Document:

Exhibit 4.(m)

 

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(1)

 

	
   

  	
  PAGE

  
	
   

  	
   

  
	
  Article 1

  
	
  DEFINITIONS
  AND INCORPORATION BY REFERENCE

  
	
   

  	
   

  
	
  Section 1.01. Definitions

  	
  1

  
	
  Section 1.02. Other
  Definitions

  	
  21

  
	
  Section 1.03. Rules of
  Construction

  	
  21

  
	
   

  	
   

  
	
  Article 2
 THE
  NOTES

  
	
   

  
	
  Section 2.01. Forms
  Generally, Certain Issues Regarding Preconditions for Transfer and Payment

  	
  22

  
	
  Section 2.02. Execution
  and Authentication

  	
  23

  
	
  Section 2.03. Amount
  Unlimited

  	
  23

  
	
  Section 2.04. Denomination
  and Date of Securities; Payment of Interest

  	
  23

  
	
  Section 2.05 . Registrar
  and Paying Agent; Agents Generally

  	
  24

  
	
  Section 2.06. Paying
  Agent to Hold Money in Trust

  	
  25

  
	
  Section 2.07. Restrictions
  on Transfer and Exchange

  	
  25

  
	
  Section 2.08. Registration,
  Transfer and Exchange

  	
  26

  
	
  Section 2.09. Replacement
  Notes

  	
  28

  
	
  Section 2.10. Outstanding
  Notes

  	
  28

  
	
  Section 2.11. Temporary
  Notes

  	
  29

  
	
  Section 2.12. Cancellation

  	
  30

  
	
  Section 2.13. CUSIP
  Numbers

  	
  30

  
	
  Section 2.14. Defaulted
  Interest

  	
  30

  
	
   

  	
   

  
	
  Article 3

  REDEMPTION

  
	
   

  	
   

  
	
  Section 3.01. Optional
  Redemption

  	
  30

  
	
  Section 3.02. Notice of
  Redemption; Partial Redemptions

  	
  31

  
	
  Section 3.03. Payment of
  Notes Called for Redemption

  	
  32

  
	
  Section 3.04. Exclusion
  of Certain Notes from Eligibility for Selection for Redemption

  	
  33

  

 

(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

  	
  33

  
	
  Section 4.02. Maintenance
  of Office or Agency

  	
  34

  
	
  Section 4.03. Noteholders’
  Lists

  	
  35

  
	
  Section 4.04. Certificate
  to Trustee

  	
  35

  
	
  Section 4.05. Reports by
  the Company

  	
  35

  
	
  Section 4.06. Limitation
  on Liens

  	
  35

  
	
  Section 4.07. Limitation
  on the Incurrence of Debt Secured by the Collateral Assets

  	
  36

  
	
  Section 4.08. Limitations
  on Restricted Payments

  	
  37

  
	
  Section 4.09. Limitations
  on Asset Dispositions

  	
  39

  
	
  Section 4.10. Repurchase
  of Notes Upon a Change of Control

  	
  43

  
	
  Section 4.11. Limitations
  on Transactions with Affiliates

  	
  44

  
	
  Section 4.12. Second-Priority
  Liens

  	
  46

  
	
  Section 4.13. Limitation
  on Sale Leaseback Transactions

  	
  46

  
	
  Section 4.14. Restrictions
  on Securing or Guaranteeing Outstanding AES Notes

  	
  47

  
	
  Section 4.15. Use of
  Proceeds from the Notes

  	
  47

  
	
  Section 4.16. Investment
  Grade Fallaway

  	
  47

  
	
   

  	
   

  
	
  Article 5

  SUCCESSOR CORPORATION

  
	
   

  	
   

  
	
  Section 5.01. When
  Company May Merge, Etc.

  	
  48

  
	
  Section 5.02. Successor
  Substituted

  	
  48

  
	
   

  	
   

  
	
  Article 6

  DEFAULT AND REMEDIES

  
	
   

  	
   

  
	
  Section 6.01. Events of
  Default

  	
  48

  
	
  Section 6.02. Acceleration

  	
  50

  
	
  Section 6.03. Other
  Remedies

  	
  51

  
	
  Section 6.04. Waiver of
  Past Defaults

  	
  51

  
	
  Section 6.05. Control by
  Majority

  	
  52

  
	
  Section 6.06. Limitation
  on Suits

  	
  52

  
	
  Section 6.07. Rights of
  Holders to Receive Payment

  	
  53

  
	
  Section 6.08. Collection
  Suit by Trustee

  	
  53

  
	
  Section 6.09. Trustee
  May File Proofs of Claim

  	
  53

  
	
  Section 6.10. Application
  of Proceeds

  	
  54

  
	
  Section 6.11. Restoration
  of Rights and Remedies

  	
  54

  
	
  Section 6.12. Undertaking
  for Costs

  	
  54

  
	
  Section 6.13. Rights and
  Remedies Cumulative

  	
  54

  
	
  Section 6.14. Delay or
  Omission Not Waiver

  	
  55

  

 

ii

 

	
  Article 7

  
	
  TRUSTEE

  
	
   

  
	
  Section 7.01. General

  	
  55

  
	
  Section 7.02. Certain
  Rights of Trustee

  	
  55

  
	
  Section 7.03. Individual
  Rights of Trustee

  	
  57

  
	
  Section 7.04. Trustee’s
  Disclaimer

  	
  57

  
	
  Section 7.05. Notice of
  Default

  	
  57

  
	
  Section 7.06. Compensation
  and Indemnity

  	
  57

  
	
  Section 7.07. Replacement
  of Trustee

  	
  58

  
	
  Section 7.08. Successor
  Trustee by Merger, Etc.

  	
  59

  
	
  Section 7.09. Money Held
  in Trust

  	
  59

  
	
   

  	
   

  
	
  Article 8

  
	
  SATISFACTION AND
  DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

  
	
   

  
	
  Section 8.01. Satisfaction
  and Discharge of Indenture

  	
  60

  
	
  Section 8.02. Application
  by Trustee of Funds Deposited for Payment of Notes

  	
  61

  
	
  Section 8.03. Repayment
  of Moneys Held by Paying Agent

  	
  61

  
	
  Section 8.04. Return of
  Moneys Held by Trustee and Paying Agent Unclaimed for Two Years

  	
  61

  
	
  Section 8.05. Defeasance
  and Discharge of Indenture

  	
  61

  
	
  Section 8.06. Defeasance
  of Certain Obligations

  	
  63

  
	
  Section 8.07. Reinstatement

  	
  64

  
	
   

  	
   

  
	
  Article 9

  
	
  AMENDMENTS,
  SUPPLEMENTS AND WAIVERS

  
	
   

  	
   

  
	
  Section 9.01. Without
  Consent of Holders

  	
  64

  
	
  Section 9.02. With
  Consent of Holders

  	
  65

  
	
  Section 9.03. Revocation
  and Effect of Consent

  	
  66

  
	
  Section 9.04. Notation
  on or Exchange of Notes

  	
  67

  
	
  Section 9.05. Trustee to
  Sign Amendments, Etc.

  	
  67

  
	
   

  	
   

  
	
  Article 10

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section 10.01. Notices

  	
  67

  
	
  Section 10.02. Certificate
  and Opinion as to Conditions Precedent

  	
  69

  
	
  Section 10.03. Statements
  Required in Certificate or Opinion

  	
  69

  
	
  Section 10.04. Evidence
  of Ownership

  	
  69

  
	
  Section 10.05. Rules by
  Trustee, Paying Agent or Registrar

  	
  69

  
	
  Section 10.06. Payment
  Date Other Than a Business Day

  	
  70

  
	
  Section 10.07. Governing
  Law

  	
  70

  

 

iii

 

	
  Section 10.08. No Adverse
  Interpretation of Other Agreements

  	
  70

  
	
  Section 10.09. Successors

  	
  70

  
	
  Section 10.10. Duplicate
  Originals

  	
  70

  
	
  Section 10.11. Separability

  	
  70

  
	
  Section 10.12. Table of
  Contents, Headings, Etc.

  	
  70

  
	
  Section 10.13. Incorporators,
  Stockholders, Officers and Directors of Company Exempt from Individual Liability

  	
  70

  
	
  Section 10.14. Judgment
  Currency

  	
  71

  
	
   

  	
   

  
	
  Article 11

  
	
  SECURITY
  ARRANGEMENTS

  
	
   

  	
   

  
	
  Section 11.01. Security

  	
  71

  
	
  Section 11.02. Notice of
  Payment, Discharge or Defeasance

  	
  73

  

 

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 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 

 

2

 

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.

 

“BVI Collateral”
means the “Collateral” referred to in the BVI Cayman Pledge Agreement.

 

3

 

“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.

 

“Collateral Trust Agreement”
means the agreement dated May 8, 2003 among the Grantors referred to
therein and the Collateral Trustees.

 

4

 

“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 Redeemable Stock of
such Person or on any Preferred Stock of a Subsidiary of such Person.

 

5

 

“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 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.

 

6

 

“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 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.

 

7

 

“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 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.

 

8

 

“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.

 

“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 

 

9

 

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 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 

 

10

 

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.

 

“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 

 

11

 

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.

 

“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.

 

12

 

“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 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 

 

13

 

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 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);

 

14

 

(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.

 

“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.

 

15

 

“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.

 

“Regulation S Certificate”
means a certificate substantially in the form of Exhibit D hereto.

 

16

 

“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.

 

“Restricted Period”
means the relevant 40 day distribution compliance period as defined in Regulation
S.

 

17

 

“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 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 

 

18

 

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.

 

“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 

 

19

 

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 custodian in respect of
the U.S. Government Obligation or the specific payment of 

 

20

 

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.

 

83⁄4% 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 such 

 

64

 

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 OfficerExhibit 4.(n)

 

 

THE AES CORPORATION

 

 

as the Company

 

 

and

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

as Trustee

 

 

 

 

FIRST SUPPLEMENTAL
INDENTURE

 

Dated as of May 28,
2008

 

To

 

SENIOR INDENTURE

 

Dated as of May 8,
2003

 

 

 

8 3⁄4% Second
Priority Senior Secured Notes due 2013

 

 

FIRST SUPPLEMENTAL INDENTURE, dated as of May 28, 2008 between The
AES Corporation, a Delaware corporation (the “Company”), as the issuer,
and Wells Fargo Bank, National Association (as successor by consolidation to
Wells Fargo Bank Minnesota, National Association), a national banking
association, as trustee (the “Trustee”).

 

WHEREAS, the Company executed and delivered an Indenture, dated as of May 8,
2003, (the “Original Indenture”), as may be amended or supplemented from
time to time (as so supplemented, the “Indenture”), between the Company
and the Trustee, providing for the issuance of the Company’s 8.75% Second
Priority Senior Secured Notes due 2013 (the “Notes”);

 

WHEREAS, Section 9.02 of the Original Indenture provides that the
Indenture may be amended by the Company and the Trustee with the consent of the
holders of the Notes representing at least a majority of the Notes then
outstanding;

 

WHEREAS, pursuant to the terms and conditions of the Offer to Purchase
and Consent Solicitation Statement, and the related Letter of Transmittal and
Second Priority Senior Secured Notes Consent, each dated May 14, 2008, as
the same may be amended, prepared by the Company in connection with its offer
to purchase (the “Tender Offer”) for cash up to $377,030,000 aggregate
principal amount of the outstanding Notes and certain other series of its
senior unsecured notes and its related solicitation (the “Consent
Solicitation”) of consents (the “Consents”) from holders of at least
a majority of the aggregate principal amount of Notes outstanding to enter into
the amendments to the Original Indenture (the “Amendments”) as set forth
in this First Supplemental Indenture;

 

WHEREAS, the Tender Offer is conditioned upon, among other things, the
Amendments as set forth in this First Supplemental Indenture having been
approved by holders of at least a majority of the aggregate principal amount of
the Notes outstanding, and provided that pursuant to Section 2.2 hereof,
this First Supplemental Indenture will not become operative until the Company
has paid the applicable consideration with respect to the Notes that have been
validly tendered and accepted for payment in accordance with the Tender Offer
and the Company has paid the consent fee (which shall be an amount in cash
equal to $3.75 per $1,000 principal amount of Notes to which the Consent
relates) (the “Consent Fee”) with respect to all Consents that have been
validly delivered in accordance with the Consent Solicitation;

 

WHEREAS, holders of a majority of the principal amount of the Notes
outstanding on May 28, 2008 have given and not revoked their consent to
the Amendments set forth in this First Supplemental Indenture; and

 

WHEREAS, all conditions and requirements necessary to
make this First Supplemental Indenture a valid and binding instrument in
accordance with its terms and the terms of the Indenture have been satisfied.

 

NOW, THEREFORE, in consideration of the premises and
of the mutual covenants herein contained, the Company and the Trustee hereby covenant
and agree as follows:

 

1

 

ARTICLE
1

 

AMENDMENT
OF ARTICLE 4 OF THE ORIGINAL INDENTURE

 

Article 4 of the Indenture is hereby amended and
restated in its entirety as follows:

 

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 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 Services CMES Corporate Product Group, the corporate
trust office of the Trustee’s Agent, located at 45 Broadway, 14th Floor, MAC
N2666-140, New York, NY 10006-3004, 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.

 

2

 

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.  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 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

 

3

 

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.

 

Section 4.07.                             Reserved.

 

Section 4.08.                             Reserved.

 

Section 4.09.                             Reserved.

 

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”),

 

(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

 

4

 

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.

 

5

 

Section 4.11.                             Reserved.

 

Section 4.12.                             Reserved.

 

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.

 

Section 4.14.                             Reserved.

 

Section 4.15.                             Reserved.

 

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 4.10 (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.

 

ARTICLE
2

 

MISCELLANEOUS

 

Section 2.01.                             Defined
Terms.  For all purposes of
this First Supplemental Indenture, except as otherwise expressly provided or
unless the context otherwise requires, all capitalized terms defined herein and
in the Indenture shall have the meanings assigned to them herein.  All capitalized terms not defined herein
shall have the meanings assigned to them in the Indenture.

 

6

 

Unless otherwise
expressly specified, all references to a “Section” herein
refer to a section of this First Supplemental Indenture.

 

Section 2.02.                             Effectiveness
of First Supplemental Indenture. 
This First Supplemental Indenture shall be effective upon its signing by
the parties hereto and the Amendments shall not be operative until the Company
has paid the applicable consideration with respect to the Notes that have been
validly tendered and accepted for payment in accordance with the Tender Offer
and the Company has paid the Consent Fee with respect to all Consents that have
been validly delivered in accordance with the Consent Solicitation.  The Company shall promptly notify the Trustee
in writing (which writing may be in electronic form) that this First
Supplemental Indenture has become operative.

 

Section 2.03                                Ratification
of Original Indenture; First Supplemental Indenture Controls.  The Original Indenture, as supplemented by
this First Supplemental Indenture, is in all respects ratified and confirmed,
and this First Supplemental Indenture shall be deemed part of the Original
Indenture in the manner and to the extent herein and therein provided.  The provisions of this First Supplemental
Indenture shall supersede the provisions of the Original Indenture to the
extent the Original Indenture is inconsistent herewith.

 

Section 2.04.                             Trustee Not
Responsible for Recitals.  The
recitals herein contained are made by the Company and not by the Trustee, and
the Trustee assumes no responsibility for the correctness thereof.  The Trustee makes no representation as to the
validity or sufficiency of this First Supplemental Indenture.

 

Section 2.05.                             Governing
Law.  This First Supplemental
Indenture shall be governed by and construed in accordance with the laws of the
State of New York.

 

Section 2.06                                Severability.  If any provision in the Original Indenture,
this First Supplemental Indenture or 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 2.07.                             Counterparts.  The parties may sign any number of copies of
this First Supplemental Indenture.  Each
signed copy shall be an original, but all of them together represent the same
agreement.  Any signed copy shall be
sufficient proof of this First Supplemental Indenture.

 

7

 

IN WITNESS WHEREOF, the parties hereto have caused
this First Supplemental Indenture to be duly executed as of the date first
above written.

 

 

	
   

  	
  THE AES
  CORPORATION, as the Company 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Willard C.
  Hoagland III

  
	
   

  	
   

  	
  Name: Willard C.
  Hoagland III

  
	
   

  	
   

  	
  Title:   Vice
  President and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO
  BANK, NATIONAL ASSOCIATION, as Trustee 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

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