Fifty-Second Supplemental Indenture

Table of Contents*

of

FIFTY-SECOND Supplemental Indenture

of

Indianapolis Power & Light Company

                                                                                                              Page

PARTIES   1

RECITALS                1

SECTION 1                Granting clauses           3

                                Part I Electric Distributing Systems                 4

                                Part II Reserved            4

                                Part III Indeterminate Permits and Franchises     4

                                Part IV Other Property   5

                                General and after-acquired title         5

SECTION 2                Definitions 6

SECTION 3                Designation of Fifty-Second series of bonds and kind and denominations thereof      6

                Designation of Company or J.P. Morgan Trust Company, National Association

                as paying agent            7

                Purpose of bonds          7

                Redemption of bonds    7

                Exchange of bonds        12

                Transfer of bonds          12

                Series limited to $40,000,000         13

SECTION 4                Form of fully registered bond         13

                Form of Trustee's certificate on bonds               15

SECTION 5                Temporary bonds         18

SECTION 6                Payment of principal and interest; credits          18

SECTION 7                Annual Payments for Maintenance and Improvement Fund   19

SECTION 8                Compliance with Section 47 of Original Mortgage with respect to dividend restrictions             19

SECTION 9                Acceptance of trusts by Trustee and conditions of acceptance                 19

SECTION 10              Successors and assigns 20

SECTION 11              Limitation of rights hereunder         20

SECTION 12              Compliance with terms, provisions and conditions of Mortgage            20

SECTION 13              Execution in counterparts               20

TESTIMONIUM         21

SIGNATURES AND SEALS         21

ACKNOWLEDGEMENTS            22

__________

*Table of Contents is not part of the Fifty-Second Supplemental Indenture and should not be considered such. It is included herein only for purposes of convenient reference.

THIS FIFTY-SECOND SUPPLEMENTAL INDENTURE , dated as of September 1, 2006, between Indianapolis Power & Light Company, a corporation of the State of Indiana, hereinafter sometimes called the "Company," party of the first part, and J.P. Morgan Trust Company, National Association, as successor in interest to American National Bank And Trust Company Of Chicago, a national banking association, as Trustee, hereinafter sometimes called the "Trustee," party of the second part;

Whereas, the Company by a Mortgage and Deed of Trust (hereinafter sometimes called the "Original Mortgage" when referred to as existing prior to any supplement thereto or modification thereof, and the "Mortgage" when referred to as now or heretofore supplemented and modified) dated as of May 1, 1940, made to said American National Bank and Trust Company of Chicago, as Trustee, to secure the payment of the bonds issued from time to time under the Mortgage for the purposes of and subject to the limitations specified in the Mortgage, and to secure the performance of the covenants therein contained, conveyed to the Trustee thereunder upon certain trusts, terms and conditions, and with and subject to certain provisos and covenants therein contained, all and singular the property, rights and franchises which the Company then owned or should thereafter acquire, excepting the property expressly excepted by the terms of the Original Mortgage or any indenture supplemental thereto, to which Mortgage reference is hereby made for greater certainty; and

Whereas, the Original Mortgage has been supplemented and modified by supplemental indentures dated as of May 1, 1942, as of February 1, 1948, as of April 1, 1949, as of October 1, 1949 (two), as of February 1, 1951, as of March 1, 1953, as of June l, 1956, as of March 1, 1958, as of October 1, 1960, as of August l, 1964; as of April l, 1966, as of May l, 1967, as of May l, 1968, as of October l, 1970, as of March l, 1972, as of March 15, 1973, as of February 15, 1974, as of August 15, 1974, as of September 15, 1975, as of June l, 1976, as of July 1, 1976, as of August 1, 1977, as of September l, 1978, as of August 1, 1981 (two), as of November l, 1983, as of November l, 1984, as of December 1, 1984, as of September 1, 1985, as of October 1, 1986, as of June 1, 1989, as of August 1, 1989, as of October 15, 1991, as of August l, 1992, as of April 1, 1993 and as of October 1, 1993 (two), as of February 1, 1994 (two), as of January 15, 1995, as of October 1, 1995, as of August 1, 2001 (four), as of August 1, 2003, as of January 1, 2004, as of April 1, 2005 (two) and as of September 1, 2006;

Whereas, Section 8 of the Original Mortgage provides, among other things, that the form of each series of bonds (other than the initial issue of bonds) issued thereunder shall be established by an indenture supplemental thereto authorized by resolution of the Board of Directors of the Company; and that the form of each series, as established by the Board of Directors, shall specify the descriptive title of the bonds and various other terms thereof, and may also contain such other provisions as the Board of Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and secured under the Original Mortgage or any indenture supplemental thereto or in modification thereof; and

Whereas, the Company has entered into a Loan Agreement, dated as of September 1, 2006 (hereinafter called the Loan Agreement") with the Indiana Finance Authority (the "IFA"), in order to obtain funds for the refunding of the aggregate principal amount of Forty Million Dollars ($40,000,000) of the City of Petersburg, Indiana Pollution Control Refunding Revenue Bonds, Series 1995A (Indianapolis Power & Light Company Project) issued by the City of Petersburg, Indiana pursuant to a related loan agreement, and pursuant to the Loan Agreement the Company has agreed to issue a series of its bonds under the Mortgage and this Fifty-Second Supplemental Indenture in order to evidence and secure its indebtedness under the Loan Agreement; and

Whereas, the Company now desires to provide for the establishment, execution, authentication and delivery under the Mortgage of bonds of a series to be known as its "First Mortgage Bonds, 4.55% Series, due 2024" (the bonds of said series being hereinafter sometimes referred to as the "2024 Bond"), limited to the aggregate principal amount of Forty Million Dollars ($40,000,000); and

Whereas, all things necessary to make the 2024 Bond hereinafter described, when duly executed by the Company and authenticated and delivered by the Trustee, a valid, binding and legal obligation of the Company, and to make this Fifty-Second Supplemental Indenture a valid and binding agreement supplemental to the Original Mortgage, have been done and performed; and

Whereas, the execution and delivery by the Company of this Fifty-Second Supplemental Indenture, and the terms of the 2024 Bond, have been duly authorized by the Board of Directors' of the Company by appropriate resolutions of said Board; and

Whereas, it is provided in and by the Original Mortgage that the Company will execute and deliver such further instruments and do such further acts as may be necessary or proper to carry out more effectually the purposes of the Mortgage, and to make subject to the lien thereof any property thereafter acquired and intended to be subject to the lien thereof; and

Whereas, the Company has, since the date of execution and delivery of the Original Mortgage, purchased and acquired property and desires by this Fifty-Second Supplemental Indenture specifically to convey to the Trustee such property for the better protection and security of the bonds issued and to be issued under the Original Mortgage, or any indenture supplemental thereto;

Now, Therefore, This Indenture Witnesseth that, in consideration of the premises and of the acceptance or purchase of the 2024 Bond by the registered owners thereof, and of the sum of one dollar, lawful money of the United States of America, to the Company duly paid by the Trustee at or before the execution and delivery of this Fifty-Second Supplemental Indenture, the receipt of which is hereby acknowledged, the Company and the Trustee, respectively, have entered into, executed and delivered this Fifty-Second Supplemental Indenture, for the uses and purposes hereinafter expressed, that is to say:

1. 1. The Company has granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, and by these presents does grant, bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over and confirm (subject, however, to permitted encumbrances as defined in the Original Mortgage), unto said J.P. Morgan Trust Company, National Association, as successor in interest to American National Bank and Trust Company of Chicago, as Trustee, as herein provided, and its successors in the trusts declared in the Original Mortgage and herein, all of the property, real, personal and mixed, tangible and intangible, of every kind, character and description which the Company has acquired since the execution and delivery of the Original Mortgage and now owns (except property, rights and assets of a character similar to that excluded from the lien and operation of the Mortgage by the Granting Clauses of the Original Mortgage, which property, rights and assets are excluded from the lien and operation of the Mortgage only to the extent provided therein), including, but without otherwise limiting the generality of the foregoing, the following described property situated within the State of Indiana:

1. 1. 1. 
         ELECTRIC DISTRIBUTING SYSTEMS.

All electric distributing systems of the Company acquired by it after May 1, 1940, the date of the Original Mortgage, and located in the Counties of Bartholomew, Boone, Daviess, Gibson, Greene, Hamilton, Hancock, Hendricks, Johnson, Knox, Madison, Marion, Monroe, Morgan, Owen, Pike, Putnam, Shelby, Sullivan and Switzerland, State of Indiana; and any additions to or extensions of any such systems, together with the buildings, erections, structures, transmission lines, power stations, sub-stations, engines, boilers, condensers, pumps, turbines, machinery, tools, conduits, manholes, insulators, dynamos, motors, lamps, cables, wires, poles, towers, cross-arms, piers, abutments, switchboard equipment, meters, appliances, instruments, apparatus, appurtenances, maps, records, ledgers, contracts, facilities and other property or equipment used or provided for use in connection with the construction, maintenance, repair and operation thereof; together also with all of the rights, privileges, rights-of-way, franchises, licenses, grants, liberties, immunities, ordinances, permits and easements of the Company in respect of the construction, maintenance, repair and operation of said systems.

1. 1. 2. 
         [RESERVED].
      3. 
         INDETERMINATE PERMITS AND FRANCHISES.

All indeterminate permits, franchises, ordinances, licenses, and other authorizations by or from any state, county, municipality, or other governmental authority, acquired by the Company after May l, 1940, the date of the Original Mortgage, including particularly, but not limited to, any indeterminate permits under the Public Service Commission Act of the State of Indiana, and all Acts amendatory thereof and supplemental thereto, and all right, title and interest therein now owned by the Company, and all renewals, extensions and modifications of said indeterminate permits, franchises, ordinances, licenses, and other authorizations, and of the indeterminate permits, franchises, ordinances, licenses, and other authorizations referred to in Part VII of the Granting Clauses of the Original Mortgage.

1. 1. 4. 
         OTHER PROPERTY.

All other property, whether real, personal or mixed (except any in the Mortgage expressly excepted), now owned by the Company and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing or of any general description contained in the Mortgage) all lands, flowage rights, water rights, flumes, raceways, dams, rights-of-way and roads; all plants for the generation of electricity by water, steam and/or other power, power houses, telephone systems, water systems, steam heat and power plants, hot water plants, substations, transmission lines, distribution systems, bridges, culverts and tracts; all offices, buildings and structures and the equipment thereof; all machinery, engines, boilers, dynamos, machines, regulators, meters, transformers, generators and motors; all appliances whether electrical, gas or mechanical, conduits, cables and lines; all pipes whether for water, steam heat and power; or other purposes; all mains and pipes, service pipes, fittings, valves and connections, poles, wires, tools, implements, apparatus, furniture and chattels; all municipal franchises, indeterminate permits, and other permits; all lines for the transportation, transmission and/or distribution of electric current, steam heat and power or water for any purpose, including towers, poles, wires, cables, pipes, conduits and all apparatus for use in connection therewith; all real estate, lands, leases, leaseholds; all contracts, whether heat, light, power, water or street lighting contracts; all easements, servitudes, licenses, permits, rights, powers, franchises, privileges, rights-of-way and other rights in or relating to real estate or the occupancy of the same and (except as hereinafter or in the Mortgage expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore described or referred to;

TOGETHER WITH all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 64 of the Original Mortgage), the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property, indeterminate permits, franchises, ordinances, licenses and other authorizations and every part and parcel thereof.

1. 2. Capitalized terms not otherwise defined in this Fifty- Second Supplemental Indenture shall have the following meanings:

"IFA 2006 Series B Bonds" means the $40,000,000 Indiana Finance Authority Pollution Control Refunding Revenue Bonds, Series 2006B (Indianapolis Power & Light Company Project) issued under and pursuant to the IFA Indenture.

"IFA Indenture" means the Indenture of Trust, dated as of September 1, 2006, by and between the IFA and U.S. Bank National Association, as Trustee, and any indenture supplemental thereto or amendatory thereof, pursuant to which the IFA 2006 Series B Bonds are issued and secured.

"IFA Trustee" means the person, corporation or association acting as trustee at any time under the IFA Indenture.

"Loan Agreement" means the Loan Agreement dated as of September 1, 2006 between the IFA and the Company, and any and all modifications, amendments and supplements thereof.

"Project" means the pollution control facilities comprising the Project as defined in the Loan Agreement.

1. 3. There shall be and is hereby established a series of bonds, limited in aggregate principal amount to Forty Million Dollars ($40,000,000) to be issued under and secured by the Mortgage, to be designated "4.55% Series, due 2024", each of which shall also bear the descriptive title "First Mortgage Bonds"; said bonds shall mature on December 1, 2024, and shall be issued only as fully registered bonds without coupons in the denomination of five thousand dollars and any larger denomination which is a whole multiple of five thousand dollars; they shall bear interest from the beginning of the current interest period during which each bond is dated, at the rate per annum designated in the title thereof, payable semi-annually, on June 1 and December 1 of each year (except that the first interest payment thereon shall be made December 1, 2006 for the period from the date of the 2024 Bond through November 30, 2006); and the principal of, premium, if any, and interest on said bond shall be payable in lawful money of the United States of America at the office of the Company in the City of Indianapolis, Indiana, or, if no such office is maintained, at J.P. Morgan Trust Company, National Association, which is hereby designated and appointed the office and agency of the Company in the City of Chicago, Illinois, for the payment of the principal of, premium, if any, and interest on the 2024 Bond, if necessary, and for the registration, transfer and exchange of such bond as hereinafter provided; all reference herein to the office or agency of the Company in the City of Chicago, Illinois, for the payment of the principal of, premium, if any, and interest on the 2024 Bond, or the registration, transfer or exchange thereof, being to J.P. Morgan Trust Company, National Association. In event of the resignation or inability to act of J.P. Morgan Trust Company, National Association, then a successor agent for all such purposes in the City of Chicago, Illinois, shall be appointed by the Board of Directors of the Company.

The 2024 Bond shall be dated as of the date of authentication thereof, except as otherwise provided in Section 10 of the Original Mortgage.

The 2024 Bond will be issued to evidence and secure a loan to the Company by the IFA pursuant to the Loan Agreement of certain funds to be acquired by the IFA through the issuance of the IFA 2006 Series B Bonds, authenticated and delivered under and pursuant to the IFA Indenture. Pursuant to the Loan Agreement, the 2024 Bond shall be issued to the IFA Trustee. All of the proceeds of the IFA 2006 Series B Bonds will be used for the refunding of the aggregate principal amount of Forty Million Dollars ($40,000,000) of the City of Petersburg, Indiana Pollution Control Refunding Revenue Bonds, Series 1995A (Indianapolis Power & Light Company Project).

Upon the notice and in the manner and with the effect provided in this Section 3, the 2024 Bond shall be redeemable prior to the maturity thereof under any one or more of the following circumstances:

1. 3. 1. 1. In whole, at the option of the Company, if the Project or Units 3 or 4 of the Petersburg Generating Station shall have been damaged or destroyed (i) to such extent that they cannot be reasonably expect, in the opinion of the Company, to be restored within a period of six (6) months to the condition thereof immediately preceding such damage or destruction, or (ii) to such extent that the Company, in its reasonable opinion, is thereby prevented from carrying on its normal operations for a period of six (6) months or more, or (iii) to such extent that the restoration thereof would not be, taking into consideration the net proceeds of any insurance payable as a result of such damage or destruction, economic in the reasonable opinion of the Company.
         2. In whole, at the option of the Company, if title to, or the temporary use of, all or substantially all of the Project or Units 3 or 4 of the Petersburg Generating Station shall have been taken, under the exercise of the power of eminent domain, or should any governmental body or agency exercise any right which it may have to purchase or designate a purchaser of the same, or should such property be sold to any governmental body or agency so that the result of such taking or takings is that (i) the Company, in its reasonable opinion, is thereby prevented from carrying on its normal operations of either the Project or Units 3 or 4 of the Petersburg Generating Station for a period of six (6) months or more, (ii) the restoration required as a result of the taking cannot be reasonably expected, in the opinion of the Company, to be completed in a period of six (6) months, or (iii) the restoration thereof, taking into consideration the net proceeds from such eminent domain award, would not be economic in the reasonable opinion of the Company.
         3. In whole, at the option of the Company, if, as a result of any changes in the Constitution of the State of Indiana or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or by final decree, judgment or order of any court or administrative body (whether state or federal) entered after the contest thereof by the Company in good faith, the Loan Agreement shall, in the reasonable opinion of counsel for the Company, have become void or unenforceable or impossible of performance in accordance with the intent and purpose of the parties as expressed in the Loan Agreement; or unreasonable burdens or excessive liabilities shall, in the reasonable opinion of the Company, have been imposed upon the IFA or the Company, with respect to the Project or operation thereof, including without limitation federal, state or other ad valorem, property, income or other taxes not being imposed on the date of the Loan Agreement other than ad valorem taxes presently levied upon privately owned property used for the same general purpose as, the Project.
         4. In whole, at the option of the Company, if changes in the economic availability of raw materials, operating supplies or facilities necessary for the operation of the Project or the operation of Units 3 or 4 of the Petersburg Generating Station shall have occurred or technological or other changes shall have occurred which render the Project or Units 3 or 4 of the Petersburg Generating Station uneconomic for use in the reasonable opinion of the Company.
         5. In part, at the option of the Company, to the extent of