eminent domain; provided
that to the extent the Company or any Subsidiary receives any cash
consideration in connection with such Asset Disposition, the Net Cash Proceeds
from such Asset Disposition shall be applied in accordance with clauses (a)(ii)
and (a)(iii) of this Section 4.09;

 

(ii)           a realization upon a security interest; provided
that to the extent the Company or any Subsidiary receives any cash
consideration in connection with such Asset Disposition, the Net Cash Proceeds
from such Asset Disposition shall be applied in accordance with clauses (a)(ii)
and (a)(iii) of this Section 4.09;

 

(iii)          any Permitted Payment or Restricted Payment that is
permitted hereunder;

 

(iv)          any sale, transfer, conveyance, lease or other disposition
of the Capital Stock or Property of a Subsidiary pursuant to the terms of any
power sales agreement or steam sales agreement or other agreement or contract
related to the output or product of, or services rendered by, a Power Supply
Business as to which such Subsidiary is the supplying party; provided
that to the extent the Company or any Subsidiary of the Company receives any
cash consideration in connection with such Asset Disposition, the Net Cash Proceeds
from such Asset Disposition shall be applied in accordance with clauses (a)(ii)
and (a)(iii) of this Section 4.09; or

 

(v)           any Investment made by the Company or any Subsidiary of
the Company, other than any Investment made by a Collateral Subsidiary in a
Subsidiary of the Company that is not a Collateral Subsidiary (x) in exchange
for which such Collateral Subsidiary receives less than fair value or (y) which
constitutes all or substantially all of the assets of such Collateral
Subsidiary.

 

(d)        If the aggregate purchase price of Notes
and other Debt tendered pursuant to an Offer made pursuant to clause
(a)(iii)(B)(z) of this Section 4.09 is less than the Net Cash Proceeds allotted
to the purchase of the Notes and other Debt, the Company may use the remaining
Net Cash Proceeds for general corporate purposes.  The Company will not be required to comply with the provisions of
clause (a)(iii) of this Section 4.09 if the Net Cash Proceeds from one or more
Asset Dispositions occurring on or after the date hereof are less than $40
million in any one fiscal year. Any lesser amounts so carried forward and
cumulated need not be segregated or reserved and may be used for general
corporate purposes.

 

42

 

(e)        The Company shall make an Offer pursuant
to clause (a)(iii)(B)(z) by mailing to each Holder of the Notes, within 30 days
from the receipt of Net Cash Proceeds, a written notice specifying the purchase
date, which shall be not less than 30 days nor more than 60 days after the date
of such notice (the “Purchase Date”) and shall contain certain
information concerning the business of the Company which the Company believes
in good faith will enable the Holders of the Notes to make an informed
decision. Holders electing to have their notes purchased will be required to
surrender such Notes at least one Business Day prior to the Purchase Date. If
at the expiration of the offer period the aggregate principal amount of Notes
surrendered by Holders exceeds the amount available to purchase Notes, the
Company will select the Notes to be purchased on a pro rata basis.

 

(f)         In the event the Company is unable to
purchase Notes from Holders in an Offer because of provisions of applicable
law, the Company need not make an Offer. 
The Company shall then be obligated to use the Net Cash Proceeds in
accordance with clauses (a)(iii)(B)(x) or (a)(iii)(B)(y) of this Section 4.09.

 

(g)        The Company shall comply with all
applicable tender offer rules, including without limitation Rule 14e-1 under
the Exchange Act, in connection with an Offer under this Section 4.09.

 

Section 4.10. 
Repurchase
of Notes Upon a Change of Control.  (a)
Upon a Change of Control, each holder of the Notes shall have the right to
require that the Company repurchase such holder’s Notes at a repurchase price
in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase.

 

(b)        Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder of the Notes with a
copy to the Trustee stating

 

(i)            that a Change of Control has occurred and that such
Holder has the right to require the Company to repurchase such Holder’s Notes
at a repurchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of repurchase (the “Change of
Control Offer”),

 

(ii)           the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of Control),

 

(iii)          the repurchase date (which shall be not earlier than 30
days or later than 60 days from the date such notice is mailed) (the “Repurchase
Date”),

 

43

 

(iv)          that any Note not tendered shall continue to accrue
interest,

 

(v)           that any Note accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Repurchase Date,

 

(vi)          that Holders electing to have a Note purchased pursuant to
a Change of Control Offer will be required to surrender the Note, with the form
entitled “Option of Holder to Elect Purchase” on the reverse of the Note
completed, to the paying agent at the address specified in the notice prior to
the close of business on the Repurchase Date,

 

(vii)         that Holders will be entitled to withdraw their election if
the paying agent receives, not later than the close of business on the third
Business Day (or such shorter periods as may be required by applicable law)
preceding the Repurchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes the
Holder delivered for purchase, and a statement that such Holder is withdrawing
his election to have such Notes purchased, and

 

(viii)        that Holders which elect to have their Notes purchased only
in part will be issued new Notes of the same Series in a principal amount equal
to the unpurchased portion of the Notes surrendered.

 

(c)        On the Repurchase Date, the Company
shall (i) accept for payment Notes or portions thereof tendered pursuant to the
Change of Control Offer; (ii) deposit with the Trustee money sufficient to pay
the purchase price of all Notes or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee Notes so accepted together with
an Officers’ Certificate identifying the Notes or portions thereof tendered to
the Company.

 

(d)        The Trustee shall promptly mail to the
Holders of the Notes so accepted payment in an amount equal to the purchase
price, and promptly authenticate and mail to such Holders a new Note of the
same Series in a principal amount equal to any unpurchased portion of the Note
surrendered.  The Company shall publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Repurchase Date.

 

(e)        The Company shall comply with all
applicable tender offer rules, including without limitation Rule 14e-1 under
the Exchange Act, in connection with a Change of Control Offer.

 

Section 4.11. 
Limitations
on Transactions with Affiliates.  (a)
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly enter into any transaction or series of related
transactions (including, without limitation, the sale, purchase or lease of any
assets or properties or the

 

44

 

rendering of any services)
involving aggregate consideration in excess of $5 million with any Affiliate
(other than a Person that constitutes an Affiliate solely because of the
Company’s or its Subsidiary ‘s control of such Person) or holder of 5% or more
of any class of Capital Stock of the Company except for transactions (including
any loans or advances by or to, or Guarantee on behalf of, any Affiliate or any
such holder) made in good faith the terms of which are fair and reasonable to
the Company or such Subsidiary, as the case may be, and are at least as
favorable as the terms which could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an
arm’s-length basis with Persons who are not such a holder or Affiliate; provided
that

 

(i)            any such transaction shall be conclusively deemed to be
on terms which are fair and reasonable to the Company or any of its
Subsidiaries and on terms which are at least as favorable as the terms which
could be obtained on an arm’s-length basis with Persons who are not such
a holder or Affiliate if such transaction is approved by a majority of the
Company’s Board of Directors (including a majority of the Company’s independent
directors); and

 

(ii)           with respect to the purchase or disposition of assets of
the Company or any of its Subsidiaries having a net book value in excess of $15
million, in addition to approval of its Board of Directors, the Company shall
obtain a written opinion of an Independent Financial Advisor stating that the
terms of such transaction are fair to the Company or its Subsidiary, as the
case may be, from a financial point of view;

 

provided that the
fairness, reasonableness and arm’s-length nature of the terms of any
transaction which is part of a series of related transactions may be determined
on the basis of the terms of the series of related transactions taken as a
whole.

 

(b)        Clause (a) of this Section 4.11 shall
not apply to

 

(i)            transactions between the Company or any of its
Subsidiaries and any employee of the Company or any of its Subsidiaries that
are approved by the Board of Directors or any committee of the Board of
Directors consisting of the Company’s independent directors; provided
that the terms of such transaction are at least as favorable as the terms which
could be obtained by the Company or its Subsidiaries, as the case may be, in a
comparable transaction or consistent with past practice;

 

(ii)           the payment of reasonable and customary regular fees to
directors of the Company or a Subsidiary of the Company;

 

45

 

(iii)          any transaction between the Company and any of its
Consolidated Subsidiaries or between any of its Consolidated Subsidiaries;

 

(iv)          any Permitted Payment and any Restricted Payment not
otherwise prohibited by Section 4.08; or

 

(v)           the provision of general corporate administrative,
operating and management services, including, without limitation, procurement,
construction engineering, construction administration, legal, accounting,
financial, money management, risk management, personnel, administration and
business planning services, in each case, in the ordinary course and provided
that the terms of such provision of services are at least as favorable as the
terms which could be obtained by the Company or its Subsidiaries, as the case
may be, in a comparable transaction made on an arm’s-length basis.

 

Section 4.12. 
Second-Priority
Liens.  To the extent the
Company or any Subsidiary of the Company grants a Lien upon any of its property
or assets to secure the First-Priority Secured Debt, the Company or such
Subsidiary, as the case may be, shall, contemporaneously with the granting of
such Lien, secure the Company’s Obligations under the Indenture and the Notes
with a second-priority Lien upon such property or assets pursuant to the Second
Priority Collateral Documents. 
Notwithstanding the foregoing, the Company shall not permit any Lien on
any Collateral Assets to secure Debt of AES that would violate Section 4.07.

 

Section 4.13. 
Limitation on Sale Leaseback Transactions.  The Company shall not enter into any sale and
leaseback transaction involving any Principal Property, the acquisition or
completion of construction and commencement of full operation of which has
occurred more than 180 days prior thereto, unless (a) the Company could incur a
Lien on such property under the restrictions described in Section 4.06 hereof
in an amount equal to the Attributable Debt with respect to the sale and
leaseback transaction without equally and ratably securing the Notes or (b) the
Company, within 180 days after the sale or transfer by the Company, applies to
the retirement of its Funded Debt an amount equal to the greater of (i) the net
proceeds of the sale of the Principal Property sold and leased pursuant to such
arrangement or (ii) the fair market value of the Principal Property so sold and
leased as determined by the Board of Directors; provided that the amount to
be applied to the retirement of Funded Debt of the Company shall be reduced by
(A) the principal amount of any Notes delivered within 180 days after such sale
or transfer to the Trustee for retirement and cancellation, and (B) the
principal amount of Funded Debt, other than Notes, voluntarily retired by the
Company within 180 days after such sale or transfer; provided further that no
retirement referred to in this clause (b) may be effected by payment at
maturity or pursuant to any mandatory sinking fund payment or any mandatory
prepayment provision.

 

46

 

Section 4.14. 
Restrictions on Securing or Guaranteeing Outstanding AES Notes.  The Company shall not pledge any
asset to secure (other than in connection with the defeasance thereof) or
permit any of its Subsidiaries to Guarantee or pledge any asset to secure any
Outstanding AES Notes unless such asset is pledged to secure the Notes or such
Subsidiary Guarantees the Notes, as the case may be, on an equal and ratable
basis.

 

Section 4.15. 
Use
of Proceeds from the Notes.  Of
the net proceeds received by the Company on the date hereof from the offering
of the Original Notes, the Company shall use (a) $475 million to repay Debt
outstanding under the Senior Secured Credit Facilities, (b) an amount necessary
to purchase its senior subordinated notes in accordance with the terms of the
tender offer it launched on April 4, 2003 as amended as of May 2, 2003 (the “Tender Offer”)
and (c) an amount necessary to purchase its senior notes in accordance with the
terms of the Tender Offer. The Company may use the remaining proceeds for
general corporate purposes.  If for any
reason, the Company terminates the Tender Offer and does not apply the proceeds
to purchase outstanding notes as described in clauses (b) and (c) above in
accordance with the terms of the Tender Offer, within 180 days of the date of
such termination, the Company shall use such proceeds to repay additional debt
under its Senior Secured Credit Facilities and/or to repurchase its outstanding
debt securities.

 

Section 4.16. 
Investment
Grade Fallaway.  (a)
Notwithstanding anything to the contrary contained in this Article 4, the
Company’s obligation to comply with the provisions of Section 4.08, Section
4.09 (but only with respect to assets that do not constitute Collateral Assets)
and Section 4.10 (collectively the “Extinguished Covenants”) will terminate and
cease to have any further effect from and after the first date when the Notes
are rated Investment Grade; provided that if the Notes subsequently
cease to be rated Investment Grade, then from and after the time the Notes
cease to be rated Investment Grade, the Company’s obligation to comply with the
Extinguished Covenants shall be reinstated.

 

(b)        Notwithstanding the foregoing, in the
event of any such reinstatement described above, no action taken or omitted to
be taken by the Company or any of its Subsidiaries prior to such reinstatement
shall give rise to a Default or Event of Default under the Extinguished
Covenants upon reinstatement; provided that with respect to Restricted
Payments made after any such reinstatement, the amount of Restricted Payments
made after the date hereof will be calculated as though Section 4.08 had been
in effect during the entire period after the date hereof.

 

47

 

ARTICLE 5

SUCCESSOR CORPORATION

 

Section 5.01.  When Company May Merge, Etc.  The Company shall not consolidate
with, merge with or into, or sell, convey, transfer, lease or otherwise dispose
of all or substantially all of its property and assets (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless either (x) the Company shall be the continuing Person or (y) the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or to which properties and assets of the Company are
transferred shall be a solvent corporation organized and validly existing under
the laws of the United States of America or any state thereof or the District
of Columbia and shall expressly assume, by a supplemental indenture and any other
agreement reasonably satisfactory to the Trustee, executed and delivered to the
Trustee, all of the Obligations of the Company under the Notes, this Indenture
and the Second Priority Collateral Documents and the Company shall have
delivered to the Trustee (a) an Opinion of Counsel stating that such
consolidation, merger or transfer and such supplemental indenture and/or other
agreement complies with this provision and that all conditions precedent
provided for herein relating to such transaction have been complied with and
that each of such supplemental indenture and/or other agreement constitutes the
legal, valid and binding obligation of the Company or such successor
enforceable against such entity in accordance with its terms, subject to
customary exceptions and (b) an Officers’ Certificate to the effect that
immediately after giving effect to such transaction, no Event of Default or
Default shall have occurred and be continuing.

 

Section 5.02.  Successor Substituted.  Upon any consolidation or merger,
or any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer, lease or other disposition is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein.

 

ARTICLE 6

DEFAULT AND REMEDIES

 

Section 6.01.  Events of Default.  An “Event of Default” shall occur with respect
to any Series of Notes if:

 

48

 

(a)           the Company defaults in the payment
of the Principal or premium, if any, on any Notes of such Series when the same
becomes due and payable at maturity, upon acceleration, redemption or mandatory
repurchase, or otherwise;

 

(b)           the Company defaults in the payment
of interest on any Note of such Series when the same becomes due and payable,
and such default continues for a period of 30 days;

 

(c)           the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in
this Indenture or in the Notes and such default or breach continues for a
period of 60 consecutive days after written notice to the Company by the
Trustee or to the Company and the Trustee by the Holders of 25% or more in
aggregate principal amount of the Notes affected by such breach;

 

(d)           an event of default, as defined in
any indenture or instrument evidencing or under which the Company has at the
date of the Indenture or shall thereafter have outstanding any indebtedness,
shall happen and be continuing and, either (i) such default results from the
failure to pay the principal of such indebtedness in excess of $50 million at
final maturity of such indebtedness or (ii) as a result of such default the
maturity of such indebtedness shall have been accelerated so that the same shall
be or become due and payable prior to the date on which the same would
otherwise have become due and payable, and such acceleration shall not be
rescinded or annulled within 60 days and, the principal amount of such
indebtedness, together with the principal amount of any other indebtedness of
the Company the maturity of which has been accelerated, aggregates $50 million
or more; provided
that the Trustee shall not be charged with knowledge of any such
default unless written notice thereof shall have been given to the Trustee by
the Company, by the holder or an agent of the holder of any such indebtedness,
by the trustee then acting under any indenture or other instrument under which
such default shall have occurred, or by the Holders of not less than 25% in the
aggregate principal amount of the Notes at the time outstanding; and provided further
that if such default shall be remedied or cured by the Company or waived by the
holder of such indebtedness, then the Event of Default under the Indenture by
reason thereof shall be deemed likewise to have been remedied, cured or waived
without further action on the part of the Trustee, any Holder or any other
person;

 

(e)           any of the Second Priority Collateral
Documents ceases to be in full force and effect, or any of the Second Priority
Collateral Documents ceases to give the Holders any of the Liens purported to
be created thereby, or any of the Second Priority Collateral Documents is
declared null and void or the Company denies in writing that it has any further
liability under any Second Priority Collateral Document or gives written notice
to such effect (in each case other than in accordance with the terms of the
Indenture or the terms of the Second Priority

 

49

 

Collateral Documents); provided that if a failure of the sort
described in this clause (e) is susceptible of cure, no Event of Default
shall arise under this clause (e) with respect thereto until 30 days
after notice of such failure shall have been given to the Company by the
Trustee or Holders of at least 25% in principal amount of the then outstanding
Notes;

 

(f)            a court having jurisdiction in the
premises shall enter a decree or order for (i) relief in respect of the Company
or any of its Material Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (ii)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official of the Company or any of its Material
Subsidiaries or for all or substantially all of the property and assets of the
Company or any of its Material Subsidiaries or (iii) the winding up or
liquidation of the affairs of the Company or any of its Material Subsidiaries,
and, in each case, such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or

 

(g)           the Company or any of its Material
Subsidiaries (i)  commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (ii) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any of its Material
Subsidiaries or for all or substantially all of the property and assets of the
Company or any of its Material Subsidiaries or (iii) effects any general
assignment for the benefit of creditors.

 

Section 6.02. 
Acceleration.  (a) If
an Event of Default (other than as described in clauses (f) or (g) of Section
6.01 with respect to the Company) with respect to the Notes then outstanding
occurs and is continuing, then, and in each and every such case, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the Notes then outstanding (or in the case of an Event of Default specified in
clauses (a) or (b), the Holders of not less than 25% of the aggregate principal
amount of the Series so affected) by notice in writing to the Company (and to
the Trustee if given by Noteholders), may, and the Trustee at the request of
such Holders (or in the case of an Event of Default specified in clauses (a) or
(b), the Holders of not less than 25% of the aggregate principal amount of the
Series so affected) shall, declare the entire Principal of all Notes (or the
applicable Series of Notes so affected, as the case may be) and the interest
accrued thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable.

 

(b)           If an Event of Default described in
clause (f) or (g) of Section 6.01 occurs and is continuing with respect to the
Company, then the Principal of all the Notes then outstanding and interest
accrued thereon, if any, shall ipso facto be and

 

50

 

become immediately due and payable, without
any declaration or other action by any Holder or the Trustee.

 

The foregoing provisions, however, are
subject to the condition that if, at any time after the Principal of the Notes
(or the applicable Series of Notes so affected, as the case may be) shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay all matured installments of interest upon all the Notes (or
the applicable Series of Notes so affected, as the case may be) and the
Principal of any and all Notes (or the applicable Series of Notes so affected,
as the case may be) which shall have become due otherwise than by acceleration
(with interest upon such Principal and, to the extent that payment of such interest
is enforceable under applicable law, on overdue installments of interest, at
the same rate as the rate of interest specified in the Notes to the date of
such payment or deposit) and such amount as shall be sufficient to cover all
amounts owing the Trustee under Section 7.06, and if any and all Events of
Default under the Indenture, other than the non-payment of the Principal of
Notes (or the applicable Series of Notes so affected, as the case may be) which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then and in every such case the Holders
of a majority in aggregate Principal amount of all the then outstanding Notes
(or the applicable Series of Notes so affected, as the case may be) that have
been accelerated, by written notice to the Company and to the Trustee, may
waive all defaults with respect to the Notes (or the applicable Series of Notes
so affected, as the case may be) and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.

 

Section 6.03.  Other Remedies.  If a payment Default or an Event of Default with
respect to the Notes occurs and is continuing, the Trustee may pursue, in its
own name or as trustee of an express trust, any available remedy by proceeding
at law or in equity to collect the payment of Principal of and interest on the
Notes or to enforce the performance of any provision of the Notes or this
Indenture.

 

The Trustee
may maintain a proceeding even if it does not possess any of the Notes or does
not produce any of them in the proceeding.

 

Section 6.04.  Waiver of Past Defaults.  Subject to Section 6.02, Section
6.07 and Section 9.02, the Holders of at least a majority in Principal amount
of the outstanding Notes affected, by notice to the Trustee, may waive an
existing Default or Event of Default with respect to the Notes and its
consequences, except a Default in the payment of Principal of or interest on
any Note as specified in clauses (a) or (b) of Section 6.01 or in respect of a
covenant or provision of this

 

51

 

Indenture
which cannot be modified or amended without the consent of the Holder of each
outstanding Note affected.  Upon any
such waiver, such Default shall cease to exist, and any Event of Default with
respect to the Notes arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.

 

Section 6.05.  Control by Majority.  Subject to Section 7.01 and
Section 7.02(e), the Holders of at least a majority in aggregate Principal
amount of the outstanding Notes (or in the case of an Event of Default
specified in clauses (a) or (b) of Section 6.01 , the Holders of at least a
majority in aggregate Principal amount of the applicable Series of Notes so
affected) may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Notes by this Indenture; provided,
that the Trustee may refuse to follow any direction that conflicts with law or
this Indenture, that may involve the Trustee in personal liability or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders not joining in the giving of such direction; and provided further, that the
Trustee may take any other action it deems proper that is not inconsistent with
any directions received from Holders of Notes pursuant to this Section 6.05.

 

Section 6.06.  Limitation on Suits.  Subject to Section 6.07, no
Holder of any Note may institute any proceeding, judicial or otherwise, with
respect to this Indenture or the Notes of the same Series, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:

 

(i)            such Holder has previously given to the
Trustee written notice of a continuing Event of Default with respect to the
Notes of such Series;

 

(ii)           the Holders of at least 25% in
aggregate Principal amount of outstanding Notes (or the applicable Series of
Notes so affected, as the case may be) shall have made written request to the
Trustee to pursue the remedy;

 

(iii)          such Holder or Holders have offered
and, if requested, provided to the Trustee indemnity reasonably satisfactory to
the Trustee against any costs, liabilities or expenses to be incurred in
compliance with such request;

 

(iv)          the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to institute
any such proceeding; and

 

52

 

(v)           during such 60-day period, the
Holders of a majority in aggregate Principal amount of the outstanding Notes
(or the applicable Series of Notes so affected, as the case may be) have not
given the Trustee a direction that is inconsistent with such written request.

 

A Holder may
not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over such other Holder.

 

Section 6.07.  Rights of Holders to Receive Payment.  The provisions of Section 6.06
shall not apply to the right of any Holder of a Note to receive payment of
Principal of or interest, if any, on such Holder’s Note on or after the
respective due dates expressed on such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, and notwithstanding
any other provision of this Indenture, such right shall not be impaired or
affected without the consent of such Holder.

 

Section 6.08.  Collection Suit by Trustee.  If an Event of Default with
respect to the Notes in payment of Principal or interest specified in clause
(a) or (b) of Section 6.01 occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount of Principal of, and accrued interest remaining unpaid on,
together with interest on overdue Principal of, and, to the extent that payment
of such interest is lawful, interest on overdue installments of interest on,
the Notes, in each case at the rate specified in such Notes, and such further
amount as shall be sufficient to cover all amounts owing the Trustee under
Section 7.06.

 

Section 6.09.  Trustee May File Proofs of Claim.  The Trustee may file such proofs
of claim and other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for amounts due
the Trustee under Section 7.06) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor on the Notes), its
creditors or its property and shall be entitled and empowered to collect and
receive any moneys, securities or other property payable or deliverable upon
conversion or exchange of the Notes or upon any such claims and to distribute
the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it under Section 7.06.  Nothing herein contained shall be deemed to
empower the Trustee to authorize or consent to, or accept or adopt on behalf of
any Holder, any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding

 

53

 

Section 6.10.  Application of Proceeds.  Any moneys or properties
collected by the Trustee pursuant to this Article in respect of the Notes shall
be applied in the following order at the date or dates fixed by the Trustee:

 

FIRST: 
To the payment of all amounts due the Trustee under Section 7.06;

 

SECOND: 
to Holders for amounts then due and unpaid for Principal of and interest
on the Notes, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for Principal and interest; and

 

THIRD: 
To the payment of the remainder, if any, to the Company or any other
person lawfully entitled thereto.

 

Section 6.11.  Restoration of Rights and Remedies.  If the Trustee or any Holder has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then, and in every
such case, subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall be restored to their former positions hereunder
and thereafter all rights and remedies of the Company, Trustee and the Holders
shall continue as though no such proceeding had been instituted.

 

Section 6.12.  Undertaking for Costs.  In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, in either case in respect to
the Notes, a court may require any party litigant in such suit (other than the
Trustee) to file an undertaking to pay the costs of the suit, and the court may
assess reasonable costs, including reasonable attorneys’ fees, against any
party litigant (other than the Trustee) in the suit having due regard to the
merits and good faith of the claims or defenses made by the party
litigant.  This Section 6.12 does not
apply to a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in Principal amount of the outstanding Notes.

 

Section 6.13.  Rights and Remedies Cumulative.  Except as otherwise provided with
respect to the replacement or payment of mutilated, destroyed, lost or
wrongfully taken Notes in Section 2.09, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not

 

54

 

prevent the
concurrent assertion or employment of any other appropriate right or remedy.

 

Section 6.14.  Delay or Omission Not Waiver.  No delay or omission of the
Trustee or of any Holder to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article
6 or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.

 

ARTICLE 7

TRUSTEE

 

Section 7.01.  General. 
The duties and responsibilities of the Trustee shall be as
set forth herein.  The Trustee
undertakes to perform only the duties expressly set forth herein and no implied
covenant or obligation shall be read into this Indenture against the
Trustee.  Notwithstanding the foregoing,
no provision of this Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, unless
it receives indemnity satisfactory to it against any loss, liability or
expense.  Whether or not therein
expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Article 7.

 

Section 7.02.  Certain Rights of Trustee.  (a)  The Trustee may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, Officers’ Certificate, Opinion of Counsel (or both), statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
person or persons.  The Trustee need not
investigate any fact or matter stated in the document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit;

 

(b)           before the Trustee acts or refrains
from acting, it may require an Officers’ Certificate and/or an Opinion of
Counsel, which shall conform to Section 10.03. 
The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such certificate or opinion.  Subject to Section 7.01 and Section 7.02,
whenever in the administration of the trusts of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or suffering or omitting any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)

 

55

 

may, in the absence of negligence or bad
faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers’ Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted by it under the provisions of this Indenture upon the faith thereof;

 

(c)           the Trustee may act through its
attorneys and agents not regularly in its employ and shall not be responsible
for the misconduct or negligence of any agent or attorney appointed with due
care;

 

(d)           any request, direction, order or
demand of the Company mentioned herein shall be sufficiently evidenced by an
Officers’ Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any Board Resolution may be evidenced to the
Trustee by a copy thereof certified by the Secretary or an Assistant Secretary
of the Company;

 

(e)           the Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;

 

(f)            the Trustee shall not be liable for
any action it takes or omits to take in good faith that it believes to be
authorized or within its rights or powers or for any action it takes or omits
to take in accordance with the direction of the Holders in accordance with
Section 6.05 relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture;

 

(g)           the Trustee may consult with counsel
and the written advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon; and

 

(h)           prior to the occurrence of an Event of
Default hereunder and after the curing or waiving of all Events of Default, the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, Officers’ Certificate, Opinion of
Counsel, Board Resolution, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, security,
or other paper or document unless requested in writing so to do by the Holders
of not less than a majority in aggregate Principal amount of the Notes then
outstanding; provided that, if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the

 

56

 

opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity against such expenses
or liabilities as a condition to proceeding.

 

Section 7.03.  Individual Rights of Trustee.  The Trustee, in its individual or
any other capacity, may become the owner or pledgee of the Notes and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not the Trustee.  Any
Agent may do the same with like rights.

 

Section 7.04.  Trustee’s Disclaimer.  The recitals contained herein and
in the Notes (except the Trustee’s certificate of authentication) and the
Second Priority Collateral Documents shall be taken as statements of the
Company and not of the Trustee and the Trustee assumes no responsibility for
the correctness of the same.  Neither
the Trustee nor any of its agents (i) makes any representation as to the validity
or adequacy of this Indenture or the Notes and (ii) shall be accountable for
the Company’s use or application of the proceeds from the Notes, if any.

 

Section 7.05.  Notice of Default.  If any Default with respect to the Notes occurs and is
continuing and if such Default is known to the actual knowledge of a
Responsible Officer of the Trustee, the Trustee shall give to each Holder of
Notes notice of such Default within 90 days after it occurs (or after such
Responsible Officer of the Trustee acquires knowledge thereof) to all Holders,
unless such Default shall have been cured or waived before the mailing or
publication of such notice; provided, however, that, except in the
case of a Default in the payment of the Principal of or interest on any Note,
the Trustee shall be protected in withholding such notice if the Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders.

 

Section 7.06.  Compensation and Indemnity.  The Company shall pay to the
Trustee such compensation as shall be agreed upon in writing from time to time
for its services.  The compensation of
the Trustee shall not be limited by any law on compensation of a Trustee of an
express trust.  The Company shall
reimburse the Trustee upon request for all reasonable out-of pocket expenses, disbursements
and advances incurred or made by the Trustee. 
Such expenses shall include the reasonable compensation and expenses of
the Trustee’s agents, counsel and other persons not regularly in its employ.  The Trustee shall not be required to make
any advances hereunder.

 

The Company
shall indemnify the Trustee for, and hold it harmless against, any loss or
liability or expense incurred by it without gross negligence or bad faith on
its part arising out of or in connection with the acceptance or administration
of this Indenture and the Notes or the issuance of the Notes or the trusts
hereunder and the performance of duties under this Indenture and the Notes,
including the costs and expenses of defending itself against or investigating
any

 

57

 

claim or
liability and of complying with any process served upon it or any of its
officers in connection with the exercise or performance of any of its powers or
duties under this Indenture and the Notes.

 

To secure the
Company’s payment obligations in this Section 7.06, the Trustee shall have a
Lien prior to the Notes on all money or property held or collected by the
Trustee, in its capacity as Trustee, except money or property held in trust to
pay Principal of, and interest on particular Notes.

 

The
obligations of the Company under this Section to compensate and indemnify the
Trustee and each predecessor Trustee and to pay or reimburse the Trustee and
each predecessor Trustee for expenses, disbursements and advances shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture or the rejection or termination of this
Indenture under bankruptcy law.  Such
additional indebtedness shall be a senior claim to that of the Notes upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Notes, and the Notes are
hereby subordinated to such senior claim. 
If the Trustee renders services and incurs expenses following an Event
of Default under Section 6.01(f) or Section 6.01(g) hereof, the parties hereto
and the Holders by their acceptance of the Notes hereby agree that such
expenses are intended to constitute expenses of administration under any
bankruptcy law.

 

Section 7.07.  Replacement of Trustee.  A resignation or removal of the
Trustee as Trustee and appointment of a successor Trustee as Trustee shall
become effective only upon the successor Trustee’s acceptance of appointment as
provided in this Section 7.07.

 

The Trustee
may resign as Trustee with respect to the Notes at any time by so notifying the
Company in writing.  The Holders of a
majority in Principal amount of the outstanding Notes may remove the Trustee as
Trustee with respect to the Notes by so notifying the Trustee in writing and
may appoint a successor Trustee with respect thereto with the consent of the
Company.  The Company may remove the
Trustee as Trustee with respect to the Notes if: (i) the Trustee is adjudged a
bankrupt or insolvent; (ii) a receiver or other public officer takes charge of
the Trustee or its property; or (iii) the Trustee becomes incapable of acting.

 

If the Trustee
resigns or is removed as Trustee with respect to the Notes, or if a vacancy
exists in the office of Trustee with respect to the Notes for any reason, the
Company shall promptly appoint a successor Trustee with respect thereto.  Within one year after the successor Trustee
takes office, the Holders of a majority in Principal amount of the outstanding
Notes may appoint a successor Trustee in respect of such Notes to replace the
successor Trustee appointed by the Company. 
If the successor Trustee with respect to the Notes does not deliver its

 

58

 

written
acceptance required by the next succeeding paragraph of this Section 7.07
within 30 days after the retiring Trustee resigns or is removed, the retiring
Trustee, the Company or the Holders of a majority in Principal amount of the
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect thereto.

 

A successor
Trustee with respect to the Notes shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company.  Immediately after the delivery of such
written acceptance, subject to the Lien provided for in Section 7.06, (i) the
retiring Trustee shall transfer all property held by it as Trustee in respect
of the Notes to the successor Trustee, (ii) the resignation or removal of the
retiring Trustee in respect of the Notes shall become effective and (iii) the
successor Trustee shall have all the rights, powers and duties of the Trustee
in respect of the Notes under this Indenture. 
A successor Trustee shall mail notice of its succession to each Holder
of Notes.

 

Upon request
of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts referred to in the
preceding paragraph.

 

The Company
shall give notice of any resignation and any removal of the Trustee with
respect to the Notes and each appointment of a successor Trustee in respect of
the Notes to all Holders of Notes.  Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.

 

Notwithstanding
replacement of the Trustee with respect to the Notes pursuant to this Section
7.07, the Company’s obligations under Section 7.06 shall continue for the
benefit of the retiring Trustee.

 

Section 7.08.  Successor Trustee by Merger, Etc.  If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation or national, banking association, the
resulting, surviving or transferee corporation or national banking association
without any further act shall be the successor Trustee with the same effect as
if the successor Trustee had been named as the Trustee herein.

 

Section 7.09.  Money Held in Trust.  The Trustee shall not be liable
for interest on any money received by it except as the Trustee may agree in
writing with the Company.  Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law and except for money held in trust under Article 8 of
this Indenture.

 

59

 

ARTICLE 8

SATISFACTION AND DISCHARGE OF
INDENTURE; UNCLAIMED MONEYS

 

Section 8.01.  Satisfaction and Discharge of Indenture.  If at any time (a) the Company
shall have paid or caused to be paid the Principal of, and interest on all the
Notes of a Series outstanding hereunder (other than Notes of such Series which
have been destroyed, lost or stolen and which have been replaced or paid as
provided in Section 2.09) as and when the same shall have become due and
payable, or (b) the Company shall have delivered to the Trustee for
cancellation all Notes of such Series theretofore authenticated (other than any
Notes of such Series which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.09) or (c)(i) all the
Notes of such Series not theretofore delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (ii) the Company shall have irrevocably deposited or caused to
be deposited with the Trustee as trust funds the entire amount in cash (other
than moneys repaid by the Trustee or any paying agent to the Company in
accordance with Section 8.04) or U.S. Government Obligations, maturing as to
principal and interest in such amounts and at such times as will insure the
availability of cash sufficient to pay at maturity or upon redemption all Notes
of such Series (other than any Notes of such Series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.09) not theretofore delivered to the Trustee for
cancellation, including Principal, and interest due or to become due on or
prior to such date of maturity as the case may be, and if, in any such case, the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company with respect to Notes of such Series, then this Indenture shall
cease to be of further effect with respect to the Notes of such Series (except
as to (i) rights of registration of transfer and exchange of Notes of such
Series, and the Company’s right of optional, redemption, if any, (ii)
substitution of mutilated, defaced, destroyed, lost or stolen Notes, (iii)
rights of Holders to receive payments of Principal and interest thereon, upon
the original stated due dates therefor (but not upon acceleration), (iv) the
rights, obligations and immunities of the Trustee hereunder and (v) the rights
of the Holders of the Notes of such Series as beneficiaries hereof with respect
to the property so deposited with the Trustee payable to all or any of them),
and the Trustee, on demand of the Company accompanied by an Officers’
Certificate and an Opinion of Counsel, and at the cost and expense of the
Company, shall execute proper instruments acknowledging such satisfaction of
and discharging this Indenture; provided, that the rights of Holders of
the Notes of such Series to receive amounts in respect of Principal of and
interest on the Notes of such Series held by them shall not be delayed longer
than required by then-applicable mandatory rules or policies of any securities
exchange upon which the Notes of such Series are listed.  The

 

60

 

Company agrees
to reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with this
Indenture or the Notes.

 

Section 8.02.  Application by Trustee of Funds Deposited
for Payment of Notes.  Subject
to Section 8.04, all moneys deposited with the Trustee pursuant to Section 8.01
shall be held in trust and applied by it to the payment, either directly or
through any paying agent (including the Company acting as its own paying
agent), to the Holders of the particular Notes for the payment or redemption of
which such moneys have been deposited with the Trustee, of all sums due and to
become due thereon for Principal and interest; but such money need not be
segregated from other funds except to the extent required by law.

 

Section 8.03.  Repayment of Moneys Held by Paying
Agent.  In connection with
the satisfaction and discharge of this Indenture with respect to the Notes of
any Series, all moneys then held by any paying agent under the provisions of
this Indenture, with respect to the Notes of such Series, shall, upon demand of
the Company, be repaid to it or paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such moneys.

 

Section 8.04.  Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years.  Any
moneys deposited with or paid to the Trustee or any paying agent for the
payment of the Principal of or interest on any Note and not applied but
remaining unclaimed for two years after the date upon which such Principal or
interest shall have become due and payable, shall, upon the written request of
the Company and unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, be repaid to the Company by the
Trustee or such paying agent, and the Holder of the Note shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Company for any payment
which such Holder may be entitled to collect, and all liability of the Trustee
or any paying agent with respect to such moneys shall thereupon cease.

 

Section 8.05.  Defeasance and Discharge of Indenture.  The Company shall be deemed to
have paid and shall be discharged from any and all obligations in respect of
the Notes of any Series, on the 123rd day after the deposit referred to in
clause (i) of this Section 8.05 has been made, and the provisions of this Indenture
shall no longer be in effect with respect to the Notes of such Series (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except as to: (a) rights of registration of transfer
and exchange, and the Company’s right of optional redemption, (b) substitution
of apparently mutilated, defaced, destroyed, lost or stolen Notes of such
Series, (c) rights of Holders to receive payments of Principal thereof and
interest thereon, upon the original stated due dates therefore (but not upon
acceleration), (d) the

 

61

 

rights,
obligations and immunities of the Trustee hereunder and (e) the rights of the
Noteholders as beneficiaries hereof with respect to the property so deposited
with the Trustee payable to all or any of them; provided that the following
conditions shall have been satisfied:

 

(i)            with reference to this provision the
Company has deposited or caused to be irrevocably deposited with the Trustee
(or another trustee satisfying the requirements of Section 7.07) as trust funds
in trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Notes of such Series, (A) money in an amount, or
(B) U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide not
later than one day before the due date of any payment referred to in clause (C)
of this clause (i) money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge without consideration of the reinvestment of
such interest and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee the Principal
of, premium, if any, and each installment of interest on the outstanding Notes
of such Series on the due dates thereof or earlier redemption (irrevocably
provided for under agreements satisfactory to the Trustee), as the case may be,
in accordance with the terms of the Notes of such Series and the Indenture;

 

(ii)           the Company has delivered to the
Trustee (A) either (x) an Opinion of Counsel to the effect that Holders of
Notes of such Series will not recognize income, gain or loss for federal income
tax purposes as a result of the Company’s exercise of its option under this
Section 8.05 and will be subject to U.S. federal income tax on the same amount
and in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred, which Opinion of
Counsel must be based upon a ruling of the Internal Revenue Service to the same
effect or a change in applicable U.S. federal income tax law or related
treasury regulations after the date of this Indenture or (y) a ruling directed
to the Trustee received from the Internal Revenue Service to the same effect as
the aforementioned Opinion of Counsel and (B) an Opinion of Counsel to the
effect that the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit, the trust fund will, not be subject to the effect of Section 547 of
the U.S. Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law;

 

(iii)          immediately after giving effect to
such deposit on a pro forma basis, no Event of Default, or event that after the
giving of notice or

 

62

 

lapse of time or both would become an Event
of Default, shall have occurred and be continuing on the date of such deposit
or during the period ending on the 123rd day after the date of such deposit,
and such deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company is a
party or by which the Company is bound; and

 

(iv)          if at such time the Notes of such
Series are listed on a national securities exchange, the Company has delivered
to the Trustee an Opinion of Counsel to the effect that the Notes will not be
delisted as a result of such deposit, defeasance and discharge.

 

Section 8.06.  Defeasance of Certain Obligations.  The Company may omit to comply
with any term, provision or condition set forth in, and this Indenture will no
longer be in effect with respect to, any covenant in Article 4 (other than
Section 4.01), Section 5.01, or Article 11 or in any indenture supplemental hereto
and clause (c) (with respect to any covenants in Article 4 or Section 5.01 or
in any indenture supplemental) and clause (e) of Section 6.01 shall be deemed
not to be an Event of Default with respect to the Notes of a Series on the 123rd
day after the deposit referred to in clause (a) of this Section 8.06 has been
made and provided
that the following conditions have been satisfied:

 

(a)           with reference to this Section 8.06,
the Company has deposited or caused to be irrevocably deposited with the Trustee
(or another trustee satisfying the requirements of Section 7.07) as trust funds
in trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Notes of such Series and the Indenture with
respect to the Notes of such Series, (i) money in an amount or (ii) U.S.
Government Obligations which through the payment of principal and interest in
respect thereof in accordance with their terms will provide not later than one
day before the due dates thereof or earlier redemption (irrevocably provided
for under agreements satisfactory to the Trustee), as the case may be, of any
payment referred to in clause (iii) of this clause (a) money in an amount, or
(iii) a combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without consideration of
the reinvestment of such interest and after payment of all federal, state and
local taxes or other charges and assessments in respect thereof payable by the
Trustee, the Principal of, premium, if any, and each installment of interest on
the outstanding Notes of such Series on the due date thereof or earlier
redemption (irrevocably provided for under arrangements satisfactory to the
Trustee), as the case may be;

 

(b)           the Company has delivered to the
Trustee (i) an Opinion of Counsel to the effect that Holders of Notes of such
Series will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the Company’s exercise

 

63

 

of its option under this Section 8.06 and
will be subject to U.S. federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit and
defeasance had not occurred and (ii) an Opinion of Counsel to the effect that
the creation of the defeasance trust does not violate the Investment Company
Act of 1940 and after the passage of 123 days following the deposit, the trust
fund will not be subject to the effect of Section 547 of the U.S. Bankruptcy
Code or Section 15 of the New York Debtor and Creditor Law;

 

(c)           immediately after giving effect to
such deposit on a pro forma basis, no Event of Default, or event that after the
giving of notice or lapse of time or both would become an Event of Default,
shall have occurred and be continuing on the date of such deposit or during the
period ending on the 123rd day after the date of such deposit, and such deposit
shall not result in a breach or violation of, or constitute a default under,
any other agreement or instrument to which the Company is a party or by which
the Company is bound; and

 

(d)           if at such time the Notes of such
Series are listed on a national securities exchange, the Company has delivered
to the Trustee an Opinion of Counsel to the effect that the Notes of such
Series will not be delisted as a result of such deposit, defeasance and
discharge.

 

Section 8.07.  Reinstatement.  If the Trustee or paying agent is unable to apply any
monies or U.S. Government Obligations in accordance with Article 8 with respect
to a Series of Notes, by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, the Company’s obligations under this
Indenture and such Series of Notes shall be revived and reinstated as though no
deposit had occurred pursuant to this Article until such time as the Trustee or
paying agent is permitted to apply all such monies or U.S. Government
Obligations in accordance with Article 8; provided, however, that if the Company
has made any payment of Principal of, premium, if any, or interest on any Notes
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the monies or U.S. Government Obligations held by the Trustee or paying
agent.

 

ARTICLE 9

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

Section 9.01.  Without Consent of Holders.  The Company and the Trustee may
amend or supplement this Indenture or the Notes or the Second Priority
Collateral Documents without notice to or the consent of any Holder:

 

(i)              to cure any ambiguity, defect or
inconsistency in this Indenture or the Second Priority Collateral Documents; provided
that

 

64

 

such amendments or supplements shall not
adversely affect the interests of the Holders in any material respect;

 

(ii)             to comply with Article 5;

 

(iii)            to comply with any requirements of
the Commission in connection with the qualification of the Indenture under the
Trust Indenture Act of 1939;

 

(iv)            to evidence and provide for the
acceptance of appointment hereunder with respect to the Notes by a successor
Trustee;

 

(v)             establish the form or forms or
terms of Notes;

 

(vi)            to provide for certificated or
unregistered securities and to make all appropriate changes for such purpose;

 

(vii)           to directly or indirectly release the
Liens created by the Second Priority Collateral Documents on less than all or
substantially all the Collateral in accordance with the terms of the Second
Priority Collateral Documents; or

 

(viii)          to make any change that does not
materially and adversely affect the rights of any Holder.

 

The Collateral
Documents may be amended or supplemented as provided therein and compliance
with any of the provisions of the Collateral Documents  may be waived as provided therein.

 

Section 9.02.  With Consent of Holders.  Subject to Section 6.04 and
Section 6.07, without prior notice to any Holders, the Company and the Trustee
may amend this Indenture and the Notes and the Second Priority Collateral
Documents with the written consent of the Holders of not less than a majority
in aggregate Principal amount of the outstanding Notes affected by such
amendment (voting as a single class) and the Holders of a majority in principal
amount of the outstanding Notes affected thereby (voting as a single class) by
written notice to the Trustee may waive future compliance by the Company with
any provision of this Indenture or the Notes.

 

Notwithstanding
the provisions of this Section 9.02, without the consent of each Holder
affected thereby, an amendment or waiver, including a waiver pursuant to
Section 6.04, may not:

 

(a)           change the Stated Maturity of the
Principal of or any installment of interest on, such Holder’s Note;

 

65

 

(b)           modify the provisions of Section
4.10;

 

(c)           reduce the Principal amount thereof
or the rate of interest thereon;

 

(d)           reduce the above stated percentage of
outstanding Notes the consent of whose holders is necessary to modify or amend
the Indenture; or

 

(e)           reduce the percentage or aggregate
Principal amount of outstanding Notes the consent of whose Holders is required
for any supplemental indenture, for any waiver of compliance with certain
provisions of this Indenture or certain Defaults and their consequences
provided for in this Indenture.

 

It shall not
be necessary for the consent of any Holder under this Section 9.02 to approve
the particular form of any proposed amendment, supplement or waiver, but it
shall be sufficient if such consent approves the substance thereof.

 

After an
amendment, supplement or waiver under this Section 9.02 becomes effective, the
Company shall give to the Holders affected thereby a notice briefly describing
the amendment, supplement or waiver. 
The Company will mail supplemental indentures to Holders upon
request.  Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver.

 

Section 9.03.  Revocation and Effect of Consent.  Until an amendment or waiver
becomes effective, a consent to it by a Holder is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same Debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. 
However, any such Holder or subsequent Holder may revoke the consent as
to its Note or portion of its Note. 
Such revocation shall be effective only if the Trustee receives the
notice of revocation before the date the amendment, supplement or waiver
becomes effective.  An amendment,
supplement or waiver shall become effective with respect to any Notes affected
thereby on receipt by the Trustee of written consents from the requisite
Holders of outstanding Notes affected thereby.

 

The Company
may, but shall not be obligated to, fix a record date (which may be not more
than 60 days prior to the solicitation of consents) for the purpose of
determining the Holders of the Notes entitled to consent to any amendment,
supplement or waiver.  If a record date
is fixed, then, notwithstanding the immediately preceding paragraph, those
Persons who were such Holders at such record date (or their duly designated
proxies) and only those Persons shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given, whether or not
such Persons continue to be such Holders after such record date.  No such consent shall be valid or effective
for more than 90 days after such record date.

 

66

 

After an
amendment, supplement or waiver becomes effective with respect to the Notes, it
shall bind every Holder unless it is of the type described in any of clauses
(a) through (e) of Section 9.02.  In
case of an amendment or waiver of the type described in clauses (a) through (e)
of Section 9.02, the amendment or waiver shall bind each such Holder who has
consented to it and every subsequent Holder of a Note that evidences the same
indebtedness as the Note of the consenting Holder.

 

Section 9.04.  Notation on or Exchange of Notes.  If an amendment, supplement or
waiver changes the terms of any Note, the Trustee may require the Holder
thereof to deliver it to the Trustee. 
The Trustee may place an appropriate notation (provided in writing by the
Company) on the Note about the changed terms and return it to the Holder and
the Trustee may place an appropriate notation on any Note thereafter
authenticated.  Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Note
shall issue and the Trustee shall authenticate a new Note of such Series of the
same tenor that reflects the changed terms.

 

Section 9.05.  Trustee to Sign Amendments, Etc.  The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 is authorized or permitted by this Indenture,
stating that all requisite consents have been obtained or that no consents are
required and stating that such supplemental indenture constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to customary exceptions.  Subject to the preceding sentence, the
Trustee shall sign such amendment, supplement or waiver if the same does not
adversely affect the rights of the Trustee. 
The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver that affects the Trustee’s own rights, duties
or immunities under this Indenture or otherwise.

 

ARTICLE 10

MISCELLANEOUS

 

Section 10.01.  Notices. 
Any notice or communication shall be sufficiently given if
written and (a) if delivered in person when received, or (b) if mailed by first
class mail 5 days after mailing, or (c) as between the Company and the Trustee
if sent by facsimile transmission, where transmission is confirmed, in each
case addressed as follows:

 

67

 

if to the Company:

 

The AES Corporation

1001 North 19th Street

Arlington, VA 22209

Telecopy:  (703) 528-4510

Attention:  General Counsel

 

if to the Trustee:

 

Wells Fargo Bank Minnesota,

National Association

Corporate Trust Services

Sixth Street and Marquette Avenue

MAC N9303-120

Minneapolis, MN  55479

Telecopy: (612) 669-9825

Attention: AES Corporation Administrator

 

The Company or
the Trustee by written notice to the other may designate additional or
different addresses for subsequent notices or communications.

 

Any notice or
communication shall be sufficiently given to Holders by mailing to such Holders
at their addresses as they shall appear on the Note Register.  Notice mailed shall be sufficiently given if
so mailed within the time prescribed. 
Copies of any such communication or notice to a Holder shall also be
mailed to the Trustee and each Agent at the same time.

 

Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders. 
Except as otherwise provided in this Indenture, if a notice or
communication is mailed in the manner provided in this Section 10.01, it is
duly given, whether or not the addressee receives it.

 

Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.

 

In case by
reason of the suspension of regular mail service or by reason of any other
cause it shall be impracticable to give notice as herein contemplated, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

 

68

 

Section 10.02.  Certificate and Opinion as to Conditions
Precedent.  Upon any request
or application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:

 

(a)           an Officers’ Certificate stating
that, in the opinion of the signers, all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with;
and

 

(b)           an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been
complied with.

 

Section 10.03.  Statements Required in Certificate or
Opinion.  Each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Indenture shall include:

 

(a)           a statement that each person signing
such certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;

 

(b)           a brief statement as to the nature
and scope of the examination or investigation upon which the statement or
opinion contained in such certificate or opinion is based;

 

(c)           a statement that, in the opinion of
each such person, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and

 

(d)           a statement as to whether or not, in
the opinion of each such person, such condition or covenant has been complied
with; provided,
however, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers’ Certificate or certificates of public
officials.

 

Section 10.04.  Evidence of Ownership.

 

The Company,
the Trustee and any agent of the Company or the Trustee may deem and treat the
person in whose name any Note shall be registered upon the Note Register as the
absolute owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the Principal of and, subject
to the provisions of this Indenture, interest on such Note and for all other
purposes; and neither the Company nor the Trustee nor any agent of the Company
or the Trustee shall be affected by any notice to the contrary.

 

Section 10.05.  Rules by Trustee, Paying Agent or
Registrar.  The Trustee may
make reasonable rules for action by or at a meeting of Holders.  The Paying Agent or Registrar may make
reasonable rules for its functions.

 

69

 

Section 10.06.  Payment Date Other Than a Business Day.  If any date for payment of
Principal or interest on any Note shall not be a Business Day at any place of
payment, then payment of Principal of or interest on such Note, as the case nay
be, need not be made on such date, but may be made on the next succeeding
Business Day at any place of payment with the same force and effect as if made
on such date and no interest shall accrue in respect of such payment for the
period from and after such date.

 

Section 10.07.  Governing Law.  The laws of the State of New York shall govern this
Indenture and the Notes.

 

Section 10.08.  No Adverse Interpretation of Other
Agreements.  This Indenture
may not be used to interpret another indenture or loan or debt agreement of the
Company or any Subsidiary of the Company. 
No indenture or agreement may be used to interpret this Indenture except
as provided in Section 1.01 with respect to the Senior Secured Credit
Facilities.

 

Section 10.09.  Successors. 
All agreements of the Company in this Indenture and the Notes
shall bind its successors.  All
agreements of the Trustee in this Indenture shall bind its successors.

 

Section 10.10.  Duplicate Originals.  The parties may sign any number
of copies of this Indenture.  Each
signed copy shall be an original, but all of them together represent the same
agreement.

 

Section 10.11.  Separability.  In case any provision in this Indenture or in the
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

Section 10.12.  Table of Contents, Headings, Etc.  The Table of Contents and
headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms and provisions hereof.

 

Section 10.13.  Incorporators, Stockholders, Officers and
Directors of Company Exempt from Individual Liability.  No recourse under or upon any
obligation, covenant or agreement contained in this Indenture or any indenture
supplemental hereto, or in any Note, or because of any indebtedness evidenced
thereby, shall be had against any incorporator, as such or against any past,
present or future stockholder, officer, director or employee, as such, of the
Company or of any successor, either directly or through the Company or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability

 

70

 

being expressly waived and released by the acceptance of the Notes by
the Holders thereof and as part of the consideration for the issue of the
Notes.

 

Section 10.14.  Judgment Currency.  The Company agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of
obtaining judgment in any court it is necessary to convert the sum due in
respect of the Principal of or interest on the Notes (the “Required Currency”) into a
currency in which a judgment will be rendered (the “Judgment Currency”), the rate
of exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the day on which final unappealable
judgment is entered, unless such day is not a Business Day, then, to the extent
permitted by applicable law, the rate of exchange used shall be the rate at
which in accordance with normal banking procedures the Trustee could purchase
in The City of New York the Required Currency with the Judgment Currency on the
Business Day preceding the day on which final unappealable judgment is entered
and (b) its obligations under this Indenture to make payments in the Required
Currency (i) shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment (whether or not entered in accordance with
subsection (a)), in any currency other than the Required Currency, except to
the extent that such tender or recovery shall result in the actual receipt, by
the payee, of the full amount of the Required Currency expressed to be payable
in respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required Currency
the amount, if any, by which such actual receipt shall fall short of the full
amount of the Required Currency so expressed to be payable and (iii) shall not
be affected by judgment being obtained for any other sum due under this
Indenture.

 

ARTICLE 11

SECURITY ARRANGEMENTS

 

Section 11.01.  Security. 
(a)  In order to
secure the Company’s Obligations under the Indenture and the Notes with a
second-priority Lien on the Collateral, the Company will, and will cause each
of its Subsidiaries named in any of the Second Priority Collateral Documents as
a party thereto, to execute and deliver to the Collateral Trustees prior to the
Original Issue Date each Second Priority Collateral Document to which it is a
party.  The Company and its Subsidiaries
shall comply with all covenants and agreements contained in the Second Priority
Collateral Documents the failure to comply with which would have a material and
adverse effect on the Liens purported to be created thereby.

 

(b)           The Trustee and each holder of each
Note by its acceptance of that Note acknowledges and agrees that:

 

71

 

(i)              this Indenture, as originally
executed and delivered by the parties hereto, does not create any Lien on any
property or securities which secures the Company’s Obligations under this
Indenture or this Indenture;

 

(ii)             the Second Priority Collateral
Documents provide, and any security document that becomes effective after the
Original Issue Date, may provide, that the Liens created thereby or thereunder
automatically will be released and extinguished with respect to any property or
security that is transferred or otherwise disposed of in accordance with the
terms of the First-Priority Collateral Documents; provided that any
amendment, modification, supplement or termination of the First-Priority
Collateral Documents which would release, in one transaction or in a series of
related transactions, the Liens created by the Second Priority Collateral
Documents on all or substantially all of the Collateral will require the
consent of the Holders of a majority in aggregate principal amount of the Notes
outstanding;

 

(iii)            without the necessity of any consent
of or notice to the Trustee or any Holder of the Notes, the Company and the
Collateral Trustees may amend, modify, supplement or terminate any Second
Priority Collateral Document as long as the Company remains in compliance with
Sections 4.06, 4.07 and 4.12; provided that any such amendment,
modification, supplement or termination which would release, in one transaction
or in a series of related transactions, the Liens created by the Second
Priority Collateral Documents on all or substantially all of the Collateral
will require the consent of the Holders of a majority in aggregate principal
amount of the Notes outstanding;

 

(iv)            as among the Trustee, the Holders of
the Notes, the lenders under the Senior Secured Credit Facilities and the other
holders of First-Priority Secured Debt and the Collateral Trustees, prior to
the termination of the Senior Secured Credit Facilities and other
First-Priority Secured Debt in existence on the date hereof (or thereafter at
any time when at least $100 million aggregate principal amount of other
First-Priority Secured Debt incurred after the date hereof is outstanding), the
lenders under the Senior Secured Credit Facilities (or if there is no
outstanding Senior Secured Credit Facility Obligations, the holders of a
majority of the other First-Priority Secured Debt) will have the sole ability
to control and obtain remedies with respect to all Collateral (including on
sale or liquidation of any Collateral after acceleration of the Senior Secured
Credit Facility Obligations) without the necessity of any consent of or notice
to the Trustee, the Collateral Trustee or any Holder of the Notes;

 

72

 

(v)             as more fully set forth in the
Second Priority Collateral Documents, at any time after the termination of the
Senior Secured Credit Facilities and the other First-Priority Secured Debt in
existence on the date hereof, when there is less than $100 million aggregate
principal amount of other First-Priority Secured Debt, incurred after the date
hereof, outstanding, neither the Trustee nor the Holders of the Notes will have
any authority to, or to direct the Collateral Trustees to, foreclose or
otherwise realize upon any of the Collateral, unless and until the holders of
such First-Priority Secured Debt fail to commence the exercise of remedies with
respect to or in connection with the Collateral within 120 days following
notice to the First-Priority Secured Debt of the occurrence of an Event of
Default under the Indenture;

 

(vi)            any or all Liens granted under the
Second Priority Collateral Documents for the benefit of the Holders of the
Notes will be automatically released, without the necessity of any consent of
the Trustee or any Holders of the Notes, upon a release of such Lien or Liens
pursuant to the terms of the First-Priority Collateral Documents and the Senior
Secured Credit Facilities or if such release is approved by the requisite
lenders under the Senior Secured Credit Facilities; provided that any release,
in one transaction or a series of related transactions, of the Liens created by
the Second Priority Collateral Documents on all or substantially all of the
Collateral will require the consent of the Holders of a majority in aggregate
principal amount of the Notes outstanding;

 

(vii)           the relative rights of the Holders of
the Notes and the holders of indebtedness or other obligations secured by Liens
on the Collateral are governed by, and are subject to the terms and conditions
of, the Second Priority Collateral Documents and not this Indenture; and

 

(viii)          without the necessity of any consent
of or notice to the Trustee or any Holder of the Notes, the Company may, on
behalf of itself or any of its Subsidiaries, request and instruct the
Collateral Trustees to, on behalf of each secured party under the Second
Priority Collateral Documents, (A) execute and deliver to the Company, for the benefit
of any Person, such release documents as the Company may reasonably request, of
all liens and security interests held by the Collateral Trustees in such
assets, and such Person shall be entitled to rely conclusively on such release
document, and (B) deliver any such assets in the possession of the Collateral
Trustees to the Company; provided  that any such release complies with the terms of the Second
Priority Collateral Documents and this Indenture.

 

Section 11.02.  Notice of Payment, Discharge or Defeasance.  The Trustee and each Holder, by
its acceptance of a Note, agree that upon the payment in full

 

73

 

or discharge pursuant to Article 8 of the Company’s Obligations under
the Indenture (including the Notes), the Trustee shall without notice to or
consent of any Holder, upon the written request of the Company, certify to the
Collateral Trustees, in writing, that the Company’s Obligations under the
Indenture have been paid in full, or that this Indenture has been discharged in
accordance with Article 8.

 

74

 

SIGNATURES

 

IN WITNESS
WHEREOF, the parties hereto have caused this Indenture to be duly executed, all
as of the date first written above.

 

	
   

  	
  THE AES CORPORATION

  as the Company

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry J. Sharp

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry J. Sharp

  
	
   

  	
   

  	
  Title:

  	
  Executive VP & CFO

  
					

 

	
   

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION,

  as the Trustee

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffery T. Rose

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffery T. Rose

  
	
   

  	
   

  	
  Title:

  	
  Corporate Trust Officer

  
					

 

75

 

EXHIBIT A-1

 

[FACE OF NOTE]

 

THE AES CORPORATION

 

83⁄4% Second-Priority Senior Secured Note due 2013

 

CUSIP 144A:
              

CUSIP Regulation S:
              

$                         

 

The AES
Corporation, a Delaware corporation (the “Company”,
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to CEDE & CO, or its registered
assigns, the principal sum of
                
DOLLARS ($          ) on the
Final Maturity Date (as defined on the reverse hereof).

 

Interest Rate:                              83⁄4%
per annum.

 

Interest
Payment Dates: May 15 and November 15, commencing November 15, 2003.

 

Regular Record
Dates: May 1 and November 1.

 

Reference is
hereby made to the further provisions of this Note due 2013 set forth on the
reverse hereof, which will for all purposes have the same effect as if set
forth at this place.

 

 

IN WITNESS
WHEREOF, the Company has caused this Note due 2013 to be signed manually or by
facsimile by its duly authorized officers.

 

	
  Date:

  	
  THE AES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Paul
  T. Hanrahan

  
	
   

  	
   

  	
  Title:
  President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Barry
  J. Sharp

  
	
   

  	
   

  	
  Title: Ex VP
  & CFO

  

 

A1-2

 

(Form of Trustee’s Certificate of Authentication)

 

This is one of
the 83⁄4% Second Priority Senior Secured Notes Due 2013 described in the
Indenture referred to in this Note.

 

	
   

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION,

  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

A1-3

 

[REVERSE SIDE OF NOTE]

 

THE AES CORPORATION

 

SECOND PRIORITY SENIOR SECURED NOTE DUE 2013

 

1.        Principal and
Interest.  THE AES CORPORATION, a
Delaware corporation (the “Company”, which definition shall include any
successor thereto in accordance with the Indenture (as defined below)),
promises to pay the Principal amount set forth on the reverse side hereof on
the Final Maturity Date.

 

The “Final
Maturity Date” means May 15, 2013.

 

The Company
promises to pay, until the Principal hereof is paid or made available for
payment, interest on the Principal amount set forth on the reverse side hereof
at a rate of 83⁄4% per  annum. 
Interest on this Note due 2013 will accrue from and including the most
recent date to which interest has been paid or, if no interest has been paid,
from May 8, 2003 through but excluding the date on which interest is paid.  Interest shall be payable in arrears on May
15 and November 15 of each year (each an “Interest Payment Date”), commencing
November 15, 2003.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.  In the event that any date on which interest
is payable on the Notes due 2013 is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay).

 

2.        Method of Payment.  The Company will pay interest on the Notes
due 2013 (except defaulted interest) to the Persons who are registered Holders
of Notes due 2013 at the close of business on the fifteenth calendar day prior
to each Interest Payment Date (each, a “Regular Record Date”).

 

All payments
of Principal of, and any interest on the Notes due 2013 issued in global form
will be made to the Depositary as the registered holder thereof.  The Company expects that the Depositary,
upon receipt of any payment of Principal or interest on such Notes due 2013,
will credit the accounts of persons who have accounts with the Depositary
(“participants”) with payment of Principal or interest on the date payable in
amounts proportionate to their respective beneficial interests in the Principal
amount of such Note due 2013 as shown on the records of the Depositary.  The Company also expects that payments by
participants to owners of beneficial interests in any Note due 2013 held
through such participants will be governed by standing instructions and
customary practices.  Such payments will
be the responsibility of such participants. 
The Company will pay Principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts.

 

A1-4

 

3.        Paying Agent and
Registrar.  Initially, Wells Fargo
Bank Minnesota, National Association (the “Trustee”) will act as Paying Agent and
Registrar.  The Company may change any
Paying Agent, Registrar or co-Registrar without notice.

 

4.        Indenture.  The Company issued the Notes due 2013 under
an Indenture dated as of May 8, 2003 between the Company and the Trustee.  The terms of the Notes due 2013 include
those stated in the Indenture.  The
Notes due 2013 are subject to all such terms, and Holders of the Notes due 2013
are referred to the Indenture for a statement of them.  Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Indenture.  The Notes due 2013 are senior secured
obligations of the Company.  The Indenture
limits, among other things, the ability of the Company to incur certain
additional secured indebtedness, create liens, enter into certain sale and
leaseback transactions, pay dividends or make other equity distributions, sell
assets, engage in transactions with affiliates or effect a consolidation or
merger.

 

5.        Optional Redemption.  The Notes due 2013 will be redeemable, in
whole or in part, at any time, and from time to time, at the option of the
Company upon not less than 30 nor more than 60 days’ notice at a redemption
price equal to (a) the sum of (i) 100% of the principal amount thereof plus
accrued and unpaid interest to the redemption date plus (ii) a Make-Whole
Amount (as defined in the Indenture), if any, if redeemed prior to May 15, 2008
or (b) the percentage of the principal amount set forth below plus accrued and
unpaid interest to the redemption date if redeemed during the 12 month period
commencing on May 15, of the years set forth below.

 

	
  12-month period

  commencing May 15

  in Year

  	
   

  	
  Percentage

  	
   

  
	
  2008

  	
   

  	
  104.375

  	
  %

  
	
  2009

  	
   

  	
  102.917

  	
  %

  
	
  2010

  	
   

  	
  101.458

  	
  %

  
	
  2011 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

6.        Partial Redemption,
Notice of Redemption. 

 

If less than
all the Notes due 2013 are to be redeemed at any time, selection of Notes due
2013 for redemption will be made by the Trustee on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate; provided that no Notes due 2013 of $1,000
or less shall be redeemed in part.

 

Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes due 2013 to be redeemed
at its registered address. If any Note due 2013 is to be redeemed in part only,
the notice of redemption that relates to such Note due 2013 shall state

 

A1-5

 

the portion of the Principal
amount thereof to be redeemed.  A new
Note due 2013 in principal amount equal to the unredeemed portion thereof will
be issued in the name of the Holder thereof upon surrender of the original Note
due 2013.  Notes due 2013 called for
redemption become due on the date fixed for redemption.  On and after the redemption date the Notes
due 2013 shall cease to be entitled to any benefit under the Indenture and the
Holders thereof shall have no right in respect of such Notes due 2013 except
the right to receive the redemption price thereof and unpaid interest to the
date fixed for redemption.

 

7.        Denominations,
Transfer, Exchange.  The Notes due
2013 are in registered form without coupons in denominations of $1,000 and
integral multiples of $1,000.  A Holder
may transfer or exchange Notes due 2013 only in accordance with the Indenture
and as set forth in the Restricted Legend and the DTC Legend.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay to it any taxes and fees required by law or permitted by the
Indenture.  The Registrar need not
transfer or exchange any Notes due 2013 or portion of a Note due 2013 selected
for redemption, or transfer or exchange any Notes for a period of 15 days
before selection of such Notes due 2013 to be redeemed.

 

8.        Persons Deemed Owners.  The registered holder of a Note due 2013 may
be treated as the owner of it for all purposes.

 

9.        Unclaimed Money.  If money for the payment of Principal or
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its written request.  After that, Holders entitled to the money must look to the
Company for payment as general creditors unless an “abandoned property” law
designates another Person.

 

10.      Amendment, Supplement,
Waiver.  The Company and the Trustee
may, without the consent of the holders of any outstanding Notes due 2013, amend,
waive or supplement the Indenture or the Notes due 2013 or the Second Priority
Collateral Documents for certain specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies, directly or indirectly
releasing the Liens created by the Second Priority Collateral Documents on less
than all or substantially all the Collateral or making any other change that
does not adversely affect the rights of any Holder in any material
respect.  Without the consent of each
Holder affected thereby, an amendment or waiver may not: (a) change the Stated
Maturity of the Principal of or any installment of interest on, such Holder’s
Note; (b) modify the provisions of Section 4.10 of the Indenture; (c) reduce
the Principal amount thereof or the rate of interest thereon; or (d) reduce the
percentage or aggregate Principal amount of outstanding Notes the consent of
whose Holders is required for any supplemental indenture, for any amendment,
waiver of compliance with certain provisions of the Indenture or certain
Defaults and their consequences provided for in the Indenture.  Other amendments and

 

A1-6

 

modifications
of the Indenture or the Notes due 2013 or the Second Priority Collateral
Documents may be made by the Company and the Trustee with the consent of the
Holders of not less than a majority of the aggregate principal amount of the
outstanding Notes due 2013 and the Notes due 2015, voting together as a single
class.

 

11.      Successor Corporation.
 When a successor corporation assumes
all the obligation of its predecessor under the Notes due 2013 and the
Indenture and the transaction complies with the terms of Article 5 of the
Indenture, the predecessor corporation, subject to certain exceptions, will be
released from those obligations.

 

12.      Defaults and Remedies.  Events of Default are set forth in the
Indenture.  Subject to certain
limitations in the Indenture, if an Event of Default (other than an Event of
Default specified in Section 6.01(f) or (g) of the Indenture with respect to
the Company) occurs and is continuing, then either the Trustee or the Holders
of not less than 25% in aggregate principal amount of the outstanding Notes
(voting as a single class) (or in the case of an Event of Default specified in
Section 6.01(a) or (b) of the Indenture with respect to the Notes due 2013, the
Holders of not less than 25% in aggregate Principal amount of the Notes due
2013) may, or the Trustee at the request of such Holders shall, declare the
Principal of, plus accrued interest, if any, to be due and payable immediately.

 

If an Event of
Default specified in Section 6.1(f) or (g) of the Indenture with respect to the
Company occurs and is continuing, the Principal of and accrued interest on all
of the Notes shall ipso  facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.  Holders of Notes due 2013 may
not enforce the Indenture or the Notes due 2013 except as provided in the
Indenture.  The Trustee may require
indemnity reasonably satisfactory to it before it enforces the Indenture or the
Notes due 2013.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes (or in the case of an Event of Default specified in Section 6.01(a) or
(b) of the Indenture with respect to the Notes due 2013, the Holders of at
least a majority in principal amount of the Notes due 2013) may direct the
Trustee in its exercise of any trust or power. 
The Trustee may withhold from Holders of the Notes due 2013 notice of
any continuing default (except a default in payment of Principal or interest or
a failure to comply with Article 5 of the Indenture) if it determines in good
faith that withholding notice is in their interests.

 

13.      Security.  In order to secure the Company’s Obligations
under the Indenture, the Company and certain of its Subsidiaries have entered
into the Second-Priority Collateral Documents. 
The Company’s Obligations under the Indenture shall be secured by
second-priority Liens on the Collateral in accordance with the terms and
provisions of the Second-Priority Collateral Documents.  The

 

A1-7

 

Indenture
requires that Holders of the Notes due 2013 be granted a second-priority lien
equally and ratably with any lien granted on additional assets pledged to
secure the First-Priority Secured Debt subsequent to the Issue Date.  Each Holder of this Note due 2013, by
accepting the same, agrees that (i) the Second-Priority Collateral Documents
provide, and any security document that becomes effective after the Original
Issue Date, may provide, that the Liens created thereby or thereunder
automatically will be released and extinguished with respect to any property or
security that is transferred or otherwise disposed of in accordance with the
terms of the First-Priority Collateral Documents; provided that any amendment,
modification, supplement or termination of the First-Priority Collateral
Documents which would release, in one transaction or in a series of related
transactions, the Liens created by the Second-Priority Collateral Documents on
all or substantially all of the Collateral will require the consent of the
Holders of a majority in aggregate principal amount of the Notes outstanding;
(ii) without the necessity of any consent of or notice to the Trustee or any
Holder of the Notes, the Company and the Collateral Trustees may amend, modify,
supplement or terminate any Second-Priority Collateral Document as long as the
Company remains in compliance with Sections 4.06, 4.07 and 4.12 of the
Indenture; provided that any such amendment, modification, supplement or
termination which would release, in one transaction or in a series of related
transactions, the Liens created by the Second-Priority Collateral Documents on
all or substantially all of the Collateral will require the consent of the
Holders of a majority in aggregate principal amount of the Notes outstanding;
(iii) as among the Trustee, the Holders of the Notes, the lenders under the
Senior Secured Credit Facilities and the other holders of First-Priority
Secured Debt and the Collateral Trustees, prior to the termination of the
Senior Secured Credit Facilities and other First-Priority Secured Debt in
existence on the date hereof (or thereafter at any time when at least $100
million aggregate principal amount of other First-Priority Secured Debt
incurred after the date hereof is outstanding), the lenders under the Senior
Secured Credit Facilities (or if there is no outstanding Senior Secured Credit
Facility Obligations, the holders of a majority of the other First-Priority
Secured Debt) will have the sole ability to control and obtain remedies with
respect to all Collateral (including on sale or liquidation of any Collateral
after acceleration of the Senior Secured Credit Facility Obligations) without
the necessity of any consent of or notice to the Trustee, the Collateral
Trustee or any such Holder of the Notes; (iv) as more fully set forth in the
Second-Priority Collateral Documents, at any time after the termination of the
Senior Secured Credit Facilities and the other First-Priority Secured Debt in
existence on the date hereof, when there is less than $100 million aggregate
principal amount of other First-Priority Secured Debt, incurred after the date
hereof, outstanding, neither the Trustee nor the Holders of the Notes will have
any authority to, or to direct the Collateral Trustees to, foreclose or
otherwise realize upon any of the Collateral, unless and until the holders of
such First-Priority Secured Debt fail to commence the exercise of remedies with
respect to or in connection with the Collateral within 120 days following
notice to the

 

A1-8

 

First-Priority
Secured Debt of the occurrence of an Event of Default under the Indenture; (v)
any or all Liens granted under the Second-Priority Collateral Documents for the
benefit of the Holders of the Notes will be automatically released, without the
necessity of any consent of the Trustee or any Holders of the Notes, upon a
release of such Lien or Liens pursuant to the terms of the First-Priority
Collateral Documents and the Senior Secured Credit Facilities or if such
release is approved by the requisite lenders under the Senior Secured Credit
Facilities; provided
that any release, in one transaction or a series of related transactions, of
the Liens created by the Second-Priority Collateral Documents on all or
substantially all of the Collateral will require the consent of the Holders of
a majority in aggregate principal amount of the Notes outstanding; (vi) the
relative rights of the Holders of the Notes and the holders of indebtedness or
other obligations secured by Liens on the Collateral are governed by, and are
subject to the terms and conditions of, the Second-Priority Collateral
Documents and not the Indenture; and (vii) without the necessity of any consent
of or notice to the Trustee or any Holder of the Notes, the Company may, on
behalf of itself or any of its Subsidiaries, request and instruct the
Collateral Trustees to, on behalf of each secured party under the
Second-Priority Collateral Documents, (A) execute and deliver to the Company,
for the benefit of any Person, such release documents as the Company may reasonably
request, of all liens and security interests held by the Collateral Trustees in
such assets, and such Person shall be entitled to rely conclusively on such
release document, and (B) deliver any such assets in the possession of the
Collateral Trustees to the Company; provided  that any such release complies with the terms of the
Second-Priority Collateral Documents and the Indenture.

 

14.      Trustee Dealing with
Company.  The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.

 

15.      No Recourse Against
Others.  A director, officer,
employee, stockholder or beneficiary, as such, of the Company shall not have
any liability for any obligations of the Company under the Second-Priority
Senior Secured Notes or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation.  Each Holder of the Notes due 2013 by accepting a Note due 2013
waives and releases all such liability. 
The waiver and release are part of the consideration for the issue of
the Notes due 2013.

 

16.      Defeasance.  The Indenture contains provisions (which
provisions apply to this Note due 2013) for defeasance at any time of (a) the
entire indebtedness of the Company in respect of this Note due 2013 and (b)
certain restrictive covenants, certain provisions relating to the Collateral
and Defaults and Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.

 

A1-9

 

17.      Authentication.  This Note due 2013 shall not be valid until
the Trustee signs the certificate of authentication on the other side of this
Note due 2013.

 

18.      Abbreviations.  Customary abbreviations may be used in the
name of a Holder of Notes due 2013 or an assignee, such as: TEN COM (= tenants
in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with right
of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

 

19.      GOVERNING LAW.  THE INDENTURE AND THIS NOTE DUE 2013 SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.

 

The Company
will furnish to any Holder of Notes due 2013 upon written request and without
charge a copy of the Indenture. 
Requests may be made to:

 

THE AES
CORPORATION

1001 North 19th Street, Suite 2000

Arlington, Virginia 22209

Telephone: (703) 522-1315

Telecopy:  (703) 528-4510

Attention:  General Counsel

 

A1-10

 

[FORM OF TRANSFER NOTICE]

 

FOR VALUE
RECEIVED the undersigned registered holder hereby sell(s), assign(s) and
transfer(s) unto

 

Insert Taxpayer Identification
No.

 

	
   

  
	
  Please
  print or typewrite name and address including zip code of assignee

  
	
   

  
	
  the
  within Note and all rights thereunder, hereby irrevocably constituting and
  appointing

  
	
   

  
	
  attorney to
  transfer said Note on the books of the Company with full power of
  substitution in the premises.

  

 

A1-11

 

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL

CERTIFICATES BEARING A RESTRICTED LEGEND]

 

In connection
with any transfer of this Note due 2013 occurring prior to
                    ,
the undersigned confirms that such transfer is made without utilizing any
general solicitation or general advertising and further as follows:

 

Check One

 

o                                    (a)
This Note is being transferred to a “qualified institutional buyer” in
compliance with Rule 144A under the Securities Act of 1933, as amended and a
Rule 144A Certificate (as defined in the Indenture) is being furnished
herewith.

 

o                                    (b)
This Note is being transferred to a Non-U.S. Person in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided by
Regulation S thereunder, and certification in the form of Exhibit D to the
Indenture is being furnished herewith.

 

o                                    (c)
This Note is being transferred to the Company.

 

or

 

o                                    (d)
This Note is being transferred other than in accordance with (a), (b) or (c)
above and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.

 

If none of the
foregoing boxes is checked, the Trustee is not obligated to register this Note
in the name of any Person other than the Holder hereof unless and until the
conditions to any such transfer of registration set forth herein and in the
Indenture have been satisfied.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Seller

  
	
   

  	
  By

  

 

 

NOTICE:  The signature to this assignment must
correspond with the name as written upon the face of the within-mentioned
instrument in every particular, without alteration or any change whatsoever.

 

A1-12

 

	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
  By

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Association Medallion Program
(“STAMP”) or such other “signature guarantee program” as may be determined by
the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  To be executed
  by an executive officer

  

 

A1-13

 

SCHEDULE OF EXCHANGES
OF NOTES

 

The following
exchanges of a part of this Global Note for a part of another Global Note have
been made:(1)

 

 

	
  Date
  of Exchange

  	
   

  	
  Amount
  of

  decrease in

  principal amount

  of this Global Note

  	
   

  	
  Amount
  of increase

  in principal

  amount of this

  Global Note

  	
   

  	
  Principal
  amount

  of this Global Note

  following such

  decrease (or

  increase)

  	
   

  	
  Signature
  of

  authorized officer

  of Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

(1)           This Schedule applies to Global Notes
only and will not be attached to any Certificated Notes. 

 

A1-14

 

EXHIBIT A-2

 

[FACE OF NOTE]

 

THE AES CORPORATION

 

9% Second-Priority Senior Secured Note due 2015

 

CUSIP 144A:
                

 

CUSIP REGULATION S:
                

 

$                           

 

The AES
Corporation, a Delaware corporation (the “Company”,
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to CEDE & CO, or its registered
assigns, the principal sum of
                             
DOLLARS ($          ) on the
Final Maturity Date (as defined on the reverse hereof).

 

Interest Rate:                              9%
per annum.

 

Interest
Payment Dates: May 15 and November 15, commencing November 15, 2003.

 

Regular Record
Dates: May 1 and November 1.

 

Reference is
hereby made to the further provisions of this Note due 2015 set forth on the
reverse hereof, which will for all purposes have the same effect as if set
forth at this place.

 

 

IN WITNESS
WHEREOF, the Company has caused this Note due 2015 to be signed manually or by
facsimile by its duly authorized officers.

 

	
  Date:

  	
  THE AES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Paul
  T. Hanrahan

  
	
   

  	
   

  	
  Title:
  President & CEO

  

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Barry
  J. Sharp

  
	
   

  	
   

  	
  Title: Ex VP
  & CFO

  

 

A2-2

 

(Form of Trustee’s Certificate of Authentication)

 

This is one of
the 9% Second-Priority Senior Secured Notes Due 2015 described in the Indenture
referred to in this Note.

 

	
   

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION,

  as Trustee

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Authorized
  Signatory

  

 

A2-3

 

[REVERSE SIDE OF NOTE]

 

THE AES CORPORATION

 

SECOND PRIORITY SENIOR SECURED NOTE DUE 2015

 

1.        Principal and
Interest.  THE AES CORPORATION, a
Delaware corporation (the “Company”, which definition shall include any
successor thereto in accordance with the Indenture (as defined below)),
promises to pay the Principal amount set forth on the reverse side hereof on
the Final Maturity Date.

 

The “Final
Maturity Date” means May 15, 2015.

 

The Company
promises to pay, until the Principal hereof is paid or made available for
payment, interest on the Principal amount set forth on the reverse side hereof
at a rate of 9% per  annum. 
Interest on this Note due 2015 will accrue from and including the most
recent date to which interest has been paid or, if no interest has been paid,
from May 8, 2003 through but excluding the date on which interest is paid.  Interest shall be payable in arrears on May
15 and November 15 of each year (each an “Interest Payment Date”), commencing
November 15, 2003.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.  In the event that any date on which interest
is payable on the Notes due 2015 is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any such
delay).

 

2.        Method of Payment.  The Company will pay interest on the Notes
due 2015 (except defaulted interest) to the Persons who are registered Holders
of Notes due 2015 at the close of business on the fifteenth calendar day prior
to each Interest Payment Date (each, a “Regular Record Date”).

 

All payments
of Principal of, and any interest on the Notes due 2015 issued in global form
will be made to the Depositary as the registered holder thereof.  The Company expects that the Depositary,
upon receipt of any payment of Principal or interest on such Notes due 2015,
will credit the accounts of persons who have accounts with the Depositary
(“participants”) with payment of Principal or interest on the date payable in
amounts proportionate to their respective beneficial interests in the Principal
amount of such Note due 2015 as shown on the records of the Depositary.  The Company also expects that payments by
participants to owners of beneficial interests in any Note due 2015 held
through such participants will be governed by standing instructions and
customary practices.  Such payments will
be the responsibility of such participants. 
The Company will pay Principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts.

 

A2-4

 

3.        Paying Agent and
Registrar.  Initially, Wells Fargo
Bank Minnesota, National Association (the “Trustee”) will act as Paying Agent and
Registrar.  The Company may change any
Paying Agent, Registrar or co-Registrar without notice.

 

4.        Indenture.  The Company issued the Notes due 2015 under
an Indenture dated as of May 8, 2003 between the Company and the Trustee.  The terms of the Notes due 2015 include
those stated in the Indenture.  The
Notes due 2015 are subject to all such terms, and Holders of the Notes due 2015
are referred to the Indenture for a statement of them.  Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Indenture.  The Notes due 2015 are senior secured
obligations of the Company.  The
Indenture limits, among other things, the ability of the Company to incur
certain additional secured indebtedness, create liens, enter into certain sale
and leaseback transactions, pay dividends or make other equity distributions,
sell assets, engage in transactions with affiliates or effect a consolidation
or merger.

 

5.        Optional Redemption.  The Notes due 2015 will be redeemable, in
whole or in part, at any time, and from time to time, at the option of the
Company upon not less than 30 nor more than 60 days’ notice at a redemption
price equal to (a) the sum of (i) 100% of the principal amount thereof plus
accrued and unpaid interest to the redemption date plus (ii) a Make-Whole Amount
(as defined in the Indenture), if any, if redeemed prior to May 15, 2008 or (b)
the percentage of the principal amount set forth below plus accrued and unpaid
interest to the redemption date if redeemed during the 12 month period
commencing on May 15, of the years set forth below. 

 

	
  12-month period

  commencing May 15

  in Year

  	
   

  	
  Percentage

  	
   

  
	
  2008

  	
   

  	
  104.500

  	
  %

  
	
  2009

  	
   

  	
  103.000

  	
  %

  
	
  2010

  	
   

  	
  101.500

  	
  %

  
	
  2011 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

6.        Partial Redemption,
Notice of Redemption. 

 

If less than
all the Notes due 2015 are to be redeemed at any time, selection of Notes due
2015 for redemption will be made by the Trustee on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate; provided that no Notes due 2015 of $1,000
or less shall be redeemed in part.

 

Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes due 2015 to be redeemed
at its registered address. If any Note due 2015 is to be redeemed in part only,
the notice of redemption that relates to such Note due 2015 shall state

 

A2-5

 

the portion of the Principal
amount thereof to be redeemed.  A new
Note due 2015 in principal amount equal to the unredeemed portion thereof will
be issued in the name of the Holder thereof upon surrender of the original Note
due 2015.  Notes due 2015 called for
redemption become due on the date fixed for redemption.  On and after the redemption date the Notes
due 2015 shall cease to be entitled to any benefit under the Indenture and the
Holders thereof shall have no right in respect of such Notes due 2015 except
the right to receive the redemption price thereof and unpaid interest to the
date fixed for redemption.

 

7.        Denominations,
Transfer, Exchange.  The Notes due
2015 are in registered form without coupons in denominations of $1,000 and
integral multiples of $1,000.  A Holder
may transfer or exchange Notes due 2015 only in accordance with the Indenture
and as set forth in the Restricted Legend and the DTC Legend.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay to it any taxes and fees required by law or permitted by the
Indenture.  The Registrar need not
transfer or exchange any Notes due 2015 or portion of a Note due 2015 selected
for redemption, or transfer or exchange any Notes for a period of 15 days
before selection of such Notes due 2015 to be redeemed.

 

8.        Persons Deemed Owners.  The registered holder of a Note due 2015 may
be treated as the owner of it for all purposes.

 

9.        Unclaimed Money.  If money for the payment of Principal or
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its written request.  After that, Holders entitled to the money must look to the
Company for payment as general creditors unless an “abandoned property” law
designates another Person.

 

10.      Amendment, Supplement,
Waiver.  The Company and the Trustee
may, without the consent of the holders of any outstanding Notes due 2015,
amend, waive or supplement the Indenture or the Notes due 2015 or the Second
Priority Collateral Documents for certain specified purposes, including, among
other things, curing ambiguities, defects or inconsistencies, directly or
indirectly releasing the Liens created by the Second Priority Collateral
Documents on less than all or substantially all the Collateral or making any
other change that does not adversely affect the rights of any Holder in any
material respect.  Without the consent
of each Holder affected thereby, an amendment or waiver may not: (a) change the
Stated Maturity of the Principal of or any installment of interest on, such Holder’s
Note; (b) modify the provisions of Section 4.10 of the Indenture; (c) reduce
the Principal amount thereof or the rate of interest thereon; or (d) reduce the
percentage or aggregate Principal amount of outstanding Notes the consent of
whose Holders is required for any supplemental indenture, for any amendment,
waiver of compliance with certain provisions of the Indenture or certain
Defaults and their consequences provided for in the Indenture.  Other amendments and

 

A2-6

 

modifications
of the Indenture or the Notes due 2015 or the Second Priority Collateral
Documents may be made by the Company and the Trustee with the consent of the
Holders of not less than a majority of the aggregate principal amount of the
outstanding Notes due 2015 and the Notes due 2013, voting together as a single
class.

 

11.      Successor Corporation.  When a successor corporation assumes all the
obligation of its predecessor under the Notes due 2015 and the Indenture and
the transaction complies with the terms of Article 5 of the Indenture, the
predecessor corporation, subject to certain exceptions, will be released from
those obligations.

 

12.      Defaults and Remedies.  Events of Default are set forth in the
Indenture.  Subject to certain
limitations in the Indenture, if an Event of Default (other than an Event of
Default specified in Section 6.01(f) or (g) of the Indenture with respect to
the Company) occurs and is continuing, then either the Trustee or the Holders
of not less than 25% in aggregate principal amount of the outstanding Notes
(voting as a single class) (or in the case of an Event of Default specified in
Section 6.01(a) or (b) of the Indenture with respect to the Notes due 2015, the
Holders of not less than 25% in aggregate Principal amount of the Notes due
2015) may, or the Trustee at the request of such Holders shall, declare the
Principal of, plus accrued interest, if any, to be due and payable immediately.

 

If an Event of
Default specified in Section 6.1(f) or (g) of the Indenture with respect to the
Company occurs and is continuing, the principal of and accrued interest on all
of the Notes shall ipso  facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.  Holders of Notes due 2015 may
not enforce the Indenture or the Notes due 2015 except as provided in the
Indenture.  The Trustee may require
indemnity reasonably satisfactory to it before it enforces the Indenture or the
Notes due 2015.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes (or in the case of an Event of Default specified in Section 6.01(a) or
(b) of the Indenture with respect to the Notes due 2015, the Holders of at
least a majority in principal amount of the Notes due 2015) may direct the
Trustee in its exercise of any trust or power. 
The Trustee may withhold from Holders of the Notes due 2015 notice of
any continuing default (except a default in payment of Principal or interest or
a failure to comply with Article 5 of the Indenture) if it determines in good
faith that withholding notice is in their interests.

 

13.      Security.  In order to secure the Company’s Obligations
under the Indenture, the Company and certain of its Subsidiaries have entered
into the Second-Priority Collateral Documents. 
The Company’s Obligations under the Indenture shall be secured by
second-priority Liens on the Collateral in accordance with the terms and
provisions of the Second-Priority Collateral Documents.  The

 

A2-7

 

Indenture
requires that Holders of the Notes due 2015 be granted a second-priority lien
equally and ratably with any lien granted on additional assets pledged to
secure the First-Priority Secured Debt subsequent to the Issue Date.  Each Holder of this Note due 2015, by
accepting the same, agrees that (i) the Second-Priority Collateral Documents
provide, and any security document that becomes effective after the Original
Issue Date, may provide, that the Liens created thereby or thereunder automatically
will be released and extinguished with respect to any property or security that
is transferred or otherwise disposed of in accordance with the terms of the
First-Priority Collateral Documents; provided that any amendment, modification,
supplement or termination of the First-Priority Collateral Documents which
would release, in one transaction or in a series of related transactions, the
Liens created by the Second-Priority Collateral Documents on all or
substantially all of the Collateral will require the consent of the Holders of
a majority in aggregate principal amount of the Notes outstanding; (ii) without
the necessity of any consent of or notice to the Trustee or any Holder of the
Notes, the Company and the Collateral Trustees may amend, modify, supplement or
terminate any Second-Priority Collateral Document as long as the Company
remains in compliance with Sections 4.06, 4.07 and 4.12 of the Indenture;
provided that any such amendment, modification, supplement or termination which
would release, in one transaction or in a series of related transactions, the
Liens created by the Second-Priority Collateral Documents on all or
substantially all of the Collateral will require the consent of the Holders of
a majority in aggregate principal amount of the Notes outstanding; (iii) as
among the Trustee, the Holders of the Notes, the lenders under the Senior
Secured Credit Facilities and the other holders of First-Priority Secured Debt
and the Collateral Trustees, prior to the termination of the Senior Secured
Credit Facilities and other First-Priority Secured Debt in existence on the
date hereof (or thereafter at any time when at least $100 million aggregate
principal amount of other First-Priority Secured Debt incurred after the date
hereof is outstanding), the lenders under the Senior Secured Credit Facilities
(or if there is no outstanding Senior Secured Credit Facility Obligations, the
holders of a majority of the other First-Priority Secured Debt) will have the
sole ability to control and obtain remedies with respect to all Collateral
(including on sale or liquidation of any Collateral after acceleration of the
Senior Secured Credit Facility Obligations) without the necessity of any
consent of or notice to the Trustee, the Collateral Trustee or any such Holder
of the Notes; (iv) as more fully set forth in the Second-Priority Collateral
Documents, at any time after the termination of the Senior Secured Credit
Facilities and the other First-Priority Secured Debt in existence on the date
hereof, when there is less than $100 million aggregate principal amount of
other First-Priority Secured Debt, incurred after the date hereof, outstanding,
neither the Trustee nor the Holders of the Notes will have any authority to, or
to direct the Collateral Trustees to, foreclose or otherwise realize upon any
of the Collateral, unless and until the holders of such First-Priority Secured
Debt fail to commence the exercise of remedies with respect to or in connection
with the Collateral within 120 days following notice to the

 

A2-8

 

First-Priority
Secured Debt of the occurrence of an Event of Default under the Indenture; (v)
any or all Liens granted under the Second-Priority Collateral Documents for the
benefit of the Holders of the Notes will be automatically released, without the
necessity of any consent of the Trustee or any Holders of the Notes, upon a
release of such Lien or Liens pursuant to the terms of the First-Priority
Collateral Documents and the Senior Secured Credit Facilities or if such
release is approved by the requisite lenders under the Senior Secured Credit
Facilities; provided
that any release, in one transaction or a series of related transactions, of
the Liens created by the Second-Priority Collateral Documents on all or
substantially all of the Collateral will require the consent of the Holders of
a majority in aggregate principal amount of the Notes outstanding; (vi) the
relative rights of the Holders of the Notes and the holders of indebtedness or
other obligations secured by Liens on the Collateral are governed by, and are
subject to the terms and conditions of, the Second-Priority Collateral
Documents and not the Indenture; and (vii) without the necessity of any consent
of or notice to the Trustee or any Holder of the Notes, the Company may, on
behalf of itself or any of its Subsidiaries, request and instruct the
Collateral Trustees to, on behalf of each secured party under the
Second-Priority Collateral Documents, (A) execute and deliver to the Company, for
the benefit of any Person, such release documents as the Company may reasonably
request, of all liens and security interests held by the Collateral Trustees in
such assets, and such Person shall be entitled to rely conclusively on such
release document, and (B) deliver any such assets in the possession of the
Collateral Trustees to the Company; provided  that any such release complies with the terms of the
Second-Priority Collateral Documents and the Indenture.

 

14.      Trustee Dealing with
Company.  The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.

 

15.      No Recourse Against Others.  A director, officer, employee, stockholder
or beneficiary, as such, of the Company shall not have any liability for any
obligations of the Company under the Second-Priority Senior Secured Notes or
the Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation.  Each
Holder of the Notes due 2015 by accepting a Note due 2013 waives and releases
all such liability.  The waiver and
release are part of the consideration for the issue of the Notes due 2015.

 

16.      Defeasance.  The Indenture contains provisions (which
provisions apply to this Note due 2015) for defeasance at any time of (a) the
entire indebtedness of the Company in respect of this Note due 2015 and (b)
certain restrictive covenants, certain provisions relating to the Collateral
and Defaults and Events of Default, in each case upon compliance by the Company
with certain conditions set forth therein.

 

A2-9

 

17.      Authentication.  This Note due 2015 shall not be valid until
the Trustee signs the certificate of authentication on the other side of this
Note due 2015.

 

18.      Abbreviations.  Customary abbreviations may be used in the
name of a Holder of Notes due 2015 or an assignee, such as: TEN COM (= tenants
in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

 

19.      GOVERNING LAW.  THE INDENTURE AND THIS NOTE DUE 2015 SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.

 

The Company
will furnish to any Holder of Notes due 2015 upon written request and without
charge a copy of the Indenture. 
Requests may be made to:

 

THE AES
CORPORATION

1001 North 19th Street, Suite 2000

Arlington, Virginia 22209

Telephone: (703) 522-1315

Telecopy:  (703) 528-4510

Attention:  General Counsel

 

A2-10

 

[FORM OF TRANSFER NOTICE]

 

FOR VALUE
RECEIVED the undersigned registered holder hereby sell(s), assign(s) and
transfer(s) unto

 

Insert
Taxpayer Identification No.

 

 

	
   

  
	
  Please
  print or typewrite name and address including zip code of assignee

  
	
   

  
	
  the
  within Note and all rights thereunder, hereby irrevocably constituting and
  appointing

  
	
   

  
	
  attorney to
  transfer said Note on the books of the Company with full power of
  substitution in the premises.

  

 

A2-11

 

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL

CERTIFICATES BEARING A RESTRICTED LEGEND]

 

In connection
with any transfer of this Note due 2015 occurring prior to
                    ,
the undersigned confirms that such transfer is made without utilizing any
general solicitation or general advertising and further as follows:

 

Check One

 

o                                    (a)
This Note is being transferred to a “qualified institutional buyer” in
compliance with Rule 144A under the Securities Act of 1933, as amended and a
Rule 144A Certificate (as defined in the Indenture) is being furnished
herewith.

 

o                                    (b)
This Note is being transferred to a Non-U.S. Person in compliance with the
exemption from registration under the Securities Act of 1933, as amended,
provided by Regulation S thereunder, and certification in the form of Exhibit D
to the Indenture is being furnished herewith.

 

o                                    (c)
This Note is being transferred to the Company.

 

or

 

o                                    (d)
This Note is being transferred other than in accordance with (a), (b) or (c)
above and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.

 

If none of the
foregoing boxes is checked, the Trustee is not obligated to register this Note
in the name of any Person other than the Holder hereof unless and until the
conditions to any such transfer of registration set forth herein and in the
Indenture have been satisfied.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Seller

  
	
   

  	
  By

  

 

 

NOTICE:  The signature to this assignment must
correspond with the name as written upon the face of the within-mentioned
instrument in every particular, without alteration or any change whatsoever.

 

A2-12

 

	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
  By

  

 

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Association Medallion Program
(“STAMP”) or such other “signature guarantee program” as may be determined by
the Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  To be
  executed by an executive officer

  

 

A2-13

 

SCHEDULE OF EXCHANGES
OF NOTES

 

The following
exchanges of a part of this Global Note for a part of another Global Note have
been made:(1)

 

 

	
  Date
  of Exchange

  	
   

  	
  Amount
  of

  decrease in

  principal amount

  of this Global Note

  	
   

  	
  Amount
  of increase

  in principal

  amount of this

  Global Note

  	
   

  	
  Principal
  amount

  of this Global Note

  following such

  decrease (or

  increase)

  	
   

  	
  Signature
  of

  authorized officer

  of Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

(1)           This Schedule applies to Global Notes
only and will not be attached to any Certificated Notes.

 

A2-14

 

EXHIBIT B

 

RESTRICTED LEGEND

 

THIS NOTE (OR
ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR THE LAWS OF ANY STATE OR OTHER
JURISDICTION AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE.  BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE ACQUIRER

 

(1)           REPRESENTS THAT

 

(A)          IT AND ANY ACCOUNT
FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT
DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, OR

 

(B)           IT IS NOT A U.S.
PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT), AND

 

(2)           AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE OR ANY
BENEFICIAL INTEREST HEREIN, EXCEPT IN ACCORDANCE WITH THE SECURITIES ACT AND
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ONLY

 

(A)          TO THE COMPANY,

 

(B)           PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT,

 

(C)           TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,

 

(D)          IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT,

 

(E)           PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR
ANY OTHER AVAILABLE EXEMPTION

 

 

FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

PRIOR TO THE REGISTRATION OF
ANY TRANSFER IN ACCORDANCE WITH (2)(E) ABOVE, THE COMPANY RESERVES THE RIGHT TO
REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE
AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER
IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS.  NO REPRESENTATION IS
MADE AS TO THE AVAILABILITY OF ANY RULE 144 EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.

 

B-2

 

EXHIBIT C

 

DTC LEGEND

 

UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.

 

TRANSFERS OF
THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE.

 

 

EXHIBIT D

 

Regulation S Certificate

 

                    ,
            

WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION

Attention: Corporate Trust
Services

Sixth Street and Marquette
Avenue

MAC N9303-120

Minneapolis, MN 55470

 

	
  Re:

  	
   

  	
  THE AES
  CORPORATION

  [83⁄4] [9]% Second Priority Senior Secured Notes Due

  20[13][15] (the “Notes”) Issued
  under the Indenture (the

  “Indenture”) dated as of May 8,
  2003 relating to the

  Notes

  

 

Ladies and Gentlemen:

 

Terms are used
in this Certificate as used in Regulation S (“Regulation S”) under the
Securities Act of 1933, as amended (the “Securities Act”), except as otherwise
stated herein.

 

[CHECK A OR B AS APPLICABLE.]

 

o  A.                 This Certificate
relates to our proposed transfer of $       
principal amount of Notes issued under the Indenture.  We hereby certify as follows:

 

1.                       The
offer and sale of the Notes was not and will not be made to a person in the
United States (unless such person is excluded from the definition of “U.S.
person” pursuant to Rule 902(k)(2)(vi) or the account held by it for which it
is acting is excluded from the definition of “U.S. person” pursuant to Rule
902(k)(2)(i) under the circumstances described in Rule 902(h)(3)) and such
offer and sale was not and will not be specifically targeted at an identifiable
group of U.S. citizens abroad.

 

2.                       Unless
the circumstances described in the parenthetical in paragraph 1 above are
applicable, either (a) at the time the buy order was originated, the buyer was
outside the United States or we and any person acting on our behalf reasonably
believed that the buyer was outside the United States or (b) the transaction
was executed in, on or through the facilities of a designated offshore
securities market, and neither we nor any person acting on our behalf knows
that the transaction was pre-arranged with a buyer in the United States.

 

 

3.                       Neither
we, any of our affiliates, nor any person acting on our or their behalf has
made any directed selling efforts in the United States with respect to the
Notes.

 

4.                       The
proposed transfer of Notes is not part of a plan or scheme to evade the
registration requirements of the Securities Act.

 

5.                       If
we are a dealer or a person receiving a selling concession, fee or other
remuneration in respect of the Notes, and the proposed transfer takes place
during the Restricted Period (as defined in the Indenture), or we are an
officer or director of the Company, we certify that the proposed transfer is
being made in accordance with the provisions of Rule 904(b) of Regulation S.

 

o  B.      This Certificate relates to our proposed
exchange of $          principal
amount of Notes issued under the Indenture for an equal principal amount of
Notes to be held by us.  We hereby
certify as follows:

 

1.                       At
the time the offer and sale of the Notes was made to us, either (i) we were not
in the United States or (ii) we were excluded from the definition of “U.S.
person” pursuant to Rule 902(k)(2)(vi) or the account held by us for which we
were acting was excluded from the definition of “U.S. person” pursuant to Rule
902(k)(2)(i) under the circumstances described in Rule 902(h)(3); and we were
not a member of an identifiable group of U.S. citizens abroad.

 

2.                       Unless
the circumstances described in paragraph 1(ii) above are applicable, either (a)
at the time our buy order was originated, we were outside the United States or
(b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and we did not pre-arrange the
transaction in the United States.

 

3.                       The
proposed exchange of Notes is not part of a plan or scheme to evade the
registration requirements of the Securities Act.

 

D-2

 

You and the
Company are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.

 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF SELLER (FOR TRANSFERS)

  OR OWNER (FOR EXCHANGES)]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
					

 

D-3

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