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Exhibit 4.2    
    

REGISTRATION
RIGHTS AGREEMENT 

Dated
as of March 22, 2004 

between

AES
GENER S.A. 

and

DEUTSCHE
BANK SECURITIES INC. 

as
the Initial Purchaser 

 
 

REGISTRATION RIGHTS AGREEMENT    
    

        REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of March 22, 2004 between AES Gener S.A., a corporation (sociedad
anónima) duly organized and validly existing under the laws of the Republic of Chile (the "Company"), and Deutsche Bank Securities Inc. (the"Initial
Purchaser"). 

        This
Agreement is made pursuant to the Purchase Agreement, dated March 12, 2004, by and between the Company and the Initial Purchaser (the "Purchase Agreement"), which provides
for the sale by the Company to the Initial Purchaser of $400 million aggregate principal amount of the Company's 7.50% Senior Notes due 2014 (the "Securities"). In order to induce the Initial
Purchaser to enter into the Purchase Agreement and in satisfaction of a condition to the Initial Purchaser's obligations thereunder, the Company has agreed to provide to the Initial Purchaser and its
direct and indirect transferees and assigns the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase
Agreement. 

        In
consideration of the foregoing, the parties hereto agree as follows: 

        1.    Definitions.    As used in this Agreement, the following capitalized defined terms shall have the following
meanings: 

        "1933 Act" shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated
thereunder. 

        "1934 Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the SEC
promulgated thereunder. 

        "Additional Interest" shall have the meaning set forth in Section 2(e) hereof. 

        "Closing Time" shall mean March 22, 2004. 

        "Depositary" shall mean The Depository Trust Company, or any other depositary appointed by the Company, including any agent thereof;
provided, however, that any such depositary must at all times have an address in the Borough of Manhattan, The City of New York. 

        "Exchange Offer" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to
Section 2(a) hereof. 

        "Exchange Offer Registration" shall mean a registration under the 1933 Act effected pursuant to Section 2(a) hereof. 

        "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form F-4 (or, if
applicable, on another appropriate form) covering the Registrable Securities, and all amendments and supplements to such registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated or deemed to be incorporated by reference therein. 

        "Exchange Securities" shall mean the 7.50% Senior Notes due 2014, issued by the Company under the Indenture containing terms identical to
the Notes (except that (i) interest thereon shall accrue from the last date to which interest has been paid or duly provided for on the Securities or, if no such interest has been paid or duly
provided for, from the Interest Accrual Date, (ii) provisions relating to an increase in the stated rate of interest thereon upon the occurrence of a Registration Default shall be eliminated,
(iii) the transfer restrictions, minimum purchase requirements and legends relating to restrictions on ownership and transfer thereof as a result of the issuance of the Securities without
registration under the 1933 Act shall be eliminated and (iv) such securities will be issuable in denominations of $1,000 and integral multiples of $1,000 in excess thereof) to be offered to
Holders of Registrable Securities in exchange for Registrable Securities pursuant to the Exchange Offer. 

        "Holders" shall mean (i) the Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors,
assigns and direct and indirect transferees who become 

 

registered
owners of Registrable Securities under the Indenture and (ii) each Participating Broker-Dealer that holds Exchange Securities for so long as such Participating Broker-Dealer is
required to deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities. 

        "Indenture" shall mean the Indenture, dated as of March 22, 2004, by and among the Company, and Law Debenture Trust Company of New
York, as trustee, as the same may be further amended or supplemented from time to time in accordance with the terms thereof. 

        "Interest Accrual Date" means March 22, 2004. 

        "Initial Purchaser" shall have the meaning set forth in the preamble of this Agreement. 

        "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of Registrable Securities outstanding, excluding
Exchange Securities referred to in clause (ii) of the definition of "Holders" above; provided that whenever the consent or approval of Holders of
a specified percentage of Registrable Securities or Exchange Securities is required hereunder, Registrable Securities and Exchange Securities held by the Company or any of its affiliates (as such term
is defined in Rule 405 under the 1933 Act) shall also be disregarded in determining whether such consent or approval was given by the Holders of such required percentage. 

        "NASD" shall mean the National Association of Securities Dealers, Inc. 

        "Notifying Broker-Dealer" shall have the meaning set forth in Section 3(f). 

        "Participating Broker-Dealer" shall have the meaning set forth in Section 3(f). 

        "Person" shall mean an individual, partnership, joint venture, limited liability company, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof. 

        "Private Exchange Securities" shall have the meaning set forth in Section 2(a) hereof. 

        "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all material incorporated or deemed to
be incorporated by reference therein. 

        "Purchase Agreement" shall have the meaning set forth in the preamble to this Agreement. 

        "Registrable Securities" shall mean the Securities; provided,  however, that any Securities shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to such Registration Statement, (ii) such Securities shall have been sold to the public
pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the 1933 Act, (iii) such Securities shall have ceased to be outstanding, (iv) such
Securities have been exchanged for Exchange Securities which have been registered pursuant to the Exchange Offer Registration Statement upon consummation of the Exchange Offer unless, in the case of
any Exchange Securities referred to in this clause (iv), such Exchange Securities are held by Participating Broker-Dealers or otherwise are not freely tradable without any limitations or
restrictions under the 1933 Act (in which case such Exchange Securities will be deemed to be Registrable Securities until such time as such Exchange Securities are sold to a purchaser in whose hands
such Exchange Securities are freely tradeable without any limitations or restrictions under the 1933 Act) or (v) such Securities have been exchanged for Private Exchange Securities under this
Agreement (in which case such Private Exchange Securities will be deemed to be Registrable 

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Securities
until such time as such Private Exchange Securities are sold to a purchaser in whose hands such Private Exchange Securities are freely tradeable without any limitations or restrictions
under the 1933 Act). 

        "Registration Default" shall have the meaning set forth in Section 2(e). 

        "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC, stock exchange or NASD registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state or other
securities or blue sky laws and compliance with the rules of the NASD (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with qualification of any of
the Exchange Securities or Registrable Securities under state or other securities or blue sky laws and any filing with and review by the NASD), (iii) all expenses of any Persons in preparing,
printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements, certificates representing the
Securities, Private Exchange Securities (if any) or Exchange Securities and other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees,
(v) all fees and expenses incurred in connection with the listing, if any, of any of the Securities or Exchange Securities on any securities exchange or exchanges or on any quotation system,
(vi) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vii) the fees and disbursements of counsel for the Company and the fees
and expenses of independent public accountants for the Company or for any other Person, business or assets whose financial statements are included in any Registration Statement or Prospectus,
including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, (viii) the fees and expenses of a "qualified independent
underwriter" as defined by Conduct Rule 2720 of the NASD (if required by the
NASD rules) and the fees and disbursements of its counsel, (ix) the fees and expenses of the Trustee, any registrar, any depositary, any paying agent, any escrow agent or any custodian, in each
case including fees and disbursements of their respective counsel, (x) the reasonable fees and expenses of the Initial Purchaser in connection with the Exchange Offer, including the reasonable
fees and expenses of counsel to the Initial Purchaser in connection therewith, (xi) the reasonable fees and disbursements, if any, of special counsel representing the Holders of Registrable
Securities and (xii) in the case of an underwritten offering, any fees and disbursements of the underwriters customarily paid by issuers or sellers of securities and the fees and expenses of
any special experts retained by the Company in connection with any Registration Statement but excluding (except as otherwise provided herein) fees of counsel to the underwriters or the Holders and
underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. 

        "Registration Statement" shall mean any registration statement of the Company relating to any offering of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement (including, without limitation, any Exchange Offer Registration Statement and any Shelf Registration Statement), and all amendments
and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material
incorporated or deemed to be incorporated by reference therein. 

        "SEC" shall mean the Securities and Exchange Commission or any successor thereto. 

        "Securities" shall have the meaning set forth in the preamble to this Agreement. 

        "Shelf Registration" shall mean a registration effected pursuant to Section 2(b) hereof. 

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        "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable Securities or Private Exchange Securities (if any), as the case may be, on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material incorporated or deemed to be incorporated by reference therein. 

        "TIA" shall mean the Trust Indenture Act of 1939, as amended from time to time, and the rules and regulations of the SEC promulgated
thereunder. 

        "Trustee" shall mean the trustee with respect to the Securities, the Private Exchange Securities (if any) and the Exchange Securities
under the Indenture. 

        For
purposes of this Agreement, (i) all references in this Agreement to any Registration Statement, preliminary prospectus or Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"); (ii) all references in this Agreement to
financial statements and schedules and other information which is "contained", "included" or "stated" in any Registration Statement, preliminary prospectus or Prospectus (or other references of like
import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated or deemed to be incorporated by reference in such Registration
Statement, preliminary prospectus or Prospectus, as the case may be; (iii) all references in this Agreement to amendments or supplements to any Registration Statement, preliminary prospectus or
Prospectus shall be deemed to mean and include the filing of any document under the 1934 Act which is incorporated or deemed to be incorporated by reference in such Registration Statement, preliminary
prospectus or Prospectus, as the case may be; (iv) all references in this Agreement to Rule 144(k), Rule 144A or Rule 405 under the 1933 Act, and all references to any
sections or subsections thereof or terms defined therein, shall in each case include any successor provisions thereto; and (v) all references in this Agreement to days (but not to business
days) shall mean calendar days. 

        2.    Registration Under the 1933 Act.    

        (a)    Exchange Offer Registration.    To the extent not prohibited by any applicable law or applicable interpretation
of the staff of the SEC, the Company shall (A) use its reasonable best efforts to cause such Exchange Offer Registration Statement to be declared effective by the SEC no later than the 270th
day after the Closing Time, (B) use its reasonable best efforts to cause such Registration Statement to remain effective until the closing of the Exchange Offer and (C) use its
reasonable best efforts to consummate the Exchange Offer no later than 330 days after the effective date of the Exchange Offer Registration Statement. Upon the effectiveness of the Exchange
Offer Registration Statement, the Company shall promptly commence the Exchange Offer, it being the objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable
Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of Rule 405 under the 1933 Act, acquires the Exchange Securities in the
ordinary course of such Holder's business and has no arrangements or understandings with any Person to participate in the Exchange Offer for the purpose of distributing such Exchange Securities) to
trade such Exchange Securities from and after their receipt without any limitations or restrictions under the 1933 Act or under the securities or blue sky laws of the States of the United States. 

        In
connection with the Exchange Offer, the Company shall: 

        (i)    promptly
mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and
related documents; 

4

 

        (ii)   keep
the Exchange Offer open for not less than thirty business days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders
and, during the Exchange Offer, offer to all Holders who are legally eligible to participate in the Exchange Offer the opportunity to exchange their Registrable Securities for Exchange Securities; 

        (iii)  use
the services of a depositary with an address in the Borough of Manhattan, The City of New York for the Exchange Offer; 

        (iv)  permit
Holders to withdraw tendered Registrable Securities at any time prior to the close of business, New York City time, on the last business day on which the
Exchange Offer shall remain open, by sending to the institution specified in the Prospectus or the related letter of transmittal or related documents a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange, and a statement that such Holder is withdrawing its election to have such
Securities exchanged; 

        (v)   notify
each Holder that any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this
Agreement (except in the case of the Initial Purchaser and Participating Broker-Dealers as provided herein); and 

        (vi)  otherwise
comply in all material respects with all applicable laws relating to the Exchange Offer. 

        If,
at or prior to the consummation of the Exchange Offer, the Initial Purchaser holds any Securities acquired by it and having the status of an unsold allotment in the initial
distribution, the Company shall, upon the request of the Initial Purchaser, simultaneously with the delivery of the Exchange Securities in the Exchange Offer, issue and deliver to the Initial
Purchaser in exchange for such Securities a like principal amount of debt securities of the Company that are identical (except that such debt securities shall be subject to transfer restrictions,
minimum purchase requirements and shall bear a legend relating to restrictions on ownership and transfer identical to those applicable to the Securities as a result of the issuance thereof without
registration under the 1933 Act and shall provide for the payment of Additional Interest) to the Exchange Securities (the "Private Exchange Securities"). The Company shall use its reasonable best
efforts to have the Private Exchange Securities bear the same CUSIP number as the Exchange Securities and, if unable to do so, the Company will, at such time as any Private Exchange Security ceases to
be a "restricted security" within the meaning of Rule 144 under the 1933 Act, permit any such Private Exchange Security to be exchanged for a like principal amount of
Exchange Securities. The Company shall not have any liability under this Agreement solely as a result of any such Private Exchange Securities not bearing the same CUSIP number as the Exchange
Securities. 

        The
Exchange Securities and the Private Exchange Securities (if any) shall be issued under the Indenture, which shall be qualified under the TIA. The Indenture shall provide that the
Exchange Securities, the Private Exchange Securities (if any) and the Securities shall vote and consent together on all matters as a single class and shall constitute a single series of debt
securities issued under the Indenture. 

        As
soon as practicable after the close of the Exchange Offer, the Company shall: 

        (i)    accept
for exchange all Registrable Securities duly tendered and not validly withdrawn pursuant to the Exchange Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal which is an exhibit thereto; 

        (ii)   deliver,
or cause to be delivered, to the Trustee for cancellation all Registrable Securities so accepted for exchange by the Company; and 

5

 

        (iii)  cause
the Trustee promptly to authenticate and deliver Exchange Securities to each Holder of Registrable Securities so accepted for exchange equal in principal amount
to the principal amount of the Registrable Securities of such Holder so accepted for exchange. 

        Interest
on each Exchange Security and such Private Exchange Security (if any) will accrue from the last date on which interest was paid or duly provided for on the Securities
surrendered in exchange therefor or, if no interest has been paid or duly provided for on such Securities, from the Interest Accrual Date. The Exchange Offer shall not be subject to any conditions,
other than (i) that the Exchange Offer, or the making of any exchange by a Holder, does not violate any applicable law or any applicable interpretation of the staff of the SEC, (ii) that
no action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer which, in the Company's judgment, would
reasonably be expected to impair the ability of the Company to proceed with the Exchange Offer, and (iii) that the Holders tender the Registrable Securities to the Company in accordance with
the Exchange Offer. Each Holder of Registrable Securities (other than Participating Broker-Dealers) who wishes to exchange such Registrable Securities for Exchange Securities in the Exchange Offer
will be required to represent that (i) it is not an affiliate (as defined in Rule 405 under the 1933 Act) of the Company, (ii) any Exchange Securities to be received by it will be
acquired in the ordinary course of business and (iii) it has no arrangement with any Person
to participate in the distribution (within the meaning of the 1933 Act) of the Exchange Securities, and shall be required to make such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to render the use of Form F-4 or another appropriate form under the 1933 Act available. To the extent permitted by law, the
Company shall inform the Initial Purchaser of the names and addresses of the Holders of Securities to whom the Exchange Offer is made and, to the extent such information is available to the Company,
the names and addresses of the beneficial owners of such Securities, and the Initial Purchaser shall have the right to contact such Holders and beneficial owners and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer. 

        (b)    Shelf Registration.    (i) If, because of any change in law or applicable interpretations thereof by the
staff of the SEC, the Company is not permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof, or (ii) if for any other reason (A) the Exchange Offer
Registration Statement is not declared effective within 270 days following the Closing Time or (B) the Exchange Offer is not consummated within 330 days after effectiveness of the
Exchange Offer Registration Statement (provided that if the Exchange Offer Registration Statement shall be declared effective after such 270-day period or if the Exchange Offer shall be
consummated after such 330-day period, then the Company's obligations under this clause (ii) arising from the failure of the Exchange Offer Registration Statement to be declared
effective within such 270-day period or the failure of the Exchange Offer to be consummated within such 330-day period, respectively, shall terminate), or (iii) if any
Holder (other than the Initial Purchaser holding Securities acquired directly from the Company) is not eligible to participate in the Exchange Offer or elects to participate in the Exchange Offer but
does not receive Exchange Securities which are freely tradeable without any limitations or restrictions under the 1933 Act or (iv) upon the request of the Initial Purchaser within
30 days following the consummation of the Exchange Offer (provided that, in the case of this clause (iv), the Initial Purchaser shall hold Registrable Securities (including, without
limitation, Private Exchange Securities) that it acquired directly from the Company), the Company shall, at its cost: 

        (A)  as
promptly as practicable, but no later than (a) the 270th day after the Closing Time or (b) the 30th day after any such filing obligation arises,
whichever is later, file with the SEC a Shelf Registration Statement relating to the offer and sale of the Registrable Securities by the Holders from time to time in accordance with the methods of
distribution elected by the Majority Holders of such Registrable Securities and set forth in such Shelf Registration Statement; 

6

 

        (B)  use
its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the SEC as promptly as practicable, but in no event later than the
270th day after the Closing Time (or, in the case of a request by the Initial Purchaser pursuant to clause (iv) above, within 90 days after such request). In the event that the Company
is required to file a Shelf Registration Statement pursuant to clause (iii) or (iv) above, the Company shall file and use its reasonable best efforts to have declared effective by
the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined
Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by such Holder or the Initial Purchaser, as applicable; 

        (C)  use
its reasonable best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required, in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years after the latest date on which any Securities are originally issued by the Company (subject to extension pursuant to the last
paragraph of Section 3) or, if earlier, when all of the Registrable Securities covered by such Shelf Registration Statement (i) have been sold pursuant to the Shelf Registration
Statement in accordance with the intended method of distribution thereunder, (ii) become eligible for resale pursuant to Rule 144(k) under the 1933 Act or (iii) cease to be
Registrable Securities; and 

        (D)  notwithstanding
any other provisions hereof, use its reasonable best efforts to ensure that (i) any Shelf Registration Statement and any amendment thereto and any
Prospectus forming a part thereof and any supplements thereto comply in all material respects with the 1933 Act and the rules and regulations thereunder, (ii) any Shelf Registration Statement
and any amendment or supplement thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any Prospectus forming part of any Shelf Registration Statement and any amendment or supplement to such Prospectus does not include an
untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 

        The
Company shall not permit any securities other than Registrable Securities to be included in the Shelf Registration Statement without the prior written consent of the Initial
Purchaser. The Company further agrees, if necessary, to supplement or amend the Shelf Registration Statement if reasonably requested by the Majority Holders with respect to information relating to the
Holders and otherwise as required by Section 3(b) below, to use its reasonable best efforts to cause any such amendment to become effective and such Shelf Registration Statement to become
usable as soon as practicable thereafter and to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. 

        (c)    Expenses.    The Company shall pay all Registration Expenses in connection with the registration pursuant to
Section 2(a) and 2(b) and, in the case of any Shelf Registration Statement, will reimburse the Holders or the Initial Purchaser for the reasonable fees and disbursements of one counsel (in
addition to any local counsel) designated in writing by the Majority Holders (or, if a Shelf Registration Statement is filed solely pursuant to clause (iv) of the first paragraph of
Section 2(b), designated by the Initial Purchaser) to act as counsel for the Holders of the Registrable Securities in connection therewith. Each Holder shall pay all fees and disbursements of
its counsel other than as set forth in the preceding sentence or in the definition of Registration Expenses and all underwriting discounts and commissions and transfer taxes, if any, relating to the
sale or disposition of such Holder's Registrable Securities pursuant to a Shelf Registration Statement. 

7

 

        (d)    Effective Registration Statement.    

        (i)    The
Company shall be deemed not to have used its reasonable best efforts to cause the Exchange Offer Registration Statement or any Shelf Registration Statement, as the
case may be, to become, or to remain, effective during the requisite periods set forth herein if the Company voluntarily takes any action that could reasonably be expected to result in any such
Registration Statement not being declared effective or remaining effective or in the Holders of Registrable Securities (including, under the circumstances contemplated by Section 3(f) hereof,
Exchange Securities) covered thereby not being able to exchange or offer and sell such Registrable Securities during that period unless (A) such action is required by applicable law or
(B) such action is taken by the Company in good faith and for valid business reasons (but not including avoidance of the Company's obligations hereunder), including the acquisition or
divestiture of assets or a material corporate transaction or event so long as the Company promptly complies with the notification requirements of Section 3(k) hereof, if applicable. Nothing in
this paragraph shall prevent the accrual of Additional Interest on any Securities or Exchange Securities. 

        (ii)   An
Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof shall not be
deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after such Registration Statement has been
declared effective, the offering of Registrable Securities pursuant to a Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement shall be deemed not to have been effective during the period of such interference until the offering of Registrable Securities pursuant to
such Registration Statement may legally resume. 

        (e)    Increase in Interest Rate.    In the event that: 

        (i)    the
Exchange Offer Registration Statement is not declared effective by the SEC on or prior to the 270th day following the Closing Time, or 

        (ii)   the
Exchange Offer is not consummated on or prior to the 330th day following the effective date of the Exchange Offer Registration Statement, or 

        (iii)  if
required, a Shelf Registration Statement is not filed with the SEC on or prior to (A) the 270th day following the Closing Time or (B) the 30th day
after the filing obligation arises, whichever is later, or 

        (iv)  if
required, a Shelf Registration Statement is not declared effective on or prior to the 270th day following the Closing Time (or, if a Shelf Registration Statement is
required to be filed upon the request of the Initial Purchaser, within 90 days after such request), or 

        (v)   a
Shelf Registration Statement is declared effective by the SEC but such Shelf Registration Statement ceases to be effective or such Shelf Registration Statement or the
Prospectus included therein ceases to be usable in connection with resales of Registrable Securities for any reason and (A) the aggregate number of days in any consecutive 60-day
period for which the Shelf Registration Statement or such Prospectus shall not be effective or usable exceeds 30 days or (B) the Shelf Registration Statement or such Prospectus shall not
be effective or usable for a period of more than 60 consecutive days, or 

        (vi)  the
Exchange Offer Registration Statement is declared effective by the SEC but, if the Exchange Offer Registration Statement is being used in connection with the resale
of Exchange Securities as contemplated by Section 3(f)(B) of this Agreement, the Exchange Offer Registration Statement ceases to be effective or the Exchange Offer Registration Statement or the
Prospectus included therein ceases to be usable in connection with resales of Exchange Securities for any reason during the 90-day period referred to in Section 3(f)(B) of this
Agreement (as such period 

8

 

may
be extended pursuant to the last paragraph of Section 3 of this Agreement) and (A) the aggregate number of days in any consecutive 60-day period for which the Exchange
Offer Registration Statement or such Prospectus shall not be effective or usable exceeds 30 days or (B) the Exchange Offer Registration Statement or the Prospectus shall not be effective
or usable for a period of more than 60 consecutive days, 

(each
of the events referred to in clauses (i) through (vi) above being hereinafter called a "Registration Default"), the per annum interest rate borne by the Registrable Securities
shall be increased ("Additional Interest") by one-half of one percent (0.50%) per annum immediately following such 270-day period in the case of clause (i) above,
immediately following such 330-day period in the case of clause (ii) above, immediately following any such 270-day period or 30-day period, whichever ends
later, in the case of clause (iii) above, immediately following any such 270-day period or 90-day period, whichever ends first, in the case of clause (iv) above,
immediately following the 30th day in any consecutive 60-day period, as of the first day of the third period in any consecutive 60-day period or immediately following the 60th
consecutive day, whichever occurs first, that a Shelf Registration Statement shall not be effective or a Shelf Registration Statement or the Prospectus included therein shall not be usable as
contemplated by clause (v) above, or immediately following the 30th day in any consecutive 60-day period, as of the first day of the third period in any consecutive
60-day period or immediately following the 60th consecutive day, whichever occurs first, that the Exchange Offer Registration Statement shall not be effective or the Exchange Offer
Registration Statement or the Prospectus included therein shall not be usable as contemplated by clause (vi) above; provided that the aggregate increase in such annual interest rate may in no
event exceed one-half of one percent (0.50%) per annum. Upon the effectiveness of the Exchange Offer Registration Statement after the 270-day period described in
clause (i) above, the consummation of the Exchange Offer after the 330-day period described in clause (ii) above, the filing of the Shelf Registration Statement after the
270-day period or 30-day period day, as the case may be, described in clause (iii) above, the effectiveness of a Shelf Registration Statement after the
270-day period or 90-day period, as the case may be, described in clause (iv) above, or the Shelf Registration Statement once again being effective or the Shelf
Registration Statement and the Prospectus included therein becoming usable in connection with resales of Registrable Securities, as the case may be, in the case of clause (v) above, or the
Exchange Offer Registration Statement once again becoming effective or the Exchange Offer Registration Statement and the Prospectus included therein becoming usable in connection with resales of
Exchange Securities, as the case may be, in the case of clause (vi) thereof, the interest rate borne by the Securities from the date of such filing, effectiveness, consummation or resumption of
effectiveness or useability, as the case may be, shall be reduced to the original interest rate so long as no other Registration Default shall have occurred and shall be continuing at such time and
the Company is otherwise in compliance with this paragraph; provided, however, that, if after any such reduction in interest rate, one or more Registration Defaults shall again occur, the interest
rate shall again be increased pursuant to the foregoing provisions. 

9

   
        The Company shall notify the Trustee within three business days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an
"Event Date"). Additional Interest shall be paid by depositing with the Trustee, in trust, for the benefit of the Holders of Registrable Securities, on or before the applicable seminannual interest
payment date, immediately available funds in sums sufficient to pay the Additional Interest then due. The Additional Interest due shall be payable on each interest payment date to the record Holder of
Securities entitled to receive the interest payment to be paid on such date as set forth in the Indenture. Each obligation to pay Additional Interest shall be deemed to accrue from and including the
day following the applicable Event Date. 

        Anything
herein to the contrary notwithstanding, any Holder who was, at the time the Exchange Offer was pending and consummated, eligible to exchange, and did not validly tender, its
Securities for Exchange Securities in the Exchange Offer will not be entitled to receive any Additional Interest. For purposes of clarity, it is hereby acknowledged and agreed that, under current
interpretations of law by the SEC, Initial Purchaser holding unsold allotments of Securities acquired from the Company is not eligible to participate in the Exchange Offer. 

        (f)    Specific Enforcement.    Without limiting the remedies available to the Initial Purchaser and the Holders, the
Company acknowledges that any failure by the Company to comply with its obligations under Sections 2(a), 2(b) and 2(d) hereof may result in material irreparable injury to the Initial Purchaser, the
Holders or the Participating Broker-Dealers for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchaser, any Holder and any Participating Broker-Dealer may obtain such relief as may be required to specifically enforce the Company's obligations under Sections 2(a), 2(b) and
2(d) hereof. 

        3.    Registration Procedures.    In connection with the obligations of the Company with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company shall: 

        (a)   prepare
and file with the SEC a Registration Statement or, if required, Registration Statements, within the time periods specified in Section 2, on the
appropriate form under the 1933 Act, which form (i) shall be selected by the Company, (ii) shall, in the case of a Shelf Registration Statement, be available for the sale of the
Registrable Securities by the selling Holders thereof and (iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by
reference all financial statements required by the SEC to be filed therewith, and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective in
accordance with Section 2 hereof; 

        (b)   prepare
and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary under applicable law to keep
such Registration Statement effective for the applicable period; cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the 1933 Act; and comply with the provisions of the 1933 Act and the 1934 Act with respect to the disposition of all Securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of distribution by the selling Holders thereof; 

        (c)   in
the case of a Shelf Registration, (i) notify each Holder of Registrable Securities, at least ten business days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and advising such Holders that the distribution of Registrable Securities will be made in accordance with the method elected by the
Majority Holders; (ii) furnish to each Holder of Registrable Securities, to counsel for the Initial Purchaser, to counsel for the Holders and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such
Holder, counsel or 

10

 

underwriter
may reasonably request, including financial statements and schedules and, if such Holder, counsel or underwriter so requests, all exhibits (including those incorporated by reference) in
order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) subject to the penultimate paragraph of this Section 3, the Company hereby consents to
the use of the Prospectus, including each preliminary Prospectus, or any amendment or supplement thereto by each of the Holders and underwriters of Registrable Securities in connection with the
offering and sale of the Registrable Securities covered by any Prospectus or any amendment or supplement thereto; 

        (d)   use
its reasonable best efforts to register or qualify the Exchange and Registrable Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration Statement and each underwriter of an underwritten offering of Registrable Securities shall reasonably request, to
cooperate with the Holders and the underwriters of any Registrable Securities in connection with any filings required to be made with the NASD, to keep each such registration or qualification
effective during the period such Registration Statement is required to be effective and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Exchange and Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d) or (ii) take any action which
would subject it to general service of process or taxation in any such jurisdiction if it is not then so subject; 

        (e)   in
the case of a Shelf Registration, notify each Holder of Registrable Securities and counsel for such Holders promptly and, if requested by such Holder or counsel,
confirm such advice in writing promptly (i) when a Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective,
(ii) of any request by the SEC or any state
securities authority for post-effective amendments or supplements to a Registration Statement or Prospectus or for additional information after a Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for
that purpose, (iv) if between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby the representations and warranties of the
Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to such offering cease to be true and correct in all material aspects,
(v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the happening of any event or the discovery of any facts during the period a Shelf Registration Statement is effective which is
contemplated in Section 2(d)(i)(A) or 2(d)(i)(B) or which makes any statement made in such Shelf Registration Statement or the related Prospectus untrue in any material respect or which
constitutes an omission to state a material fact in such Shelf Registration Statement or Prospectus and (vii) of any determination by the Company that a post-effective amendment to
a Registration Statement would be appropriate. Without limitation to any other provisions of this Agreement, the Company agrees that this Section 3(e) shall also be applicable,  mutatis mutandis,
with respect to the Exchange Offer Registration Statement and the Prospectus included therein to the extent that such Prospectus is
being used by Participating Broker-Dealers as contemplated by Section 3(f); 

        (f)    (A)
in the case of an Exchange Offer, (i) include in the Exchange Offer Registration Statement (x) a "Plan of Distribution" section substantially in the
form set forth in Annex A hereto or other such form as is reasonably acceptable to counsel to the Initial Purchaser covering the use of the Prospectus included in the Exchange Offer Registration
Statement by broker-dealers 

11

 

who
have exchanged their Registrable Securities for Exchange Securities for the resale of such Exchange Securities and (y) a statement to the effect that any such broker-dealers who wish to use
the related Prospectus in connection with the resale of Exchange Securities acquired as a result of market-making or other trading activities will be required to notify the Company to that effect,
together with instructions for giving such notice (which instructions shall include a provision for giving such notice by checking a box or making another appropriate notation on the related letter of
transmittal) (each such broker-dealer who gives notice to the Company as aforesaid being hereinafter called a "Notifying Broker-Dealer"), (ii) furnish to each Notifying Broker-Dealer who
desires to participate in the Exchange Offer, without charge, as many copies of each Prospectus included in the Exchange Offer Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, as such broker-dealer may reasonably request, (iii) include in the Exchange Offer Registration Statement a statement that any broker-dealer who holds
Registrable Securities acquired for its own account as a result of market-making activities or other trading activities (a "Participating Broker-Dealer"), and who receives Exchange Securities for
Registrable Securities pursuant to the Exchange Offer, may be a statutory underwriter and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such
Exchange Securities, (iv) subject to the penultimate paragraph of this Section 3, the Company hereby consents to the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto by any Notifying Broker-Dealer in connection with the sale or transfer of Exchange Securities, and (v) include in the transmittal letter or
similar documentation to be executed by an exchange offeree in order to participate in the Exchange Offer the following provision: 

        "If
the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the
undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities, it represents that the Registrable Securities to be exchanged for
Exchange Securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus meeting the requirements of the 1933 Act
in connection with any resale of such Exchange Securities pursuant to the Exchange Offer; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the 1933 Act;" 

	(B)
	to
the extent any Notifying Broker-Dealer participates in the Exchange Offer, (i) the Company shall use its reasonable best efforts to maintain the effectiveness of the
Exchange Offer Registration Statement for a period of 180 days (subject to extension pursuant to the last paragraph of this Section 3) following the last date on which exchanges are
accepted pursuant to the Exchange Offer, and (ii) the Company will comply, insofar as relates to the Exchange Offer Registration Statement, the Prospectus included therein and the offering and
sale of Exchange Securities pursuant thereto, with its obligations under Section 2(b)(D), the last paragraph of Section 2(b), Section 3(c), 3(d), 3(e), 3(i), 3(j), 3(k), 3(o) and
3(p), and the last two paragraphs of this Section 3 as if all references therein to a Shelf Registration Statement, the Prospectus included therein and the Holders of Registrable Securities
referred, mutatis mutandis, to the Exchange Offer Registration Statement, the Prospectus included therein and the applicable Notifying Broker-Dealers
and, for purposes of this Section 3(f), all references in any such paragraphs or sections to the "Majority Holders" shall be deemed to mean, solely insofar as relates to this
Section 3(f), the Notifying Broker-Dealers who are the Holders of the majority in aggregate principal amount of the Exchange Securities which are Registrable Securities;

	(C)
	the
Company shall not be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement as would otherwise be contemplated by
Section 3(b) 

12

 

or
3(k) hereof, or take any other action as a result of this Section 3(f), for a period exceeding 180 days (subject to extension pursuant to the last paragraph of this Section 3)
after the last date on which exchanges are accepted pursuant to the Exchange Offer and Notifying Broker-Dealers shall not be authorized by the Company to, and shall not, deliver such Prospectus after
such period in connection with resales contemplated by this Section 3; and 

	(D)
	In
the case of any Exchange Offer Registration Statement, the Company agrees to deliver to the Initial Purchaser on behalf of the Participating Broker-Dealer upon the effectiveness of
the Exchange Offer Registration Statement (i) an opinion of counsel or opinions of counsel reasonably satisfactory to the Initial Purchaser, (ii) officers' certificates substantially
in the form customarily delivered in a public offering of debt securities and (iii) a comfort letter or comfort letters in customary form to the extent permitted by Statement on Auditing
Standards No. 100 of the American Institute of Certified Public Accountants (or if such a comfort letter is not permitted, an agreed upon procedures letter in customary form) from the Company's
independent certified public accountants (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which
financial statements are, or are required to be, included in the Registration Statement) at least as broad in scope and coverage as the comfort letter or comfort letters delivered to the Initial
Purchaser in connection with the initial sale of the Securities to the Initial Purchaser; 

        (g)   (i) in
the case of an Exchange Offer, furnish counsel for the Initial Purchaser and (ii) in the case of a Shelf Registration, furnish counsel for the
Holders of Registrable Securities and counsel for any underwriters of Registrable Securities copies of any request by the SEC or any state securities authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information; 

        (h)   use
its reasonable best effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement as soon as practicable and provide
immediate notice to each Holder of the withdrawal of any such order; 

        (i)    in
the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any
post-effective amendments thereto (without documents incorporated or deemed to be incorporated therein by reference or exhibits thereto, unless requested), if such documents are not
available via the SEC EDGAR database; 

        (j)    in
the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive legends; and cause such Registrable Securities to be in such denominations (consistent with the provisions of the
Indenture) and in a form eligible for deposit with the Depositary and registered in such names as the selling Holders or the underwriters, if any, may reasonably request in writing at least two
business days prior to the closing of any sale of Registrable Securities; 

        (k)   in
the case of a Shelf Registration, upon the occurrence of any event or the discovery of any facts as contemplated by Section 3(e)(vi) hereof, use its
reasonable best efforts to prepare a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated or deemed to be incorporated
therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain at the time of such delivery
any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
The Company agrees to notify each Holder to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and each Holder hereby agrees to suspend use of the
Prospectus until the Company has amended or 

13

 

supplemented
the Prospectus to correct such misstatement or omission. At such time as such public disclosure is otherwise made or the Company determines that such disclosure is not necessary, in each
case to correct any misstatement of a material fact or to include any omitted material fact, the Company agrees promptly to notify each Holder of such determination and to furnish each Holder such
number of copies of the Prospectus, as amended or supplemented, as such Holder may reasonably request; 

        (l)    obtain
CUSIP numbers for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement, and
provide the Trustee with printed or word-processed certificates for the Exchange Securities or Registrable Securities, as the case may be, in a form eligible for deposit with the
Depositary; 

        (m)  (i) cause
the Indenture to be qualified under the TIA in connection with the registration of the Exchange Securities or Registrable Securities, as the case may
be, (ii) cooperate with the Trustee and the Holders to effect such changes, if any, to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the
TIA and (iii) execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes, if any, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely manner; 

        (n)   in
the case of a Shelf Registration, the holders of a majority in principal amount of the Registrable Securities registered pursuant to such Shelf Registration Statement
shall have the right to direct the Company to effect not more than one underwritten registration and, in connection with such underwritten registration, the Company shall enter into agreements
(including underwriting agreements or similar agreements) and take all other customary and appropriate actions (including those reasonably requested by the holders of a majority in principal amount of
the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, in a manner that is reasonable and customary: 

        (i)    make
such representations and warranties to the Holders of such Registrable Securities and the underwriters, in form, substance and scope as are customarily made by
issuers to underwriters in similar underwritten offerings as may be reasonably requested by such Holders and underwriters; 

        (ii)    obtain
opinions of counsel to the Company (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, and
the Holders of a majority in principal amount of the Registrable Securities being sold) addressed to each selling Holder and the underwriters, covering the matters customarily covered in opinions
requested in sales of securities or underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; 

        (iii)    obtain
"cold comfort" letters and updates thereof with respect to such Shelf Registration Statement and the Prospectus included therein, all amendments and supplements
thereto and all documents incorporated or deemed to be incorporated by reference therein from the Company's independent certified public accountants and from the independent certified public
accountants for any other Person or any business or assets whose financial statements are included or incorporated by reference in the Shelf Registration Statement, each addressed to the underwriters,
and use reasonable best efforts to have such letters addressed to the selling Holders of Registrable Securities, such letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters to underwriters in connection with similar underwritten offerings and such letters to be delivered at the time of the pricing of such underwritten registration with
an update to such letter to be delivered at the time of closing of such underwritten registration; 

14

 

        (iv)    if
an underwriting agreement or other similar agreement is entered into, cause the same to set forth indemnification and contributions provisions and procedures
substantially equivalent to the indemnification and contributions provisions and procedures set forth in Section 5 hereof with respect to the underwriters and all other parties to be
indemnified pursuant to Section 5 hereof or such other indemnification and contributions as shall be satisfactory to the Company, the applicable underwriters and the Holders of the majority in
principal amount of the Registrable Securities being sold; and 

        (v)    deliver
such other documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings. 

The
documents referred to in Sections 3(n)(ii) and 3(n)(v) shall be delivered at the closing under any underwriting or similar agreement as and to the extent required thereunder. In the
case of any such underwritten offering, the Company shall provide written notice to the Holders of all Registrable Securities of such underwritten offering at least 30 days prior to the filing
of a prospectus supplement for such underwritten offering. Such notice shall (x) offer each such Holder the right to participate in such underwritten offering, (y) specify a date, which
shall be no earlier than 15 days following the date
of such notice, by which such Holder must inform the Company of its intent to participate in such underwritten offering and (z) include the instructions such Holder must follow in order to
participate in such underwritten offering; 

        (o)   in
the case of a Shelf Registration, make available for inspection by representatives of the Holders of the Registrable Securities and any underwriters participating in
any disposition pursuant to a Shelf Registration Statement and any counsel or accountant retained by such Holders or underwriters, all financial statements and other records, documents and properties
of the Company reasonably requested by any such Persons, and cause the respective officers, directors, employees, and any other agents of the Company to supply all information reasonably requested by
any such Persons in connection with a Shelf Registration Statement; 

        (p)   (i) in
the case of an Exchange Offer, a reasonable time prior to the filing of any Exchange Offer Registration Statement, any Prospectus forming a part thereof,
any amendment to an Exchange Offer Registration Statement or amendment or supplement to such Prospectus, provide copies of such documents to the Initial Purchaser, and make such changes in any such
documents prior to the filing thereof as the Initial Purchaser or its counsel may reasonably request; (ii) in the case of a Shelf Registration, a reasonable time prior to filing any Shelf
Registration Statement, any Prospectus forming a part thereof, any amendment to such Shelf Registration Statement or amendment or supplement to such Prospectus, provide copies of such document to the
Holders of Registrable Securities, to the Initial Purchaser, to the underwriter or underwriters, of an underwritten offering of Registrable Securities, and to counsel for any such Holders, Initial
Purchaser or underwriters, and make such changes in any such document prior to the filing thereof as the Holders of Registrable Securities, the Initial Purchaser, any such underwriter or underwriters
or any of their respective counsel may reasonably request; and (iii) cause the representatives of the Company to be available for discussion of such documents as shall be reasonably requested
by the Holders of Registrable Securities, the Initial Purchaser on behalf of such Holders or any underwriter, and shall not at any time make any filing of any such document of which such Holders, the
Initial Purchaser on behalf of such Holders, its counsel or any underwriter shall not have previously been advised and furnished a copy or to which such Holders, the Initial Purchaser on behalf of
such Holders, its counsel or any underwriter shall reasonably object within a reasonable time period; 

        (q)   in
the case of a Shelf Registration, use its reasonable best efforts to cause the Registrable Securities to be rated with the appropriate rating agencies, if so
requested by the Majority Holders of Registrable Securities or by the underwriter or underwriters of an underwritten offering, unless the Registrable Securities are already so rated; 

15

 

        (r)   otherwise
use its reasonable best efforts to comply with all applicable rules and regulations of the SEC and, with respect to each Registration Statement and each
post-effective amendment, if any, thereto and each filing by the Company of an Annual Report on Form 20-F; 

        (s)   cooperate
and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter and its counsel; 

        (t)    in
the case of a Shelf Registration, a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide
copies of such document to the Initial Purchaser on behalf of such Holders; and make representatives of the Company as shall be reasonably requested by the Holders of Registrable Securities, or the
Initial Purchaser on behalf of such Holders, available for discussion of such document; and 

        (u)   in
the case of a Shelf Registration, use its reasonable best efforts to cause all Registrable Securities to be listed on any securities exchange on which similar debt
securities issued by the Company are then listed if requested by the Majority Holders or by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any. 

        In
the case of a Shelf Registration Statement, the Company may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Securities to
furnish to the Company such information regarding such Holder and the proposed distribution by such Holder of such Registrable Securities as the Company may from time to time reasonably request in
writing and require such Holder to agree in writing to be bound by all provisions of this Agreement applicable to such Holder. 

        In
the case of a Shelf Registration Statement, each Holder agrees and, in the event that any Participating Broker-Dealer is using the Prospectus included in the Exchange Offer
Registration Statement in connection with the sale of Exchange Securities pursuant to Section 3(f), each such Participating Broker-Dealer agrees that, upon receipt of any notice from the
Company of the happening of any event or the discovery of any facts of the kind described in Section 3(e)(ii), 3(e)(iii) or 3(e)(v) through 3(e)(vii) hereof, such Holder or
Participating Broker-Dealer, as the case may be, will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until receipt by such Holder or Participating
Broker-Dealer, as the case may be, of (i) the copies of the supplemented or amended Prospectus contemplated by Section 3(k) hereof or (ii) written notice from the Company that the
Shelf Registration Statement or the Exchange Offer Registration Statement, respectively, are once again effective or that no supplement or amendment is required. If so directed by the Company, such
Holder or Participating Broker-Dealer, as the case may be, will deliver to the Company (at the Company's expense) all copies in its possession, other than permanent file copies then in its possession,
of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Nothing in this paragraph shall prevent the accrual of Additional Interest on any Securities or
Exchange Securities. 

        If
the Company shall give any such notice to suspend the disposition of Registrable Securities pursuant to the immediately preceding paragraph, the Company shall be deemed to have used
its reasonable best efforts to keep the Shelf Registration Statement or, in the case of Section 3(f), the Exchange Offer Registration Statement, as the case may be, effective during such period
of suspension; provided that (i) such period of suspension shall not exceed the time periods provided in Section 2(e)(vi) hereof and (ii) the Company shall use its
reasonable best efforts to file and have declared effective (if an amendment) as soon as practicable thereafter an amendment or supplement to the Shelf Registration Statement or the Exchange Offer
Registration Statement or both, as the case may be, or the Prospectus included therein and shall extend the period during which the Shelf Registration Statement or the Exchange Offer Registration
Statement or both, as the case may be, shall 

16

 

be
maintained effective pursuant to this Agreement (and, if applicable, the period during which Participating Broker-Dealers may use the Prospectus included in the Exchange Offer Registration
Statement pursuant to Section 3(f) hereof) by the number of days during the period from and including the date of the giving of such notice to and including the earlier of the date when the
Holders or Participating Broker-Dealers, respectively, shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions and the effective date of written
notice from the Company to the Holders or Participating Broker-Dealers, respectively, that the Shelf Registration Statement or the Exchange Offer Registration Statement, respectively, are once again
effective or that no supplement or amendment is required. 

        4.    Underwritten Registrations.    In the event that the Company fails to effect the Exchange Offer or file any
Shelf Registration Statement and maintain the effectiveness of any Shelf Registration Statement as provided herein, the Company shall not file any Registration Statement with respect to any securities
(within the meaning of Section 2(l) of the 1933 Act) of the Company other than Registrable Securities. 

        If
any of the Registrable Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Majority Holders of such Registrable Securities included in such offering, subject to the consent of the Company, which consent shall not be
unreasonably withheld. 

        No
Holder of Registrable Securities may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the
basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. 

        5.    Indemnification and Contribution.    

        (a)    The
Company agrees to indemnify and hold harmless the Initial Purchaser, each Holder, each Participating Broker-Dealer, each underwriter who participates in an offering
of Registrable Securities (each, an "Underwriter") and each Person, if any, who controls the Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, as follows: 

        (i)    against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents
incorporated therein by reference, or any omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising
out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or Prospectus (or any amendment or supplement thereto) or any omission or alleged
omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; 

        (ii)    against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 5(d) below) any such settlement is effected with the written consent of the Company; and 

17

 

        (iii)    against
any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by any indemnified party), reasonably incurred in
investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the
Company by the Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter with respect to the Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter, as the case may be,
expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) or made in reliance upon the Statements of Eligibility and
Qualification of Trustees (Form T-1) under the 1939 Act filed as exhibits to the Registration Statement provided, further, that the
foregoing indemnity shall not inure to the benefit of any of the foregoing parties from whom the person asserting any such losses, claims, damages or liabilities purchased the
Exchange Securities or Registrable Securities, or any person controlling any of the foregoing parties, if such party failed to send or give a copy of the Prospectus (as amended or supplemented if the
Company shall have furnished such amendments or supplements thereto) to such person within the time required by the Securities Act (and if so required) and if the Prospectus (as so amended as
supplemented) would have cured the defect giving rise to such loss, liability, claim, damage and expense. 

        (b)   Each
Holder, the Initial Purchaser, each Participating Broker-Dealer and each Underwriter, severally but not jointly, agrees to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company, each other Participating Broker-Dealer, each other Underwriter and each other selling Holder and each Person, if any, who controls the
Company, the Initial Purchaser, any Underwriter, any Participating Broker-Dealer or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 5(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in
reliance upon and in conformity with written information with respect to such Holder, Initial Purchaser, Underwriter or Participating Broker-Dealer furnished to the Company by such Holder, Initial
Purchaser, Underwriter or Participating Broker-Dealer respectively, expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement
thereto); provided, however, that no such Holder, Initial Purchaser, Underwriter or Participating Broker-Dealer shall be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration Statement. 

        (c)   Each
indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to 

18

 

the
entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. 

        (d)   If
at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature contemplated by Section 5(a)(ii) effected without its written consent if (i) such settlement is entered into
more than 270 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least
30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date
of such settlement. 

        (e)   In
order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in this Section 5 is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party or parties on the one hand and the indemnified
party or parties on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or parties or such indemnified party or parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. 

        (f)    The
Company, the Holders, and the Initial Purchaser agree that it would not be just or equitable if contribution pursuant to this Section 5 were determined by pro
rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (e) above. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to above in this Section 5 shall be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. 

        Notwithstanding
the provisions of this Section 5, neither the Initial Purchaser nor any Holder, Participating Broker-Dealer or Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which Registrable Securities sold by it were offered exceeds the amount of any damages that such Initial Purchaser, Holder, Participating
Broker-Dealer or Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. 

        No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. 

19

   
        For purposes of this Section 5, each Person, if any, who controls the Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter, as the case may be, and
each director of the Company, each officer of the Company who signed the Registration Statement and each Person, if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The respective obligations of the Initial Purchaser, Holders, Participating Broker-Dealers and
Underwriters to contribute pursuant to this Section 5 are several in proportion to the principal amount of Securities purchased by them and not joint. 

        The
indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of the Initial Purchaser, any Holder, Participating Broker-Dealer or Underwriter or any Person controlling the Initial Purchaser, any
Holder, Participating Broker-Dealer or Underwriter, or by or on behalf of the Company, its officers or directors or any Person controlling the Company, (iii) acceptance of any of the Exchange
Securities and (iv) any sale of Registrable Securities or Exchange Securities pursuant to a Shelf Registration Statement. 

        6.    Miscellaneous.    

        (a)    Rule 144 and Rule 144A.    For so long as any Registrable Securities are outstanding and the
Company is subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the Company covenants that it will file all reports required to be filed by it under Section 13(a)
or 15(d) of the 1934 Act and the rules and regulations adopted by the SEC thereunder, that if it ceases to be so required to file such reports, it will upon the request of any Holder or beneficial
owner of Registrable Securities (i) make publicly available such information (including, without limitation, the information specified in Rule 144(c)(2) under the 1933 Act) as is
necessary to permit sales pursuant to Rule 144 under the 1933 Act, (ii) deliver or cause to be delivered, promptly following a request by any Holder or beneficial owner of Registrable
Securities or any prospective purchaser or transferee designated by such Holder or beneficial owner, such information (including, without limitation, the information specified in
Rule 144A(d)(4) under the 1933 Act) as is necessary to permit sales pursuant to Rule 144A under the 1933 Act. 

        (b)    No Inconsistent Agreements.    The Company has not entered into nor will the Company on or after the date of
this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not and will not in any way conflict with and are not
and will not be inconsistent with the rights granted to the holders of any of the Company's other issued and outstanding securities under any other agreements entered into by the Company or any of its
subsidiaries. 

        (c)    Amendments and Waivers.    The provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consents. 

        (d)    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing
by hand-delivery, registered first-class mail, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder or Participating Broker-Dealer (other than the Initial
Purchaser), at the most current address set forth on the records of the registrar under the Indenture, (ii) if to the Initial Purchaser, at the most current address given by the Initial
Purchaser to the Company by means of a notice given in accordance with the provisions of this Section 6(d), which address initially is the 

20

 

address
set forth in the Purchase Agreement; (iii) if to the Company, initially at the address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given
in accordance with the provisions of this Section 6(d) and (iv) if to any Underwriter, at the most current address given by such Underwriter to the Company by means of a notice given in
accordance with the provisions of this Section 6(d), which address initially shall be the address set forth in the applicable underwriting agreement. 

        All
such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail,
first class, postage prepaid, if mailed; when receipt is acknowledged, if telecopied; and on the second business day if timely delivered to an air courier guaranteeing overnight delivery. 

        Copies
of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. 

        (e)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors,
assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit
any assignment, transfer or other disposition of Registrable Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such
Registrable Securities, such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof. 

        (f)    Third Party Beneficiary.    Each Holder and Participating Broker-Dealer shall be a third party beneficiary of
the agreements made hereunder between the Company, on the one hand, and the Initial Purchaser, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder. Each Holder, by its acquisition of Securities, shall be deemed to have agreed to the provisions
of Section 5(b) hereof. 

        (g)    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

        (h)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. 

        (i)    Restriction on Resales.    If (i) the Company or any of its subsidiaries or affiliates (as defined in
Rule 144 under the 1933 Act) shall redeem, purchase or otherwise acquire any Registrable Security or any Exchange Security which is a "restricted security" within the meaning of Rule 144
under the 1933 Act, the Company will deliver or cause to be delivered such Registrable Security or Exchange Security, as the case may be, to the Trustee for cancellation and neither the Company nor
any of its subsidiaries or affiliates will hold or resell such Registrable Security or Exchange Security or issue any new Security or Exchange Security to replace the same. 

        (j)    GOVERNING LAW.    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. 

        (k)    Severability.    In the event that any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby. 

[SIGNATURE
PAGE FOLLOWS] 

21

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. 

	 	 	AES GENER S.A.
	

 	
 	
By:	

 Name:

Title:

22

 

Confirmed
and accepted

    as of the date first above written: 

DEUTSCHE
BANK SECURITIES INC. 

	By:	 	 	 
	 	
	 	 
	 	Name:	 	 
	 	Title:	 	 
	

By:	

 	
 	

 
	 	
	 	 
	 	Name:	 	 
	 	Title:	 	 

23

 
 

ANNEX A    
    

 
  FORM OF PLAN OF DISTRIBUTION    
    

        Each broker-dealer that receives new notes for its own account under the exchange offer must acknowledge that it will deliver a prospectus in connection with any
resale of those notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer for resales of new notes received in exchange for original notes that had
been acquired as a result of market-making or other trading activities. We have agreed that, for a period of 60 days after the expiration date of the exchange offer, we will make this
prospectus, as it may be amended or supplemented, available to any broker-dealer for use in connection with any such resale. Any broker-dealers required to use this prospectus and any amendments or
supplements to this prospectus for resales of the new notes must notify us of this fact by checking the box on the letter of transmittal requesting additional copies of these documents. 

        Notwithstanding
the foregoing, we are entitled under the registration rights agreements to suspend the use of this prospectus by broker-dealers under specified circumstances. For
example, we may suspend the use of this prospectus if: 

	•
	the
SEC or any state securities authority requests an amendment or supplement to this prospectus or the related registration statement or additional information;

	•
	the
SEC or any state securities authority issues any stop order suspending the effectiveness of the registration statement or initiates proceedings for that purpose;

	•
	we
receive notification of the suspension of the qualification of the new notes for sale in any jurisdiction or the initiation or threatening of any proceeding for that
purpose;

	•
	the
suspension is required by law; or

	•
	an
event occurs which makes any statement in this prospectus untrue in any material respect or which constitutes an omission to state a material fact in this prospectus. 

        If
we suspend the use of this prospectus, the 60-day period referred to above will be extended by a number of days equal to the period of the suspension. 

        We
will not receive any proceeds from any sale of new notes by broker-dealers. New notes received by broker-dealers for their own account under the exchange offer may be sold from time
to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on those notes or a combination of those methods,
at market prices prevailing at the time of resale, at prices related to prevailing market prices or at negotiated prices. Any resales may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions from the selling broker-dealer or the purchasers of the new notes. Any broker-dealer that resells new notes received by
it for its own account under the exchange offer and any broker or dealer that participates in a distribution of the new notes may be deemed to be an "underwriter" within the meaning of the Securities
Act and any profit on any resale of new notes and any commissions or concessions received by these persons may be deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. 

        We
have agreed to pay all expenses incidental to the exchange offer other than commissions and concessions of any broker or dealer and will indemnify holders of the notes, including any
broker-dealers, against certain liabilities, including liabilities under the Securities Act. 

QuickLinks

Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT

ANNEX A

FORM OF PLAN OF DISTRIBUTIONQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.1  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of March, 29th 2004, is made by and between CommunitySouth Bancshares, Inc., a South
Carolina corporation (the "Company"), which will be the holding company for CommunitySouth Bank (Proposed), a proposed South Carolina state bank (the "Bank"), and C. Allan Ducker, III, an
individual resident of South Carolina (the "Executive"). Each of the Organizers of the Bank shall also be a party to this Agreement until the date the Bank opens. 

        The
Employer is in the process of organizing the Bank, and the Executive has agreed to serve as Chief Executive Officer of the Bank and the Company. Upon completion of the organization
of the Bank, the Bank will automatically become a party to this Agreement, and all references to the term "Employer" as used herein shall refer to the Company and the Bank. 

        The
Employer recognizes that the Executive's contribution to the growth and success of the Bank during its organization and initial years of operations will be a significant factor in
the success of the Bank. The Employer desires to provide for the employment of the Executive in a manner which will reinforce and encourage the dedication of the Executive to the Bank and promote the
best interests of the Bank and its shareholders. The Executive is willing to serve the Employer on the terms and conditions herein provided. Certain terms used in this Agreement are defined in
Section 17 hereof. 

        This
Agreement will be submitted to the FDIC and the South Carolina Board of Financial Institutions in connection with the regulatory applications related to the formation of the Bank.
The parties hereto agree to any amendments to this Agreement as may be required in connection with obtaining such regulatory approvals. 

        In
consideration of the foregoing, the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows: 

        1.    Employment.    The Employer shall employ the Executive, and the Executive shall serve the Employer, as Chief
Executive Officer of the Bank and as Chief Executive Officer of the Company upon the terms and conditions set forth herein. The Executive shall also serve on the Board of Directors of the Company and
the Bank. The Executive shall have such authority and responsibilities consistent with his position as are set forth in the Company's or the Bank's Bylaws or assigned by the Company's or the Bank's
Board of Directors (collectively, the "Board") from time to time. The Executive shall devote his full business time, attention, skill and efforts to the performance of his duties hereunder, except
during periods of illness or periods of vacation and leaves of absence consistent with Bank policy. The Executive may devote reasonable periods to service as a director or advisor to other
organizations, to charitable and community activities, and to managing his personal investments, provided that such activities do not materially
interfere with the performance of his duties hereunder and are not in conflict or competitive with, or adverse to, the interests of the Company or the Bank. 

        2.    Term.    Unless earlier terminated as provided herein, the Executive's employment under this Agreement shall
commence on the date hereof and be for a term (the "Term") of three years. At the end of each day of the Term, the Term shall be extended for an additional day so that the remaining term shall
continue to be three years; provided that the Executive or the Bank may at any time, by written notice, fix the Term to a finite term of three years
commencing with the date of the notice. Notwithstanding the foregoing, the Term of employment hereunder will end on the date that the Executive attains the retirement age, if any, specified in the
Bylaws of the Bank for directors of the Bank. 

 

        3.    Compensation and Benefits.    

        (a)   Starting
March 29, 2004, the Employer shall pay the Executive an initial annual base salary of $100,000, plus family yearly medical, dental, vision and disability
insurance premium in amounts to be determined by the Board. On the date that the Company breaks escrow on its initial offering for the formation of the Bank, the annual base salary will be increased
to $115,000. Prior to the date the Bank opens for business to the public (the "Opening Date"), the salary will be paid bi-monthly. Following the Opening Date, the salary will be paid in
accordance with the Bank's standard payroll procedures. The Board (or an appropriate committee of the Board) shall review the Executive's performance and salary at least annually and may increase the
Executive's base salary if it determines in its sole discretion that an additional increase is appropriate. 

        (b)   Following
the Opening Date of the Bank, the Executive shall be eligible each year to receive a cash bonus equaling up to 50% of his annual salary if the Bank achieves
certain performance levels established by the board of directors from time to time. 

        (c)   The
Executive shall participate in the Employer's long-term equity incentive program and be eligible for the grant of stock options, restricted stock, and
other awards thereunder or under any similar plan adopted by the Employer. As soon as an appropriate stock option plan is adopted by the Board, the Company shall grant to the Executive an option to
purchase a number of shares of Common Stock equal to 4% of the number of shares actually sold in the offering. The award agreement for the stock option shall provide that one-third of the
shares subject to the option will vest on each of the first three anniversaries of the Opening Date, but only if the Executive remains employed by the Company or one of its subsidiaries on such date,
and shall contain other customary terms and conditions. Nothing herein shall be deemed to preclude the granting to the Executive of warrants or options under a director option plan in addition to the
options granted hereunder. The exercise price of the options will be equal to the fair market value of the stock on the date of grant. 

        (d)   The
Executive shall participate in all retirement, welfare and other benefit plans or programs of the Employer now or hereafter applicable generally to employees of the
Employer or to a class of employees that includes senior executives of the Employer. The Executive shall also be paid directors' fees in the same amount as outside directors at such time that the
Employer begins paying directors' fees. 

        (e)   The
Employer shall be responsible for paying the Executive's Cobra coverage until replacement insurance is provided by the Company. 

        (f)    The
Employer shall also pay relocation expenses upon the sale of the Executive's house in Columbia in the amount of $40,000. 

        (g)   The
Employer shall provide the Executive with a term life insurance policy providing for death benefits totaling $500,000 payable to the Executive's spouse and heirs and
$500,000 payable to the Employer), and the Executive shall cooperate with the Employer in the securing and maintenance of such policy. If Executive is taxed by state or federal authorities with
respect to Employer's payment of the key man life insurance policy, Executive's compensation payable hereunder shall be increased, on a tax gross-up basis, so as to reimburse the Executive
for the additional tax payable by the Executive as a result of Employer's payment of the key man life insurance premiums taking into account all taxes payable by the Executive with respect to such tax
gross-up payments hereunder, so that the Executive shall be, after payment of all taxes, in the same financial position as if no taxes with respect to the key man life insurance policy had
been imposed upon him. The Employer shall require and pay the cost of an annual physical for the Executive. 

2

 

        (h)   The
Employer shall provide the Executive with an automobile either owned or leased by the Company or the Bank of a make and model appropriate to the Executive's status.
The monthly payment of this automobile shall not exceed $750 per month. Insurance, taxes and other related automobile expenses shall also be paid by the Bank. Until the Employer provides this
automobile, the Employer will reimburse the Executive for the use of his personal automobile at the IRS legal mileage rate. 

        (i)    In
addition, at a time deemed appropriate by the Board, the Employer shall obtain a membership in and pay the initiation fee for and the dues pertaining to area country,
social, and civic clubs and shall designate the Executive as the authorized user of such membership for so long as the Executive remains the President or Chief Executive Officer of the Employer and
this Agreement remains in force. 

        (j)    The
Employer shall reimburse the Executive for reasonable travel and other expenses related to the Executive's duties, including cell phone expenses, which are incurred
and accounted for in accordance with the normal practices of the Employer. 

        (k)   The
Employer shall provide the Executive with four weeks' paid vacation per year, which shall be taken in accordance with any banking rules or regulations governing
vacation leave. 

        4.    Termination.    

        (a)   The
Executive's employment under this Agreement may be terminated prior to the end of the Term only as provided in this Section 4. 

        (b)   The
Agreement will be terminated upon the death of the Executive. In this event, the Executive's estate shall receive any sums due him as base salary and/or
reimbursement of expenses through the end of the month during which death occurred, plus any bonus earned or accrued through the date of death (including any amounts awarded for previous years but
which were not yet vested). 

        (c)   The
Employer may terminate this Agreement upon the disability of the Executive for a period of 180 days which, in the opinion of the Board of Directors, renders
him unable to perform the essential functions of his job and for which reasonable accommodation is unavailable. For purposes of this Agreement, a "disability" is defined as a physical or mental
impairment that substantially limits one or more major life activities, and a "reasonable accommodation" is one that does not impose an undue hardship on the Employer. During the period of any
incapacity leading up to the termination of the Executive's employment under this provision, the Employer shall continue to pay the Executive his full base salary at the rate then in effect and all
perquisites and other benefits (other than any bonus) until the Executive becomes eligible for benefits under any long-term disability plan or insurance program maintained by the Employer,
provided that the amount of any such payments to the Executive shall be reduced by the sum of the amounts, if any, payable to the Executive for the same period under any other disability benefit or
pension plan covering the Executive. Furthermore, the Executive shall receive any bonus earned or accrued through the date of incapacity (including any amounts awarded for previous years but which
were not yet vested). 

        (d)   The
Employer may terminate this Agreement for Cause upon delivery of a Notice of Termination to the Executive. If the Executive's employment is terminated for Cause
under this provision, the Executive shall receive only any sums due him as base salary and/or reimbursement of expenses through the date of such termination. 

        (e)   The
Employer may terminate this Agreement without Cause upon delivery of a Notice of Termination to the Executive. If the Executive's employment is terminated without
Cause under this provision, the Employer shall pay to the Executive severance compensation in an amount 

3

 

equal
to 100% of his then current monthly base salary each month for 24 months from the date of termination, plus any bonus earned or accrued through the date of termination (including any
amounts awarded for previous years but which were not yet vested). 

        (f)    The
Executive may terminate this Agreement at any time by delivering a Notice of Termination. If the Executive resigns under this provision, the Executive shall receive
any sums due him as base salary and/or reimbursement of expenses through the date of such termination. 

        (g)   The
Executive may terminate this Agreement for Good Reason upon delivery of a Notice of Termination to the Employer within a 90-day period beginning on the
30th day after the
occurrence of a Change in Control or within a 90-day period beginning on the one year anniversary of the occurrence of a Change in Control. If the Executive's employment is terminated by
the Executive pursuant to this provision, in addition to other rights and remedies available in law or equity, the Executive shall be entitled to the following: 

          (i)  the
Employer shall pay the Executive in cash within fifteen days of the date of termination severance compensation in an amount equal to his then current monthly base
salary multiplied by 36, plus any bonus earned or accrued through the date of termination (including any amounts awarded for previous years but which were not yet vested); 

         (ii)  for
a period of three years, the Employer shall at its expense continue on behalf of the Executive and his dependents and beneficiaries the life insurance, disability,
medical, dental, and hospitalization benefits provided (x) to the Executive at any time during the 90-day period prior to the Change in Control or at any time thereafter or
(y) to other similarly situated executives who continue in the employ of the Employer. Such coverage and benefits (including deductibles and costs) shall be no less favorable to the Executive
and his dependents and beneficiaries than the most favorable of such coverages and benefits referred to above. The Employer's obligation hereunder with respect to the foregoing benefits shall be
limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Employer may reduce the coverage of any benefits it is required
to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be
provided hereunder. This subsection (ii) shall not be interpreted so as to limit any benefits to which the Executive or his dependents or beneficiaries may be entitled under any of the
Employer's employee benefit plans, programs, or practices following the Executive's termination of employment, including, without limitation, retiree medical and life insurance benefits; and 

        (iii)  the
restrictions on any outstanding incentive awards (including restricted stock) granted to the Executive under the Company's or the Bank's long-term
equity incentive program or any other incentive plan or arrangement shall lapse and such awards shall become 100% vested, all stock options and stock appreciation rights granted to the Executive shall
become immediately exercisable and shall become 100% vested, all performance units granted to the Executive shall become 100% vested, and the restrictive covenants contained in Section 9 shall
not apply to the Executive. 

        (h)   The
Employer may terminate this Agreement if its effort to organize the Bank is abandoned, or if the Company or the Bank receives notice or otherwise has reason to
believe that it will not receive approval of any bank regulatory application in connection with the formation of the Bank and the Board determines in good faith that the Executive's actions,
inactions, lack of experience, or background was a material factor in the failure to obtain such approval. If the Executive's employment is terminated under this provision, the Employer shall pay to
the Executive severance compensation in an amount equal to 100% of his then current monthly base 

4

 

salary
each month for six months from the date of termination, but shall not be obligated to pay any portion of any bonus. 

        (i)    With
the exceptions of the provisions of this Section 4, and the express terms of any benefit plan under which the Executive is a participant, it is agreed that,
upon termination of the Executive's employment, the Employer shall have no obligation to the Executive for, and the Executive waives and relinquishes, any further compensation or benefits (exclusive
of COBRA benefits). Unless otherwise stated in this Section 4, the effect of termination on any outstanding incentive awards, stock options, stock appreciation rights, performance units, or
other incentives shall be governed by the terms of the applicable benefit or incentive plan and/or the agreements governing such incentives. At the time of termination of employment, the Employer and
the Executive shall enter into a mutually satisfactory form of release acknowledging such remaining obligations and discharging both parties, as well as the Employer's officers, directors and
employees with respect to their actions for or on behalf of the Employer, from any other claims or obligations arising out of or in connection with the Executive's employment by the Employer,
including the circumstances of such termination. 

        (j)    In
the event that the Executive's employment is terminated for any reason, the Executive shall tender his resignation as a director of the Company and the Bank and
effective as of the date of termination. 

        (k)   The
parties intend that the severance payments and other compensation provided for herein are reasonable compensation for the Executive's services to the Employer and
shall not constitute "excess parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986 and any regulations thereunder. In the event that the Employer's
independent accountants acting as auditors for the Employer on the date of a Change in Control determine that the payments provided for herein constitute "excess parachute payments," then the
compensation payable hereunder shall be reduced to an amount the value of which is $1.00 less than the maximum amount that could be paid to the Executive without the compensation being treated as
"excess parachute payments" under Section 280G. The allocations of the reduction required hereby among the termination benefits payable to the Executive shall be determined by the Executive. 

        5.    Ownership of Work Product.    The Employer shall own all Work Product arising during the course of the
Executive's employment (prior, present or future). For purposes hereof, "Work Product" shall mean all intellectual property rights, including all Trade Secrets, U.S. and international copyrights,
patentable inventions, and other intellectual property rights in any programming, documentation, technology or
other work product that relates to the Employer, its business or its customers and that the Executive conceives, develops, or delivers to the Employer at any time during his employment, during or
outside normal working hours, in or away from the facilities of the Employer, and whether or not requested by the Employer. If the Work Product contains any materials, programming or intellectual
property rights that the Executive conceived or developed prior to, and independent of, the Executive's work for the Employer, the Executive agrees to point out the pre-existing items to
the Employer and the Executive grants the Employer a worldwide, unrestricted, royalty-free right, including the right to sublicense such items. The Executive agrees to take such actions
and execute such further acknowledgments and assignments as the Employer may reasonably request to give effect to this provision. 

        6.    Protection of Trade Secrets.    The Executive agrees to maintain in strict confidence and, except as necessary
to perform his duties for the Employer, the Executive agrees not to use or disclose any Trade Secrets of the Employer during or after his employment. "Trade Secret" means information, including a
formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list, that: (i) derives economic value, actual or potential, 

5

 

from
not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy. 

        7.    Protection of Other Confidential Information.    In addition, the Executive agrees to maintain in strict
confidence and, except as necessary to perform his duties for the Employer, not to use or disclose any Confidential Business Information of the Employer during his employment and for a period of
24 months following termination of the Executive's employment. "Confidential Business Information" shall mean any internal, non-public information (other than Trade Secrets already
addressed above) concerning the Employer's financial position and results of operations (including revenues, assets, net income, etc.); annual and long-range business plans; product or
service plans; marketing plans and methods; training, educational and administrative manuals; customer and supplier information and purchase histories; and employee lists. The provisions of Sections 6
and 7 shall also apply to protect Trade Secrets and Confidential Business Information of third parties provided to the Employer under an obligation of secrecy. 

        8.    Return of Materials.    The Executive shall surrender to the Employer, promptly upon its request and in any
event upon termination of the Executive's employment, all media, documents, notebooks, computer programs, handbooks, data files, models, samples, price lists, drawings, customer lists, prospect data,
or other material of any nature whatsoever (in tangible or electronic form) in the Executive's possession or control, including all copies thereof, relating to the Employer, its business, or its
customers. Upon the request of the Employer, the Executive shall certify in writing compliance with the foregoing requirement. 

        9.    Restrictive Covenants.    

        (a)   No Solicitation of Customers. During the Executive's employment with the Employer and for a period of 24 months
thereafter, the Executive shall not (except on behalf of or with the prior written consent of the Employer), either directly or indirectly, on the Executive's own behalf or in the service or on behalf
of others, (A) solicit, divert, or appropriate to or for a Competing Business, or (B) attempt to solicit, divert, or appropriate to or for a Competing Business, any person or entity that
is or was a customer of the Employer or any of its Affiliates at any time during the 12 months prior to the date of termination and with whom the Executive has had material contact. 

        (b)   No Recruitment of Personnel. During the Executive's employment with the Employer and for a period of 24 months
thereafter, the Executive shall not, either directly or indirectly, on the Executive's own behalf or in the service or on behalf of others, (A) solicit, divert, or hire away, or
(B) attempt to solicit, divert, or hire away, to any Competing Business located in the Territory, any employee of or consultant to the Employer or any of its Affiliates, regardless of whether
the employee or consultant is full-time or temporary, the employment or engagement is pursuant to written agreement, or the employment is for a determined period or is at will. 

        (c)   Non-Competition Agreement. During the Executive's employment with the Employer and for a period of
24 months thereafter, the Executive shall not (without the prior written consent of the Employer) compete with the Employer or any of its Affiliates by, directly or indirectly, forming, serving
as an organizer, director or officer of, or consultant to, or acquiring or maintaining more than a 1% passive investment in, a depository financial institution or holding company therefor if such
depository institution or holding company has one or more offices or branches located in the Territory. Notwithstanding the foregoing, the Executive may serve as an officer of or consultant to a
depository institution or holding company therefor even though such institution operates one or more offices or branches in the Territory, if the Executive's employment does not directly involve, in
whole or in part, the depository financial institution's or holding company's operations in the Territory. 

6

 

        10.    Independent Provisions.    The provisions in each of the above Sections 9(a), 9(b), and 9(c) are independent,
and the unenforceability of any one provision shall not affect the enforceability of any other provision. 

        11.    Successors; Binding Agreement.    The rights and obligations of this Agreement shall bind and inure to the
benefit of the surviving corporation in any merger or consolidation in which the Employer is a party, or any assignee of all or substantially all of the Employer's business and properties. The
Executive's rights and obligations under this Agreement may not be assigned by him, except that his right to receive accrued but unpaid compensation, unreimbursed expenses and other rights, if any,
provided under this Agreement which survive termination of this Agreement shall pass after death to the personal representatives of his estate. 

        12.    Notice.    For the purposes of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, however, that all notices to the Employer
shall be directed to the attention of the Employer with a copy to the Secretary of the Employer. All notices and communications shall be deemed to have been received on the date of delivery thereof. 

        13.    Governing Law.    This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of South Carolina without giving effect to the conflict of laws principles thereof. Any action brought by any party to this Agreement shall be brought and maintained in a court of competent
jurisdiction in State of South Carolina. 

        14.    Non-Waiver.    Failure of the Employer to enforce any of the provisions of this Agreement or any
rights with respect thereto shall in no way be considered to be a waiver of such provisions or rights, or in any way affect the validity of this Agreement. 

        15.    Enforcement.    The Executive agrees that in the event of any breach or threatened breach by the Executive of
any covenant contained in Section 9(a), 9(b), or 9(c) hereof, the resulting injuries to the Employer would be difficult or impossible to estimate accurately, even though irreparable injury or
damages would certainly result. Accordingly, an award of legal damages, if without other relief, would be inadequate to protect the Employer. The Executive, therefore, agrees that in the event of any
such breach, the Employer shall be entitled to obtain from a court of competent jurisdiction an injunction to restrain the breach or anticipated breach of any such covenant, and to obtain any other
available legal, equitable, statutory, or contractual relief. Should the Employer have cause to seek such relief, no bond shall be required from the Employer, and the Executive shall pay all
attorney's fees and court costs which the Employer may incur to the extent the Employer prevails in its enforcement action. 

        16.    Saving Clause.    The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision or clause of this Agreement, or portion thereof, shall be held by any
court or other tribunal of competent jurisdiction to be illegal, void, or unenforceable in such jurisdiction, the remainder of such provision shall not be thereby affected and shall be given full
effect, without regard to the invalid portion. It is the intention of the parties that, if any court construes any provision or clause of this Agreement, or any portion thereof, to be illegal, void,
or unenforceable because of the duration of such provision or the area or matter covered thereby, such court shall reduce the duration, area, or matter of such provision, and, in its reduced form,
such provision shall then be enforceable and shall be enforced. The Executive and the Employer hereby agree that they will negotiate in good faith to amend this Agreement from time to time to modify
the terms of Sections 9(a), 9(b), and 9(c), the definition of the term "Territory," and the definition of the term "Business," to reflect changes in the Employer's business and affairs 

7

 

so
that the scope of the limitations placed on the Executive's activities by Section 9 accomplishes the parties' intent in relation to the then current facts and circumstances. Any such
amendment shall be effective only when completed in writing and signed by the Executive and the Employer. 

        17.    Certain Definitions.    

        (a)   "Affiliate" shall mean any business entity controlled by, controlling or under common control with the Employer. 

        (b)   "Business" shall mean the operation of a depository financial institution, including, without limitation, the
solicitation and acceptance of deposits of money and commercial paper, the solicitation and funding of loans and the provision of other banking services, and any other related business engaged in by
the Employer or any of its Affiliates as of the date of termination. 

        (c)   "Cause" shall consist of any of (A) the commission by the Executive of a willful act (including, without
limitation, a dishonest or fraudulent act) or a grossly negligent act, or the willful or grossly negligent omission to act by the Executive, which is intended to cause, causes or is reasonably likely
to cause material harm to the Employer (including harm to its business reputation), (B) the indictment of the Executive for the commission or perpetration by the Executive of any felony or any
crime involving dishonesty, moral turpitude or fraud, (C) the material breach by the Executive of this Agreement that, if susceptible of cure, remains uncured ten days following written notice
to the Executive of such breach, (D) the receipt of any form of notice, written or otherwise, that any regulatory agency having jurisdiction over the Employer intends to institute any form of
formal or informal (e.g., a memorandum of understanding which relates to the Executive's performance) regulatory action against the Executive or the
Employer or the Employer (provided that the Board of Directors determines in good faith, with the Executive abstaining from participating in the
consideration of and vote on the matter, that the subject matter of such action involves acts or omissions by or under the supervision of the Executive or that termination of the Executive would
materially advance the Employer's compliance with the
purpose of the action or would materially assist the Employer in avoiding or reducing the restrictions or adverse effects to the Employer related to the regulatory action); (E) the exhibition
by the Executive of a standard of behavior within the scope of his employment that is materially disruptive to the orderly conduct of the Employer's business operations (including, without limitation,
substance abuse or sexual misconduct) to a level which, in the Board of Directors' good faith and reasonable judgment, with the Executive abstaining from participating in the consideration of and vote
on the matter, is materially detrimental to the Employer's best interest, that, if susceptible of cure remains uncured ten days following written notice to the Executive of such specific inappropriate
behavior; or (F) the failure of the Executive to devote his full business time and attention to his employment as provided under this Agreement that, if susceptible of cure, remains uncured
30 days following written notice to the Executive of such failure. In order for the Board of Directors to make a determination that termination shall be for Cause, the Board must provide the
Executive with an opportunity to meet with the Board in person. 

        (d)   "Change in Control" shall mean the occurrence during the Term of any of the following events, unless such event is a
result of a Non-Control Transaction: 

          (i)  The
individuals who, as of the date of this Agreement, are members of the Board of Directors of the Company (the "Incumbent Board") cease for any reason to constitute
at least 50% of the Board of Directors of the Company; provided, however, that if the election, or
nomination for election by the Company's shareholders, of any new director was approved in advance by a vote of at least 50% of the Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board; provided, further, that no individual shall
be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest, 

8

 

or
other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board of Directors of the Company, including by reason of any agreement intended to avoid
or settle any election contest or proxy contest. 

         (ii)  An
acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term "person" is used
for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of the combined voting power of the Company's then outstanding Voting Securities; provided,  however, that in determining
whether a Change in Control has occurred, Voting Securities which are acquired in a Non-Control Acquisition
shall not constitute an acquisition which would cause a Change in Control. 

        (iii)  Consummation
of: (i) a merger, consolidation, or reorganization involving the Company; (ii) a complete liquidation or dissolution of the Company; or
(iii) the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). 

        (iv)  A
notice of an application is filed with the South Carolina Board of Financial Institutions or the Federal Reserve Board or any other bank or thrift regulatory approval
(or notice of no disapproval) is granted by the Federal Reserve, South Carolina Board of Financial Institutions, the OCC, the Federal Deposit Insurance Corporation, or any other regulatory authority
for permission to acquire control of the Company or any of its banking subsidiaries; provided that if the application is filed in connection with a transaction which has been approved by the Board,
then the Change in Control shall not be deemed to occur until consummation of the transaction. 

        (e)   "Competing Business" shall mean any business that, in whole or in part, is the same or substantially the same as the
Business. 

        (f)    "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in
subsections (i) through (viii) hereof: 

          (i)  a
change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents
an adverse change from his status, title, position or responsibilities as in effect at any time within ninety days preceding the date of a Change in Control or at any time thereafter; the assignment
to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with his status, title, position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at any time thereafter; any removal of the Executive from or failure to reappoint or reelect him to any of such offices or positions, except in
connection with the termination of his employment for Disability or Cause, as a result of his death, or by the Executive other than for Good Reason, or any other change in condition or circumstances
that in the Executive's reasonable judgment makes it materially more difficult for the Executive to carry out the duties and responsibilities of his office than existed at any time within ninety days
preceding the date of Change in Control or at any time thereafter; 

         (ii)  a
reduction in the Executive's base salary or any failure to pay the Executive any compensation or benefits to which he is entitled within five days of the date due; 

        (iii)  the
Employer's requiring the Executive to be based at any place outside a 30-mile radius from the executive offices occupied by the Executive immediately
prior to the Change in Control, except for reasonably required travel on the Employer's business which is not materially greater than such travel requirements prior to the Change in Control; 

9

 

        (iv)  the
failure by the Employer to (A) continue in effect (without reduction in benefit level and/or reward opportunities) any material compensation or employee
benefit plan in which the Executive was participating at any time within ninety days preceding the date of a Change in Control or at any time thereafter, unless such plan is replaced with a plan that
provides substantially equivalent compensation or benefits to the Executive, or (B) provide the Executive with compensation and benefits, in the aggregate, at least equal (in terms of benefit
levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which the Executive was participating at any time within ninety days preceding
the date of a Change in Control or at any time thereafter; 

         (v)  the
insolvency or the filing (by any party, including the Company or the Bank) of a petition for bankruptcy of the Company or the Bank, which petition is not dismissed
within sixty days; 

        (vi)  any
material breach by the Employer of any material provision of this Agreement; 

       (vii)  any
purported termination of the Executive's employment for Cause by the Employer which does not comply with the terms of this Agreement; or 

      (viii)  the
failure of the Employer to obtain an agreement, satisfactory to the Executive, from any successor or assign to assume and agree to perform this Agreement, as
contemplated in Section 11 hereof. 

        Any
event or condition described in clause (i) through (viii) above which occurs prior to a Change in Control but which the Executive reasonably demonstrates (A) was
at the request of a third party, or (B) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes of this
Agreement, notwithstanding that it occurred prior to the Change in Control. The Executive's right to terminate his employment for Good Reason shall not be affected by his incapacity due to physical or
mental illness. 

        (g)   "Non-Control Transaction" shall mean a transaction described below: 

          (i)  the
shareholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly, immediately following such merger,
consolidation or reorganization, at least 50% of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation or reorganization (the
"Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization; and 

         (ii)  immediately
following such merger, consolidation or reorganization, the number of directors on the board of directors of the Surviving Corporation who were members of
the Incumbent Board shall at least equal the number of directors who were affiliated with or appointed by the other party to the merger, consolidation or reorganization. 

        (h)   "Territory" shall mean a radius of 15 miles from (i) the main office of the Employer or (ii) any branch
office of the Employer. 

        (i)    "Notice of Termination" shall mean a written notice of termination from the Employer or the Executive which specifies an
effective date of termination, indicates the specific termination provision in this Agreement relied upon, and, in the case of a termination for Good Reason or for Cause, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 

10

 

        18.    Entire Agreement.    This Agreement constitutes the entire agreement between the parties hereto and supersedes
all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. 

        19.    Counterparts.    This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument. 

        IN
WITNESS WHEREOF, the Employer has caused this Agreement to be executed and its seal to be affixed hereunto by its officers thereunto duly authorized, and the Executive has signed and
sealed this Agreement, effective as of the date first above written. 

	 	 	 	 	CommunitySouth Bancshares, Inc.
	

ATTEST:	
 	

 	
 	

 
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	Name:	 	 	 	Name:	 	 
	 	 	
	 	 	 	

	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	

	

 	
 	

 	
 	

EXECUTIVE
	

 	
 	

 	
 	

 C. Allan Ducker, III

        The
following Organizers of the Bank agree to personally guarantee the obligations of the Employer under Section 4(h) of this Agreement until the date the Bank opens for business
to the public: 

	
 David Larry Brotherton	 	
 W. Michael Riddle
	

 G. Dial Dubose	
 	

 Joanne McMillin Rogers
	

 Dave Edwards	
 	

 B. Lynn Spencer
	

 R. Wesley Hammond	
 	

 Neal Workman
	

 Arnold J. Ramsey	
 	

 Daniel E. Youngblood

11

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EMPLOYMENT AGREEMENT

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