TABLE OF CONTENTS

 

	Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions	2
Section 1.02 Accounting Terms and Determinations	32
Section 1.03 Types of Borrowing	33
Section 1.04 Currency Equivalents Generally	33
ARTICLE II
THE CREDITS
Section 2.01 Commitment to Lend	33
Section 2.02 Notice of Borrowing	34
Section 2.03 Revolving Letters of Credit	35
Section 2.04 Evidence of Debt	42
Section 2.05 Maturity of Loans	43
Section 2.06 Interest Rates	43
Section 2.07 Method of Electing Interest Rates	45
Section 2.08 Commitment Fee	46
Section 2.09 Termination or Reduction of Revolving Credit Loan Commitments	46
Section 2.10 Prepayment of the Loans	47
Section 2.11 General Provisions as to Payments	48
Section 2.12 Funding Losses	49
Section 2.13 Computation of Interest and Fees	49
Section 2.14 Revolving L/C Cash Collateral Account	49
Section 2.15 Computations of Outstandings; Determination of Available Amount of Alternative Currency Letters of Credit	51
Section 2.16 Alternative Currency Letter of Credit Issuances	52
Section 2.17 Increase in Term Loan Commitments	53
Section 2.18 Increase in Revolving Credit Loan Commitments	55
ARTICLE III
CONDITIONS
Section 3.01 Closing	57
Section 3.02 Extension of Credit	59

 

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Corporate Existence and Power	60
Section 4.02 Corporate and Governmental Authorization and Filings; No Contravention	60
Section 4.03 Compliance with Laws	61
Section 4.04 Binding Effect	61
Section 4.05 Financial Information	61
Section 4.06 Litigation	62
Section 4.07 Compliance with ERISA	62
Section 4.08 Environmental Matters	62
Section 4.09 Taxes	63
Section 4.10 Material AES Entities	63
Section 4.11 Not an Investment Company	63
Section 4.12 Public Utility Holding Company Act	63
Section 4.13 Full Disclosure	64
Section 4.14 Collateral Documents and Collateral	64
Section 4.15 Existing Letters of Credit	65
Section 4.16 Solvency	65
Section 4.17 Pledged Subsidiaries	66
Section 4.18 Qualified Holding Companies Debt	66
ARTICLE V
COVENANTS
Section 5.01 Information	66
Section 5.02 Payment of Obligations	70
Section 5.03 Maintenance of Property; Insurance	70
Section 5.04 Conduct of Business and Maintenance of Existence	70
Section 5.05 Compliance with Laws	71
Section 5.06 Inspection of Property, Books and Records	71
Section 5.07 Limitation on Debt	71
Section 5.08 Use of Proceeds	76
Section 5.09 Restricted Payments	76
Section 5.10 Negative Pledge	78
Section 5.11 Consolidations and Mergers	81
Section 5.12 [Intentionally omitted.]	81
Section 5.13 Cash Flow Coverage	81
Section 5.14 Recourse Debt to Cash Flow Ratio	82
Section 5.15 Transaction with Affiliates	83
Section 5.16 Investments in Other Persons	84
Section 5.17 Upstreaming of Net Cash Proceeds by Subsidiaries	87
Section 5.18 Sales, Etc., of Assets	87
Section 5.19 Derivative Obligations	90
Section 5.20 Covenant to Give Security	90

 

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Section 5.21 Further Assurances	91
ARTICLE VI
DEFAULTS
Section 6.01 Events of Default	92
Section 6.02 Notice of Default	94
Section 6.03 Cash Collateral	94
ARTICLE VII
THE AGENT
Section 7.01 Appointment and Authorization	95
Section 7.02 Agent and Affiliates	95
Section 7.03 Consultation with Experts	96
Section 7.04 Liability of Agent and Collateral Agent	96
Section 7.05 Indemnification	96
Section 7.06 Credit Decision	97
Section 7.07 Successor Agent or Collateral Agent	97
Section 7.08 Administrative Agent May File Proofs of Claim	98
Section 7.09 Agents’ Fee	98
Section 7.10 [Intentionally Omitted]	98
Section 7.11 Delivery of Information	98
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
Section 8.01 Basis for Determining Interest Rate Inadequate or Unfair	100
Section 8.02 Illegality	100
Section 8.03 Increased Cost and Reduced Return	101
Section 8.04 Taxes	102
Section 8.05 Base Rate Loans Substituted for Affected Euro-Dollar Loans	105
ARTICLE IX
SUBSIDIARY GUARANTY
Section 9.01 The Subsidiary Guaranty	105
Section 9.02 Guaranty Absolute	106
Section 9.03 Discharge Only Upon Payment in Full, Reinstatement in Certain Circumstances	107
Section 9.04 Revolving L/C Cash Collateral Account	107
Section 9.05 Waiver by the Subsidiary Guarantors	108
Section 9.06 Subrogation	108
Section 9.07 Stay of Acceleration	108
Section 9.08 Limitation of Liability	109

 

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Section 9.09 Release of Subsidiary Guarantors	109
Section 9.10 Representations and Warranties	109
Section 9.11 Covenants	109
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices	109
Section 10.02 No Waivers	110
Section 10.03 Expenses; Indemnification	110
Section 10.04 Sharing of Set-offs	110
Section 10.05 Amendments and Waivers	111
Section 10.06 Successors and Assigns	112
Section 10.07 No Margin Stock	115
Section 10.08 Governing Law; Submission to Jurisdiction	115
Section 10.09 Release of Collateral	115
Section 10.10 Counterparts; Integration; Effectiveness	116
Section 10.11 Confidentiality	116
Section 10.12 WAIVER OF JURY TRIAL	116
Section 10.13 Severability; Modification to Conform to Law	117
Section 10.14 Judgment Currency	117
Section 10.15 Revolving Fronting Banks	117
Section 10.16 Replacement of Banks	118

 

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Appendix I	—	Revolving Credit Loan Facility
Appendix II	—	Initial Term Loan Facility
Appendix III	—	Existing Letters of Credit
Schedule I	—	Pledged Subsidiaries
Schedule II	—	Assigned Agreements
Schedule III	—	Non-Pledged Subsidiaries
Schedule IV	—	Excluded AES Entities
Schedule 5.15	—	Existing Agreements with Affiliates
Schedule V	—	Qualified Holding Companies
Schedule VI	—	Existing Debt
Schedule VII	—	Revolving Fronting Banks
Exhibit A-1	—	Form of Revolving Credit Loan Note
Exhibit A-2	—	Form of Term Loan Note
Exhibit B-1	—	Form of Opinion of the General Counsel of the Borrower
Exhibit B-2	—	Form of Opinion of Davis Polk & Wardwell, Special Counsel for the Borrower
Exhibit B-3	—	Form of Opinion of Special Counsel for certain Subsidiaries of the Borrower
Exhibit B-4	—	Form of Opinion of Morris, Nichols, Arsht & Tunnell, Delaware counsel for the Borrower
Exhibit B-5	—	Form of Opinion of Maples and Calder, Cayman Islands counsel for the Borrower
Exhibit B-6	—	Form of Opinion of Conyers Dill & Pearman, British Virgin Islands counsel for the Borrower
Exhibit B-7	—	Form of Opinion of Shearman & Sterling, Special Counsel for the Agent
Exhibit C-1	—	Form of Revolving Credit Loan Facility Assignment and Assumption Agreement
Exhibit C-2	—	Form of Term Loan Facility Assignment and Assumption Agreement
Exhibit C-3	—	Form of Third Party Fronting Bank Assignment and Assumption Agreement
Exhibit D	—	Form of Revolving Fronting Bank Agreement

 

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FOURTH AMENDED AND RESTATED CREDIT AND

REIMBURSEMENT AGREEMENT

 

FOURTH AMENDED AND RESTATED CREDIT AND REIMBURSEMENT AGREEMENT dated as of July 29, 2008 (this “ Agreement ”) among THE AES CORPORATION, a Delaware corporation (the “ Borrower ”), the SUBSIDIARY GUARANTORS listed herein, the BANKS listed on the signature pages hereof, CITIGROUP GLOBAL MARKETS INC., as Lead Arranger and Book Runner, BANC OF AMERICA SECURITIES LLC, as Lead Arranger and Book Runner and as Co-Syndication Agent (for the Initial Term Loan Facility (as hereinafter defined)), DEUTSCHE BANK SECURITIES INC, as Lead Arranger and Book Runner (for the Initial Term Loan Facility), UNION BANK OF CALIFORNIA, N.A., as Co-Syndication Agent (for the Initial Term Loan Facility) and as Lead Arranger and Book Runner and as Syndication Agent (for the Revolving Credit Loan Facility (as hereinafter defined)), LEHMAN COMMERCIAL PAPER INC., as Co-Documentation Agent (Initial Term Loan Facility), UBS SECURITIES LLC, as Co-Documentation Agent (Initial Term Loan Facility), SOCIÉTÉ GÉNÉRALE, as Co-Documentation Agent (Revolving Credit Loan Facility), CREDIT LYONNAIS NEW YORK BRANCH, as Co-Documentation Agent (Revolving Credit Loan Facility), CITICORP USA, INC., as Administrative Agent for the Bank Parties (the “ Agent ”) and CITIBANK, N.A., as Collateral Agent for the Bank Parties (the “ Collateral Agent ”).

 

PRELIMINARY STATEMENTS:

 

1.             The Borrower is party to a Third Amended and Restated Credit and Reimbursement Agreement dated as of March 17, 2004 (as amended, amended and restated, supplemented or otherwise modified up to the date hereof, the “ Existing Bank Credit Agreement ”) among the subsidiary guarantors listed therein, the banks listed on the signatures pages thereof, Citigroup Global Markets, Inc., as Lead Arranger and Book Runner, Banc of America Securities LLC, as Lead Arranger and Book Runner and as Co-Syndication Agent (term loan facility), Deutsche Bank Securities Inc., as Lead Arranger and Book Runner (term loan facility), Union Bank of California, N.A., as Co-Syndication Agent (term loan facility) and as Lead Arranger and Book Runner and as Syndication Agent (Revolving Credit Loan Facility), Lehman Commercial Paper Inc., as Co-Documentation Agent (term loan facility), UBS Securities LLC, as Co-Documentation Agent (term loan facility), Société Générale, as Co-Documentation Agent (Revolving Credit Loan Facility), Credit Lyonnaise New York Branch, as Co-Documentation Agent (Revolving Credit Loan Facility), Citicorp USA, Inc., as Administrative Agent for the Bank Parties and Citibank, N.A., as Collateral Agent for the bank parties.

 

2.             The Borrower wishes to amend and restate the Existing Bank Credit Agreement to, among other things, restructure certain provisions of the Existing Bank Credit Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree to amend and restate the Existing Bank Credit Agreement, and the Existing Bank Credit Agreement is hereby amended and restated, in its entirety as follows:

 

AES Fourth Amended and Restated Credit Agreement

 

 

ARTICLE I

DEFINITIONS

 

Section 1.01 Definitions .

 

The following terms, as used herein, have the following meanings:

 

“ Actionable Default ” means an Event of Default described in clauses (a), (g) and (h) of Section 6.01.

 

“ Acquired Debt ” means Debt of a Person existing at the time the Person merges with or into any Subsidiary or becomes a Subsidiary and not incurred in connection with, or in contemplation of, such merger or such Person becoming a Subsidiary.

 

“ Additional Collateral Trust Agreement Collateral ” means the “Additional Collateral” referred to in the Collateral Trust Agreement.

 

“ Additional Term Loan Bank ” means any Eligible Assignee who agrees, in accordance with the provisions of Section 2.17, to commit to one of the Term Loan Facilities existing at the time of the request for a Commitment Increase.

 

“ Adjusted London Interbank Offered Rate ” means, for any Interest Period and subject to Section 2.02(a)(iv), a rate per annum equal to the quotient obtained (rounded upward, if necessary, to the next higher 1/100 ^th of 1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.

 

“ Adjusted Parent Operating Cash Flow ” means, for any period, (i) Parent Operating Cash Flow for such period less (ii) the sum of the following expenses (determined without duplication), in each case to the extent paid by the Borrower during such period in cash and regardless of whether any such amount was accrued during such period:

 

(A)  income tax expenses of the Borrower and its Subsidiaries; and

 

(B)   corporate overhead expenses (including rental expense of the Borrower).

 

“ Administrative Questionnaire ” means, with respect to each Bank Party, an administrative questionnaire in the form prepared by the Agent and submitted to the Agent (with a copy to the Borrower) duly completed by such Bank.

 

“ Adverse Alternative Currency Letters of Credit ” has the meaning set forth in Section 2.16.

 

“ AES ” means The AES Corporation, a Delaware corporation, and its successors.

 

“ AES Business ” shall have the meaning set forth in Section 5.07(b)(ii).

 

AES Fourth Amended and Restated Credit Agreement

 

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“ AES BVI II ” means AES International Holdings II, Ltd., a company organized under the laws of the British Virgin Islands.

 

“ AES Electric ” means Applied Energy Services Electric Limited, an English corporation, and its successors.

 

“ AES Hawaii Management ” means AES Hawaii Management Company, Inc., a Delaware corporation and a Subsidiary of the Borrower, and its successors.

 

“ AES Management Group ” means (i) individuals who are members of the board of directors or officers of the Borrower or the president of any Material AES Entity; (ii) their respective spouses, children, grandchildren, siblings and parents; (iii) trusts established for the sole or principal benefit of Persons described in clauses (i) and (ii) above; (iv) heirs, executors, administrators and personal or legal representatives of Persons described in clauses (i) and (ii) above; and (v) any corporation or other Person that is controlled by, and a majority of the equity interests in which are directly owned by, Persons described in clauses (i) and (ii) above.

 

“ AES New York ” means AES New York Funding, L.L.C., a Delaware limited liability company and a wholly-owned Subsidiary of the Borrower, and its successors.

 

“ AES Oklahoma ” means AES Oklahoma Holdings, L.L.C., a Delaware limited liability company and a Subsidiary of the Borrower, and its successors.

 

“ AES Sonel ” means AES-SONEL S.A., a société anonyme organised and existing under the laws of Cameroon.

 

“ AES Warrior Run ” means AES Warrior Run Funding, L.L.C., a Delaware limited liability company and a Wholly-Owned Consolidated Subsidiary of the Borrower, and its successors.

 

“ Affiliate ” means (i) any Person that directly, or indirectly through one or more intermediaries, controls the Borrower (a “ Controlling Person ”), or (ii) any Person (other than the Borrower or a Subsidiary) which is controlled by or is under common control with a Controlling Person or (iii) as to any Person (other than the Borrower and its Subsidiaries), any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person.  As used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“ Agent ” means Citicorp USA, Inc., in its capacity as administrative agent for the Bank Parties hereunder, and its successors in such capacity.

 

“ Agreement ” has the meaning specified in the recital of the parties to this Agreement.

 

“ Alternative Currency ” means (i) any lawful currency (other than Dollars) that is freely transferable and convertible into Dollars or (ii) with respect to any Revolving Letter of

 

AES Fourth Amended and Restated Credit Agreement

 

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Credit issued by a Revolving Fronting Bank, any other lawful currency (other than Dollars) that such Revolving Fronting Bank agrees may be used as the designated currency of such Revolving Letter of Credit; provided that such Revolving Fronting Bank is able to provide, and continues to provide, to the Agent the information required pursuant to Section 2.15(b) with respect to such Revolving Letter of Credit.

 

“ Alternative Currency Letter of Credit ” means any Revolving Letter of Credit having a stated amount denominated in an Alternative Currency.

 

“ Amendment No. 2 to the Collateral Trust Agreement ” means Amendment No. 2 to the Collateral Trust Agreement dated as of the Effective Date, by and among each grantor thereunder, the Representatives (as defined in the Collateral Trust Agreement) and the Corporate Trustee.

 

“ Amendment and Restatement Effective Date ” means the date that Amendment No. 13 to the Existing Bank Credit Agreement, dated as of July 29, 2008, becomes effective in accordance with Section 2 thereof.

 

“ Applicable Lending Office ” means, with respect to any Bank Party, (i) in the case of its Base Rate Loans, its Domestic Lending Office and (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.

 

“ Applicable Revolving Margin ” means, on any date, the percentage set forth in the table below based on the ratings assigned to the Facilities on such date by Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services:

 

Rating (Moody’s/S&P)		Margin
Ba1 (or higher)/BB+ (or higher)		1.50	%
Ba2/BB		1.75	%
Ba3/BB-		2.00	%
B1 (or lower)/B+ (or lower)		2.50	%

 

If the Facilities are rated by only one such rating agency, the rating of such rating agency shall be used in determining the Applicable Revolving Margin.  If the Facilities are rated by both such rating agencies and (x) the ratings differential is one level, the lower rating will apply or (y) the ratings differential is two levels or more, the midpoint rating will apply; provided that if there is no midpoint rating, the lower of the two intermediate ratings surrounding the midpoint will apply.  If the Facilities are not rated by either of such rating agencies, the Facilities shall be deemed to be rated one level higher than (i) in the case of Moody’s Investors Service Inc., the Borrower’s corporate family rating and (ii) in the case of Standard & Poor’s Rating Services, the Borrower’s corporate credit rating and, in each case, the rules of the preceding two sentences shall apply to such deemed ratings.  If the Facilities are not rated (or deemed rated in accordance with the preceding sentence) by either or such rating agencies, the Applicable Revolving Margin shall be 2.50%.

 

AES Fourth Amended and Restated Credit Agreement

 

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“ Arranger Parties ” means Citigroup Global Markets Inc., as Lead Arranger and Book Runner, Banc of America Securities LLC, as Lead Arranger and Book Runner and as Co-Syndication Agent (Initial Term Loan Facility), Deutsche Bank Securities Inc., as Lead Arranger and Book Runner (Initial Term Loan Facility) and Union Bank of California, N.A., as Co-Syndication Agent (Initial Term Loan Facility) and as Lead Arranger and Book Runner and as Syndication Agent (Revolving Credit Loan Facility).

 

“ Asset Sale ” means any sale, lease, transfer or other disposition (including any such transaction effected by way of merger or consolidation or by way of an Equity Issuance by a Subsidiary) by the Borrower or any of its Subsidiaries, but excluding any transactions permitted by the provisions of Section 5.18 (other than sales of assets or Equity Interests of, or other Investments in, IPALCO or any of its Subsidiaries or any Subsidiary Guarantor or Subsidiary thereof permitted by subsection (iv) thereof); provided that a disposition of such assets not excluded during any fiscal year shall not constitute an Asset Sale unless and until (and only to the extent that) the aggregate Net Cash Proceeds from such disposition, when combined with all other such dispositions previously made during such fiscal year, exceeds $10,000,000.

 

“ Assigned Agreements ” has the meaning set forth in Section 4.14(d).

 

“ Assignee ” has the meaning set forth in Section 10.06(c).

 

“ Assignment and Assumption ” means an assignment and assumption agreement substantially in the form of Exhibit C-1, C-2 or C-3 hereto, as applicable.

 

“ Assumption Agreement ” has the meaning set forth in Section 2.17(d).

 

“ Automatic Acceleration Event ” means the occurrence, with respect to the Borrower, of any of the Events of Default listed in clauses (g) and (h) of Section 6.01.

 

“ Available Amount ” means, for any Revolving Letter of Credit on any date of determination, the maximum aggregate amount (which, in the case of an Alternative Currency Letter of Credit, shall be the Dollar Equivalent on such date of determination of such amount) available to be drawn under such Revolving Letter of Credit at any time on or after such date, the determination of such maximum amount to assume the compliance with and satisfaction of all conditions for drawing enumerated therein.

 

“ Bank ” means each lender listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 10.06(c), each Incremental Term Loan Bank and their respective successors.  Without limiting the generality of the foregoing sentence, the term “Banks” shall include the Term Loan Banks.

 

“ Bank Party ” means any Bank.

 

“ Banks’ Ratable Share ” means, in respect of any Net Cash Proceeds, a percentage of the Creditors’ Portion equal to a fraction (x) the numerator of which is the Total Bank Exposure at such time and (y) the denominator of which is the sum of the Total Bank Exposure at such time plus the aggregate principal amount of First Priority Secured Debt, the proceeds of which were used to permanently reduce Total Bank Exposure.

 

AES Fourth Amended and Restated Credit Agreement

 

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“ Bankruptcy Law ” means any law relating to bankruptcy, insolvency, winding up, reorganization, suspension of payments, arrangement, liquidation, relief of debtors, receivership, compromise, amalgamation, assignment for the benefit of creditors or composition or readjustment of debts, or any equivalent or similar proceeding or action.

 

“ Base Rate ” means, for any day, a rate per annum equal to the higher of (i) the rate of interest publicly announced by Citicorp USA, Inc. from time to time as its Base Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day.

 

“ Base Rate Borrowing ” has the meaning set forth in the definition of “ Borrowing ” herein.

 

“ Base Rate Loan ” means a Loan which bears interest at the Base Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate Election or the provisions of Section 2.07(a) or Article 8 plus the Base Rate Margin.

 

“ Base Rate Margin ” means (i) in respect of the Revolving Credit Loans, a rate per annum equal to the Applicable Revolving Margin less 1.00%, (ii) in respect of the Initial Term Loans, a rate per annum equal to 0.75% (subject to the provisions of Section 2.06(f) hereof), and (iii) in respect of the Incremental Term Loan Facility, a rate per annum to be agreed to by the Borrower, the Agent and the Incremental Term Loan Banks.

 

“ Benefit Arrangement ” means, at any time, an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

 

“ Borrower ” has the meaning specified in the recital of the parties to this Agreement.

 

“ Borrowing ” means (i) a borrowing hereunder consisting of Revolving Credit Loans made to the Borrower at the same time by the Revolving Credit Loan Banks pursuant to Section 2.01(a) or (ii) a borrowing hereunder consisting of Incremental Term Loans made to the Borrower at the same time by the Incremental Term Loan Banks pursuant to Section 2.17.  A Borrowing is a “ Base Rate Borrowing ” if such Loans are Base Rate Loans or a “ Euro-Dollar Borrowing ” if such Loans are Euro-Dollar Loans.

 

“ Bridge Debt ” means any Debt incurred pursuant to Section 5.07(b)(iv) relating to a bridge financing of any Asset Sale.

 

“ Business Day ” means either (i) a Domestic Business Day or (ii) a Euro-Dollar Business Day, as applicable.

 

“ BVI Cayman Pledge Agreement ” means the Pledge Agreement dated as of December 12, 2002, made by AES BVI II in favor of the Collateral Trustees.

 

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

 

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“ Cameroon Business ” means any AES Business located in the Republic of Cameroon, including, without limitation, AES Sonel.

 

“ Capital Commitment ” means any contractual commitment or obligation under an equity contribution or other agreement the primary purpose of which is for the Borrower to provide to an AES Business a portion of the capital required to finance construction projects, the acquisition of additional assets or capital improvements being undertaken by such AES Business.

 

“ Capital Stock ” means, with respect to any Person, any and all shares, interests, participants or other equivalents (however designated, whether voting or non-voting) of, or interests in (however designated), the equity of such Person, including, without limitation, all common stock and preferred stock and partnership and joint venture interests of such Person.

 

“ Cash Flow Coverage Ratio ” means, for any period, the ratio of (i) Adjusted Parent Operating Cash Flow for such period to (ii) Corporate Charges for such period.

 

“ CFC ” means any entity that is a controlled foreign corporation under Section 957 of the Internal Revenue Code (or any successor provision thereto).

 

“ Closing Date ” means March 17, 2004, the date on which the Agent received the fees and documents specified in or pursuant to Section 3.01.

 

“ Collateral ” means the Creditor Group Collateral.

 

“ Collateral Account ” has the meaning as set forth in the Collateral Trust Agreement.

 

“ Collateral Agent ” means Citibank N.A., in its capacity as collateral agent for the Lender Parties under the Financing Documents and its successors in such capacity.

 

“ Collateral Documents ” means the Security Agreement, the Collateral Trust Agreement, the BVI Cayman Pledge Agreement and any other agreement that creates or purports to create a Lien in favor of the Collateral Trustees for the benefit of the Secured Holders.

 

“ Collateral Trust Agreement ” means the Collateral Trust Agreement dated as of December 12, 2002 made by the grantors thereunder in favor of the Collateral Trustees, as amended by Amendment No. 1 dated as of July 29, 2003 and as further amended from time to time.

 

“ Collateral Trustees ” has the meaning as set forth in the Collateral Trust Agreement.

 

“ Collateral Value ” means, at any time, the aggregate book value at such time of the percentage of Equity Interests pledged in favor of the Secured Holders (other than the Equity Interests of the Excluded AES Entities); provided that the book value of each Subsidiary whose Equity Interests are being pledged shall be determined at such time (without giving effect to any accumulated other comprehensive gain or loss) by the sum of (i) its contributed capital less (ii) its intercompany receivables, plus (iii) its pre-tax retained earnings, plus (iv) its

 

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intercompany payables and less (v) dividends paid to the Borrower by such Subsidiary; provided further that for purposes of determining IPALCO’s book value, IPALCO’s contributed capital shall be calculated on a purchase accounting basis.

 

“ Commitment Increase ” has the meaning set forth in Section 2.17(a).

 

“ Communications ” has the meaning set forth in Section 7.11(a).

 

“ Conduit Lender ” means any special purpose corporation organized and administered by any Bank for the purpose of making Loans hereunder otherwise required to be made by such Bank and designated by such Bank in a written instrument, subject to the consent of the Agent and the Borrower (which, in each case, shall not be unreasonably withheld or delayed); provided that the designation by any Bank of a Conduit Lender shall not relieve the designating Bank of any of its obligations to fund a Loan under the Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Bank (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided further that no Conduit Lender shall (i) be entitled to receive any greater amount pursuant to Section 8.03, 8.04 or 10.03 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (ii) be deemed to have any Revolving Credit Commitment hereunder.

 

“ Consolidated Subsidiary ” means, at any date with respect to any Person, any Subsidiary of such Person or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date.

 

“ Controlling Person ” has the meaning set forth in the definition of “ Affiliate ” herein.

 

“ Corporate Charges ” means, for any period, the sum of the following amounts (determined without duplication), in each case to the extent paid in cash by the Borrower during such period and regardless of whether any such amount was accrued during such period:

 

(i)             interest expense of the Borrower for such period:

 

(A)           including, without limitation, interest expense attributable to (x) the accretion of original issue discount on Debt issued at less than face value thereof and (y) any interest added to the principal amount of Debt; but

 

(B)            excluding any interest expense to the extent that (x) the Borrower has the option or obligation to pay or satisfy such interest expense by the issuance of Capital Stock of the Borrower or other securities of the Borrower which would not constitute Recourse Debt and (y) the Borrower has not paid or satisfied such interest expense during such period with cash or by the issuance of Recourse Debt;

 

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(ii)            regularly scheduled dividend (including cumulative payments made as a result of any deferral) payments paid on the Borrower’s Redeemable Stock during such period;

 

(iii)           regularly scheduled dividend (including cumulative payments made as a result of any deferral) payments paid on Trust Preferred Securities during such period; and

 

(iv)           regularly scheduled dividend (including cumulative payments made as a result of any deferral) payments paid on the Borrower’s preferred stock or Hybrid Securities during such period.

 

“ Corporate Trustee ” means Wilmington Trust Company, a Delaware banking corporation, as Corporate Trustee under the Collateral Trust Agreement and any successor in such capacity.

 

“ Covered Transaction ” has the meaning set forth in the definition of “ Net Cash Proceeds ” herein.

 

“ Credit Agreement Documents ” has the meaning set forth in the Collateral Trust Agreement.

 

“ Credit Party ” has the meaning set forth in Section 8.03.

 

“ Creditor Group Collateral ” means the Security Agreement Collateral, the Additional Collateral Trust Agreement Collateral and the BVI Collateral.

 

“ Creditors’ Portion ” means, in respect of any Net Cash Proceeds, (i) 60% of such Net Cash Proceeds at any time that the Recourse Debt to Cash Flow Ratio is greater than or equal to 5.0:1.0 or (ii) 50% of such Net Cash Proceeds at any time that the Recourse Debt to Cash Flow Ratio is less than 5.0:1.0.

 

                                “ Debt ” of any Person means at any date, without duplication, (i) all Obligations of such Person for borrowed money; (ii) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all Obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business; (iv) all Obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles; (v) all Obligations (whether contingent or non-contingent) of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit, surety or performance bond or similar instrument; (vi) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person; (vii) all Debt of others Guaranteed by such Person and (viii) all Redeemable Stock of such Person valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends.  For purposes hereof, contingent obligations of the type described in clause (v) of this definition with respect to letters of credit not issued hereunder shall not be treated as “Debt” hereunder to the extent that such obligations are cash collateralized or to the extent that the issuer of any such letter of credit is entitled to draw under a

 

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Revolving Letter of Credit issued hereunder which by its terms requires that Revolving L/C Drawings under such letter of credit be applied only to reimburse such issuer for amounts paid by such issuer under such letter of credit.  The obligations of the Borrower under any Capital Commitment or under any agreement, in the form of indemnity or contingent equity contribution agreement or otherwise, pursuant to which the Borrower agrees to protect any Person, in whole or in part, from tax liabilities, environmental liabilities, political risks, including currency convertibility and transferability risk and changes in law, or construction cost overruns shall not constitute Debt.  For the avoidance of doubt, Qualified Equity-Linked or Hybrid Securities shall not be considered Debt for any purpose of this Agreement (other than for purposes of the definition of Material Debt and Section 6.01 hereof).

 

“ Default ” means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

 

“ Derivatives Obligations ” of any Person means all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, credit derivative transaction, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions; provided that Derivatives Obligations shall not include any obligations of such Person in relation to an equity forward contract, equity or equity index swap or equity or equity index option pertaining, linked or indexed to the common stock of such Person or any affiliate thereof.  For purposes of determining the aggregate amount of Derivative Obligations on any date or the Recourse Debt to Cash Flow Ratio on any date, the Derivative Obligations of the applicable Person in respect of any Hedge Agreement shall be the maximum aggregate amount (after giving effect to any netting agreements to the extent such netting agreements are with the same Person to whom any such Derivative Obligations are owed or with Affiliates of such Person) that the applicable Person would be required to pay if such Hedge Agreement were terminated at such time.

 

“ Direct Exposure ” has the meaning set forth in Section 2.14(c).

 

“ Disclosed Matters ” means matters disclosed in any SEC Filings made prior to March 15, 2004 or in written materials sent by or on behalf of the Borrower to all of the Bank Parties prior to March 15, 2004.

 

“ Dollar Equivalent ” means, on any date of determination with respect to any Alternative Currency Letter of Credit, (i) in calculating the maximum aggregate amount available to be drawn under such Alternative Currency Letter of Credit at any time on or after such date, the amount thereof in Dollars most recently reported to the Agent pursuant to Section 2.15 in calculating the amount of any Revolving L/C Drawing under such Alternative Currency Letter of Credit, the aggregate amount of Dollars paid by the relevant Revolving Fronting Bank to purchase the Alternative Currency paid by such Revolving Fronting Bank in respect of such Revolving L/C Drawing.

 

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“ Dollars ” has the meaning set forth in Section 2.16.

 

“ Domestic Business Day ” means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close.

 

“ Domestic Lending Office ” means, as to each Bank Party, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank Party may hereafter designate as its Domestic Lending Office by notice to the Borrower and the Agent.

 

“ Effective Date ” means March 17, 2004, the date the Existing Bank Credit Agreement became effective in accordance with Section 10.10 of the Existing Bank Credit Agreement.

 

“ Eligible Assignee ” means any commercial bank or financial institution (including, without limitation, any fund that regularly invests in loans similar to the Term Loans) as approved (which approval shall be required only so long as no Event of Default has occurred and is continuing at the time of an assignment) by the Borrower (such approval not to be unreasonably withheld or delayed); provided , however , that neither any Loan Party nor any Subsidiary of a Loan Party shall qualify as an Eligible Assignee under this definition.

 

“ Environmental Laws ” means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to the environment, the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, Hazardous Substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, Hazardous Substances or wastes or the clean-up or other remediation thereof.

 

“ Equity Credit Preferred Securities ” means, at any date:

 

(i)             Debt of the Borrower (A) that is owed to a Special Purpose Financing Subsidiary of the Borrower; (B) that is issued in connection with the issuance by such Special Purpose Financing Subsidiary of Existing Trust Preferred Securities; (C) that is subordinated in right of payment to other Debt of the Borrower of at least the types and to at least the extent as was, on the date of issuance thereof, the Junior Subordinated Debentures issued by AES in connection with the issuance by AES Trust III of its $3.375 Term Convertible Securities, Series C, on October 7, 1999 (or otherwise satisfactory to the Agent); and (D) as to which, at such date, AES has the right to defer the payment of all interest for the period of at least 19 consecutive quarters beginning at such date; and

 

(ii)            Guarantees by the Borrower of the obligations of the issuer of any Existing Trust Preferred Securities in respect of such Existing Trust Preferred Securities; and

 

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(iii)           Mandatorily convertible securities (such as those known as “DECS” (including tax deductible DECS)) consisting of Debt of the Borrower that is subordinated in right of payment to other Debt of the Borrower of at least the types and to at least the extent as was, on the date of issuance thereof, the Junior Subordinated Debentures issued by the Borrower in connection with the issuance by AES Trust III of its $3.375 Term Convertible Securities, Series C, on October 7, 1999, (or otherwise satisfactory to the Agent) and which is mandatorily convertible into, or redeemable with the proceeds of, Capital Stock of the Borrower (other than Redeemable Stock).

 

“ Equity Interest ” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination; provided that Equity Interest shall not include Trust Preferred Securities (other than the Existing Trust Preferred Securities) or any debt security that constitutes Debt and is convertible into, or exchangeable for, Equity Interests.

 

“ Equity Issuances ” means, in respect of any Person, the issuance or sale of Equity Interests of such Person other than any such issuance to directors, officers or employees pursuant to employee benefit plans in the ordinary course of business (including by way of exercise of stock options).

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute.

 

“ ERISA Group ” means the Borrower, its Subsidiaries and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Internal Revenue Code.

 

“ Euro-Dollar Borrowing ” has the meaning set forth in the definition of “ Borrowing ” herein.

 

“ Euro-Dollar Business Day ” means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London.

 

“ Euro-Dollar Default Rate ” has the meaning set forth in Section 2.06(c).

 

“ Euro-Dollar Lending Office ” means, as to each Bank Party, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or

 

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affiliate of such Bank Party as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower and the Agent.

 

“ Euro-Dollar Loan ” means a Loan which bears interest at the Adjusted London Interbank Offered Rate pursuant to the applicable Notice of Borrowing or Notice of Interest Rate Election plus the Euro-Dollar Margin.

 

“ Euro-Dollar Margin ” means (i) in respect of the Revolving Credit Loans, a rate per annum equal to the Applicable Revolving Margin, (ii) in respect of the Initial Term Loans, a rate per annum equal to 1.75% (subject to the provisions of Section 2.06(f) hereof) and (iii) in respect of the Incremental Term Loan Facility, a rate per annum to be agreed to by the Borrower, the Agent and the Incremental Term Loan Banks.

 

“ Euro-Dollar Reserve Percentage ” means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of “Eurocurrency liabilities” (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents).  The Adjusted London Interbank Offered Rate shall be adjusted automatically on and as of the effective date of any change in the Euro-Dollar Reserve Percentage.

 

“ Event of Default ” has the meaning set forth in Section 6.01.

 

“ Excess Revolving L/C Collateral ” has the meaning set forth in Section 2.14(d).

 

“ Exchange Note Holders ” means the holders of the Senior Secured Exchange Notes.

 

“ Excluded AES Business ” means any AES Business located in Brazil or Argentina; provided that the Borrower may by written notice to the Agent make an election not to treat one or more AES Businesses in Brazil or Argentina as an “Excluded AES Business”.  Once the Borrower elects not to treat an AES Business as an “Excluded AES Business” it may not thereafter change or revoke such election with respect to such AES Business without the consent of the Required Banks.

 

“ Excluded AES Entity ” means any Person set forth on Schedule IV, as such Schedule IV may be updated pursuant to Section 5.01(l)(2) whose assets consist only of any of the Excluded AES Businesses and direct or indirect Investments therein.

 

“ Existing Bank Credit Agreement ” has the meaning set forth in the first preliminary statement hereto.

 

“ Existing Letter of Credit ” means a “ Letter of Credit ” (as defined in the Former Bank Credit Agreement) issued under the Former Bank Credit Agreement that was

 

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outstanding on the Effective Date and listed on Appendix III under the heading “ Existing Revolving Letters of Credit ”.

 

“ Existing Trust Preferred Securities ” means (i) the $3.375 Trust Preferred Securities, Series C issued by AES Trust III on October 7, 1999 and (ii) the $3.00 Trust Convertible Preferred Securities issued by AES Trust VII on May 17, 2000.

 

“ Extension of Credit ” means (i) a Borrowing pursuant to Section 2.01 or Section 2.17 or (ii) the issuance of a Revolving Letter of Credit pursuant to Section 2.03.

 

“ Facilities ” means the Revolving Credit Loan Facility, the Initial Term Loan Facility and any Incremental Term Loan Facility made available to the Borrower pursuant to Section 2.17.

 

“ Federal Funds Rate ” means, for any day, the rate per annum (rounded upward, if necessary, to the nearest 1/100 ^th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day; provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Citicorp USA, Inc. on such day on such transactions as determined by the Agent.

 

“ Financing Documents ” means this Agreement, the Collateral Documents and the Notes.

 

“ Financing Parties ” means (i) the Bank Parties hereunder and (ii) Exchange Note Holders.

 

“ First Priority Secured Debt ” means Debt of the Borrower secured by a first-priority lien on the Creditor Group Collateral (subject to the limitations set forth in Section 5.10(p)), provided that Debt owed to an Affiliate of the Borrower shall not be First-Priority Secured Debt.

 

“ Foreign Subsidiary ” means a Pledged Subsidiary or a Subsidiary of a Pledged Subsidiary (other than an Excluded AES Entity) organized under the laws of a jurisdiction other than the United States or any State thereof.

 

“ Form 10-K ” means the Borrower’s annual report on Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.

 

“ Form 10-Q ” means the Borrower’s quarterly report on Form 10-Q for the quarter ended September 30, 2003, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.

 

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“ Former Bank Credit Agreement ” means the “Existing Bank Credit Agreement” as defined in the Existing Bank Credit Agreement.

 

“ GAAP ” has the meaning set forth in Section 1.02.

 

“ Group of Loans ” means, at any time, a group of Loans consisting of (i) all Loans which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans having the same Interest Period at such time; provided that if a Loan of any particular Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been in if it had not been so converted or made.

 

“ Guarantee ” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or, for the avoidance of doubt, obligations of the Borrower to provide capital to an AES Business under a Capital Commitment.  The term “Guarantee” used as a verb has a corresponding meaning.

 

“ Guaranteed Obligations ” has the meaning set forth in Section 9.01.

 

“ Hazardous Substances ” means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics.

 

“ Hedge Agreement ” means any contract, instrument or agreement in respect of Derivative Obligations.

 

“ Hedge Bank ” means any Bank Party or an Affiliate of a Bank Party in its capacity as a party to a Secured Hedge Agreement.

 

“ Hybrid Securities ” means, with respect to any Person, any securities of such Person that, at the time of issuance, received at least two of the following treatments: (a) “intermediate equity content” or better equity treatment from Standard & Poor’s Rating Services, (b) “Basket C Equity Credit” or better equity treatment from Moody’s Investors Service, Inc. and (c) “Class C- Moderate Equity Content” or better equity treatment from Fitch Ratings; provided that to the extent any such category of a rating agency is no longer in existence, the applicable references in this definition shall be deemed to be a reference to the nearest equivalent category of such rating agency.

 

“ Increase Commitment Date ” has the meaning set forth in Section 2.17(b).

 

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“ Increase Date ” has the meaning set forth in Section 2.17(a).

 

“ Incremental Term Loan ” means each term loan made by an Incremental Term Loan Bank under the Incremental Term Loan Facility in accordance with the terms of Section 2.17.

 

“ Incremental Term Loan Bank ” means each Bank (including any Additional Term Loan Bank) having an Incremental Term Loan.

 

“ Incremental Term Borrowings ” means a borrowing consisting of simultaneous Incremental Term Loans of the same type made by the Incremental Term Loan Banks.

 

“ Incremental Term Loan Commitment ” means, with respect to each Incremental Term Loan Bank, the amount set forth for such Bank in respect of the Incremental Term Loan Facility in the Register maintained by the Agent pursuant to Section 10.06(f).

 

“ Incremental Term Loan Facility ” has the meaning set forth in Section 2.17(a).

 

“ Incremental Term Loan Note ” means a promissory note of the Borrower to the order of any Incremental Term Loan Bank, in substantially the form of Exhibit A-2 hereto (with such modifications as the Borrower and the Agent may agree are necessary to evidence the terms of the Incremental Term Loan Facility), evidencing the indebtedness of the Borrower to such Bank resulting from the Incremental Term Loan deemed to have been made by such Lender.

 

“ Incremental Term Loan Termination Date ” has the meaning set forth in the definition of “Termination Date” herein.

 

“ Indemnitee ” has the meaning set forth in Section 10.03(b).

 

“ Initial Term Loan ” means each “Term Loan” under the Existing Bank Credit Agreement continued as an Initial Term Loan hereunder in accordance with the terms of Section 2.01(b) and each Initial Term Loan made as a result of a Commitment Increase in accordance with the terms of Section 2.17.

 

“ Initial Term Loan Bank ” means each Bank (including any Additional Term Loan Bank) having an Initial Term Loan.

 

“ Initial Term Loan Commitment ” means, with respect to each Initial Term Loan Bank, the amount set forth opposite its name on Appendix II hereto or, if such Bank has entered into one or more Assignment and Assumptions or Assumption Agreements or is an Additional Term Loan Bank, the amount set forth for such Bank in respect of the Initial Term Loan Facility in the Register maintained by the Agent pursuant to Section 10.06(f).

 

“ Initial Term Loan Facility ” means, at any time, the aggregate amount of the Initial Term Loan Banks’ Initial Term Loans at such time.

 

“ Initial Term Loan Note ” means a promissory note of the Borrower to the order of any Initial Term Loan Bank, in substantially the form of Exhibit A-2 hereto, evidencing the

 

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indebtedness of the Borrower to such Bank resulting from the Initial Term Loan deemed to have been made by such Lender.

 

“ Initial Term Loan Termination Date ” has the meaning set forth in the definition of “Termination Date” herein.

 

“ Interest Period ” means, with respect to each Euro-Dollar Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in an applicable Notice of Interest Rate Election and ending one, two, three, six or, with the consent of all affected Banks, nine or twelve months thereafter, as the Borrower may elect in such notice; provided that:

 

(i)             any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day;

 

(ii)            any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (iii) below, end on the last Euro-Dollar Business Day of a calendar month; and

 

(iii)           any Interest Period that would otherwise end after the Termination Date shall end on the Termination Date.

 

“ Intermediate Holding Companies ” has the meaning set forth in Section 5.16(b).

 

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended, or any successor statute.

 

“ Investment ” means any investment in any Person, whether by means of share purchase, capital contribution, loan, Guarantee, time deposit or otherwise (but not including any demand deposit).

 

“ IPALCO ” means Ipalco Enterprises, Inc., an Indiana corporation.

 

“ IPALCO Asset Sale ” has the meaning set forth in Section 2.09(b)(ii).

 

“ Lender Parties ” has the meaning set forth in the Collateral Trust Agreement.

 

“ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset.  For the purposes of this Agreement, the Borrower or any of its Subsidiaries shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

 

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“ Loan ” means a Revolving Credit Loan or a Term Loan, each of which may be a Base Rate Loan or a Euro-Dollar Loan and “ Loans ” means Revolving Credit Loans or Term Loans, each of which may be Base Rate Loans or Euro-Dollar Loans or any combination of the foregoing.

 

“ Loan Party ” means each Obligor and AES BVI II.

 

“ London Interbank Offered Rate ” means, for any Interest Period, the average (rounded upward, if necessary, to the next higher 1/16 ^th of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two business days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Euro-Dollar Loan of such Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period.

 

“ Material Adverse Effect ” means a material adverse effect on (i) the business, consolidated results of operations, consolidated financial condition or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of the Loan Parties to perform their material obligations under any Financing Document or (iii) the rights of and remedies available to any Bank Party under any Financing Document.

 

“ Material AES Entity ” means (i) any Subsidiary Guarantor and (ii) any other Person in which the Borrower has a direct or indirect equity Investment if such Person’s contribution to Parent Operating Cash Flow for the four most recently completed fiscal quarters of the Borrower constitutes 15% or more of Parent Operating Cash Flow for such period.

 

“ Material Debt ” means, with respect to any Person, Debt (other than the Loans and the Reimbursement Obligations) of such Person arising in one transaction, in an aggregate principal amount exceeding $50,000,000.

 

“ Material Hedge Agreement ” means, with respect to any Person, a Hedge Agreement entered into by such Person in respect of which the Derivative Obligations of such Person exceed $50,000,000.

 

“ Material Obligation ” means any obligation or liability in an amount equal to or in excess of $50,000,000.

 

“ Material Plan ” means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $50,000,000.

 

“ Maximum Outstanding Exposure ” has the meaning set forth in Section 2.15(a).

 

“ Minimum CP Rating ” means (i) A-1 for Standard & Poor’s Ratings Services; (ii) P-1 for Moody’s Investors Service, Inc.; (iii) F-1 for Fitch IBCA, Inc. and (iv) D-1 for Duff & Phelps Credit Rating Co.

 

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“ Minimum Ratings Condition ” means, at any time of determination, that the Facilities are rated at least Ba1 from Moody’s Investors Service, Inc. and the corporate credit rating of the Borrower is at least BB- from Standard & Poor’s Ratings Services, in each case without any negative outlook.

 

“ Multiemployer Plan ” means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period.

 

“ Net Cash Proceeds ”:  (a)  with respect to an Equity Issuance by a Subsidiary or the incurrence of Debt (a “ Covered Transaction ”), means the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration) by the Borrower and its Subsidiaries from such Covered Transaction after deducting therefrom (without duplication) (i) brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees and commissions, (ii) in the case of a Covered Transaction in the form of incurrence of Debt by a Subsidiary, the amount of any Debt of such Subsidiary that, by the terms of the agreement or instrument governing such Debt or applicable law, is required to be repaid or prepaid and is actually so repaid or prepaid with all or a portion of the proceeds of such Covered Transaction and (iii) any portion of the proceeds of such Covered Transaction required to prepay or collateralize interest or dividends payable in respect of such Covered Transaction during one six-month period; and

 

(b) with respect to any Asset Sale, means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received (including any cash received upon sale or disposition of such note or receivable), excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the property disposed of in such Asset Sale or received in any other noncash form) therefrom, in each case, net of:

 

                (i)             all legal, title and recording tax expenses, commissions and other customary fees and expenses incurred (including, without limitation, consent and waiver fees and any applicable premiums, earn-out or working interest payments or payments in lieu or in termination thereof), and all federal, state, provincial, foreign and local taxes payable to the relevant tax authority (x) as a direct consequence of such Asset Sale, (y) as a result of the required repayment of any Debt in any jurisdiction other than the jurisdiction where the property disposed of was located or (z) as a result of any repatriation to the U.S. of any proceeds of such Asset Sale,

 

                (ii)            a reasonable reserve (which reserve if required by the applicable sale agreement, shall be deposited into a third party escrow account with an escrow agent and shall be maintained in such account until such time as the applicable indemnification obligation expires or the amounts on deposit are required to make indemnification payments) for any indemnification payments

 

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(fixed and contingent) attributable to seller’s indemnities to the purchaser undertaken by the Borrower or any of its Subsidiaries in connection with such Asset Sale (but excluding any payments, which by the terms of the indemnities will not, under any circumstances, be made prior to the Termination Date); provided that any amounts in such reserve to the extent not paid to the purchaser as an indemnification payment after the expiration of any applicable time period set forth in the agreements in respect of such Asset Sale shall be treated as “Net Cash Proceeds” for all purposes of this Agreement,

 

                (iii)           all payments made on any Debt which must by its terms or by applicable law be repaid out of the proceeds from such Asset Sale, and

 

                (iv)           all required distributions and other required payments made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale;

 

provided that for purposes of determining Net Cash Proceeds received by a Subsidiary required to be applied pursuant to Section 2.10, only that portion of such Net Cash Proceeds received by the Borrower or a Qualified Holding Company whose Equity Interests have been pledged to the Secured Holders pursuant to the Collateral Documents from such Subsidiary in accordance with Section 5.17 shall be included.

 

“ Non-Consenting Bank ” has the meaning set forth in Section 10.16.

 

“ Non-Pledged Subsidiaries ” means (i) as of the Closing Date, each of the direct Subsidiaries of the Borrower or of AES BVI II listed on Schedule III or (ii) after the Closing Date, in addition to the “Non-Pledged Subsidiaries” set forth on Schedule III, any newly formed or acquired direct (1) Subsidiary of the Borrower whose aggregate assets have a fair market value not in excess of $3,000,000 and, together with the fair market value of the assets of all Non-Pledged Subsidiaries (other than any Subsidiary which is described in clause (2) below), does not exceed $50,000,000 or (2) Subsidiaries of the Borrower for which a grant or perfection of a Lien on such Subsidiary’s stock would require approvals and consents from foreign and domestic regulators and from lenders to, and suppliers, customers or other contractual counterparties of, such Subsidiary.

 

“ Note ” means a Revolving Credit Loan Note or a Term Loan Note.

 

“ Notice of Borrowing ” has the meaning set forth in Section 2.02.

 

“ Notice of Interest Rate Election ” has the meaning set forth in Section 2.07(a).

 

“ Notice of Issuance ” has the meaning set forth in Section 2.03(d).

 

“ Obligation ” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged,

 

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stayed or otherwise affected by any proceeding referred to in Section 6.01(g) or (h).  Without limiting the generality of the foregoing, the Obligations of the Borrower and the Subsidiary Guarantors under the Loan Documents include (i) the obligation to pay principal, interest, Revolving Letter of Credit commissions, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by the Borrower and such Subsidiary Guarantor under any Financing Document and (ii) the obligation of the Borrower and such Subsidiary Guarantor to reimburse any amount in respect of any of the foregoing that any Bank Party, in its sole discretion, may elect to pay or advance on behalf of the Borrower and such Subsidiary Guarantor.

 

“ Obligors ” means the Borrower and the Subsidiary Guarantors.

 

“ Off Balance Sheet Obligation ” means, with respect to any Person, any Obligation of such Person under a synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing classified as an operating lease in accordance with GAAP, if such Obligations would give rise to a claim against such Person in a proceeding referred to in Section 6.01(h).

 

“ Other Taxes ” has the meaning set forth in Section 8.04(b).

 

“ Parent ” means, with respect to any Bank Party, any Person controlling such Bank Party.

 

“ Parent Operating Cash Flow ” means, for any period, the sum of the following amounts (determined without duplication) as calculated below:

 

(i)             dividends paid to the Borrower by its Subsidiaries during such period;

 

(ii)            consulting and management fees paid to the Borrower for such period;

 

(iii)           tax sharing payments made to the Borrower during such period;

 

(iv)           interest and other distributions paid to the Borrower during such period with respect to cash and other Temporary Cash Investments of the Borrower (other than with respect to amounts on deposit in the Revolving L/C Cash Collateral Account);

 

(v)            cash payments made to the Borrower in respect of foreign exchange Hedge Agreements or other foreign exchange activities entered into by the Borrower on behalf of any of its Subsidiaries; and

 

(vi)           other cash payments made to the Borrower by its Subsidiaries other than (A) returns of invested capital; (B) payments of the principal of Debt of any such Subsidiary to the Borrower and (C) payments in an amount equal to the aggregate amount released from debt service reserve accounts upon the issuance of letters of credit for the account of the Borrower and the benefit of the beneficiaries of such accounts.

 

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For purposes of determining Parent Operating Cash Flow:

 

(1)            net cash payments received by a Qualified Holding Company whose Equity Interests have been pledged to the Secured Holders pursuant to the Collateral Documents during any period which could have been (without regard for any cash held by such Qualified Holding Company at the beginning of such period), but were not, paid as a dividend to the Borrower during such period due to tax or other cash management considerations may be included in Parent Operating Cash Flow for such period; provided that any amounts so included will not be included in Parent Operating Cash Flow if and when paid to the Borrower in any subsequent period; and

 

(2)            Net Cash Proceeds from Asset Sales, Equity Issuances or the incurrence of Debt (but only to the extent that the Net Cash Proceeds from such incurrence of Debt are paid to the Borrower or a Qualified Holding Company as a return of capital) shall not be included in Parent Operating Cash Flow for any period.

 

“ Participant ” has the meaning set forth in Section 10.06(b).

 

“ Payment Restriction ” means any provision in any agreement limiting the ability of any of the Borrower’s Subsidiaries to declare or pay dividends or other distributions in respect of its Equity Interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or invest in, the Borrower or any Subsidiary of the Borrower (whether through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise).

 

“ PBGC ” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

“ Permitted Business ” means, with respect to any Person, (i) a line of business which is substantially the same line of business as one or more of the principal businesses of such Person and its Subsidiaries, (ii) a line of business which is complementary or ancillary to, one or more of the principal businesses of such Person and its Subsidiaries, (iii) any energy business, (iv) any infrastructure business, (v) any power business, (vi) any public utility business, (vii) the ownership, extraction, processing, transportation, distribution and sales of fossil fuels and derivatives thereof, (viii) any line of business relating or in connection with, climate solutions, carbon offsets, biofuels or battery storage and (ix) any business ancillary, complementary or related to any of the business described in clauses (i) through (viii), including without limitation trading activities.

 

“ Permitted Credit Derivative Transaction ” means any credit derivative transaction referencing a government, governmental agency or quasi-governmental agency, sovereign or sovereign agency or a super- or multi- national agency or any debt obligation issued by any such entity, in each case to the extent such transaction is not entered into for speculative purposes.

 

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“ Person ” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

“ Plan ” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

 

“ Pledged Debt ” shall have the meaning specified in the Security Agreement.

 

“ Pledged Subsidiary ” means a direct Subsidiary of the Borrower or AES BVI II listed on Schedule I hereto, whose Equity Interests have been pledged to the Collateral Trustees for the benefit of the Secured Holders by the Borrower or AES BVI II, as applicable, pursuant to the Security Agreement or the BVI Cayman Pledge Agreement.

 

“ Power Supply Business ” means an electric power or thermal energy generation or cogeneration facility or related facilities, or an electric power transmission, distribution, fuel supply and fuel transportation facilities, or any combination thereof (all subject to relevant security, if any, under related project financing arrangements), together with its or their related power supply, thermal energy and fuel contracts as well as other contractual arrangements with customers, suppliers and contractors.

 

“ PUHCA ” has the meaning set forth in Section 4.12.

 

“ Qualified Equity-Linked or Hybrid Securities ” means preferred stock, mandatorily convertible debt securities and Hybrid Securities, in each case, that does not constitute Redeemable Stock.

 

“ Qualified Holding Company ” means any Wholly-Owned Consolidated Subsidiary of the Borrower that satisfies, and all of whose direct or indirect holding companies (other than the Borrower) are Wholly-Owned Consolidated Subsidiaries of AES that satisfy, the following conditions:

 

                (i)             its direct and indirect interest in any AES Business shall be limited to the ownership of Capital Stock or Debt obligations of a Person with a direct or indirect interest in such AES Business;

 

                (ii)            except as a result of the Financing Documents (and permitted refinancings thereof), no consensual encumbrance or restriction of any kind shall exist on its ability to make payments, distributions, loans, advances or transfers to the Borrower;

 

                (iii)           it shall not have outstanding any Debt other than Guarantees of Debt under, or Liens constituting Debt under, the Financing Documents (and

 

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permitted refinancings thereof) and Debt to the Borrower or to other Qualified Holding Companies (other than AES BVI II);

 

                (iv)           it shall engage in no business or other activity, shall enter into no binding agreements and shall incur no obligations (other than agreements with, and obligations to, the Borrower or other Qualified Holding Companies (other than AES BVI II)) other than (A) the holding of the Capital Stock and Debt obligations permitted under clause (i) above, including entering into retention agreements and subordination agreements relating to such Capital Stock and Debt, (B) the holding of cash received from its Subsidiaries and the investment thereof in Temporary Cash Investments, (C) the payment of dividends and other amounts to the Borrower, (D) ordinary business development activities, (E) the making (but not the entering into binding obligations to make) of Investments in AES Businesses owned by its Subsidiaries, (F) in the case of AES Electric, the making of Investments in Power Supply Business owned by NIGEN Limited and Medway Power Limited or the repayment of up to GBP10,000,000 owed to AES Barry as of the Effective Date under any agreement by which it is bound as of the Effective Date and (G) entering into foreign exchange Hedge Agreements (otherwise permitted under Section 5.19) in respect of dividends received or expected to be received from Subsidiaries of such Qualified Holding Company, in a notional amount not to exceed $100,000,000 outstanding at any time for each Qualified Holding Company and for a term of no more than six months from the date the relevant Hedge Agreement is entered into; and

 

                (v)            is listed on Schedule V hereto (as supplemented from time to time by written notice to the Agent by the Borrower).

 

“ Quarterly Payment Date ” means each March 31, June 30, September 30 and December 31.

 

“ Recourse Debt ” means, on any date, the sum of (i) Debt of the Borrower (other than Equity Credit Preferred Securities and Qualified Equity-Linked or Hybrid Securities) plus (ii) Derivative Obligations of the Borrower plus (iii) Off Balance Sheet Obligations of the Borrower.

 

“ Recourse Debt to Cash Flow Ratio ” means, for any period, the ratio of:

 

(i)             the sum of the Recourse Debt as of the end of such period to;

 

(ii)            the Adjusted Parent Operating Cash Flow during such period.

 

“ Redeemable Stock ” means any class or series of Capital Stock or Hybrid Securities of any Person that by its terms or otherwise is (i) required to be redeemed prior to the date that is 180 days following the Termination Date (other than a redemption solely in the form of Capital Stock that does not constitute Redeemable Stock), (ii) redeemable at the option of the holder of such class or series of Capital Stock or Hybrid Securities at any time prior to the date that is 180 days following the Termination Date or (iii) convertible into or exchangeable for (unless solely at the option of such person) Capital Stock or Hybrid Securities referred to in

 

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clause (i) or (ii) above or Debt having a scheduled maturity prior to the date that is 180 days following the Termination Date; provided that any Capital Stock or Hybrid Securities that would not constitute Redeemable Stock but for provisions thereof giving holders thereof the right to require such person to repurchase or redeem such Capital Stock or Hybrid Securities upon the occurrence of an “asset sale” or a “change of control” occurring prior to the date that is 180 days following the Termination Date shall not constitute Redeemable Stock if such Capital Stock or Hybrid Securities specifically provides that such person will not repurchase or redeem any such Capital Stock or Hybrid Securities pursuant to such provisions unless such repurchase or redemption is permitted under the terms of this Agreement.

 

“ Reference Banks ” means the respective principal London offices of Citicorp USA, Inc., Bank of America, N.A. and Union Bank of California, N.A. and “ Reference Bank ” means any one of such Reference Banks.

 

“ Refunding Borrowing ” means a Borrowing which, after application of the proceeds thereof, results in no net increase in the Total Outstandings of any Revolving Credit Loan Bank.

 

“ Register ” has the meaning set forth in Section 10.06(f).

 

“ Regulation U ” means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“ Reimbursement Obligations ” means at any date the obligations then outstanding of the Borrower under Section 2.03(f) to reimburse the Revolving Fronting Banks for Revolving L/C Drawings under Revolving Letters of Credit.

 

“ Related Fund ” means with respect to any Bank Party that is a fund that invests in bank loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Bank party or by an Affiliate of such investment advisor.

 

“ Relevant Contingent Exposure ” has the meaning set forth in Section 2.14(c).

 

“ Required Banks ” means, at any time, Bank Parties owed or holding at least a majority in interest of the aggregate principal amount (based in the case of any Revolving Letter of Credit denominated in an Alternative Currency other than Dollars, on the Dollar Equivalent at such time) of the sum of (i) the aggregate principal amount of the Loans outstanding at such time, (ii) the aggregate Revolving Letter of Credit Liabilities outstanding at such time and (iii) the aggregate Unused Revolving Credit Loan Commitments at such time.

 

“ Required Revolving Credit Loan Banks ” means at any time the Revolving Credit Loan Banks having at least a majority of the aggregate Total Exposures at such time.

 

“ Responsible Officer ” means any duly authorized officer of the Borrower or any of its Subsidiaries.

 

“ Restricted Payment ” has the meaning set forth in Section 5.09(a).

 

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“ Revolving Credit Assumption Agreement ” has the meaning set forth in Section 2.18(d)(ii).

 

“ Revolving Credit Increase Date ” has the meaning set forth in Section 2.18(a).

 

“ Revolving Credit Loan ” has the meaning set forth in Section 2.01(a).

 

“ Revolving Credit Loan Bank ” means each Bank having a Revolving Credit Loan Commitment.

 

“ Revolving Credit Loan Commitment ” means, at any time, with respect to any Revolving Credit Loan Bank at any time, the amount set forth opposite such Bank’s name on Appendix I hereto under the caption “Revolving Credit Loan Commitment” or, if such Bank has entered into one or more Assignment and Assumptions, the amount set forth for such Bank in the Register maintained by the Agent pursuant to Section 10.06(f) as such Bank’s “Revolving Credit Loan Commitment”, as such amount may be reduced at or prior to such time pursuant to Sections 2.09 or 2.10.

 

“ Revolving Credit Loan Commitment Increase ” has the meaning set forth in Section 2.18(a).

 

“ Revolving Credit Loan Facility ” means, at any time, the aggregate amount of the Revolving Credit Loan Banks’ Revolving Credit Loan Commitments.

 

“ Revolving Credit Loan Increase Commitment Date ” has the meaning set forth in Section 2.18(b).

 

“ Revolving Credit Loan Note ” means a promissory note of the Borrower to the order of any Revolving Credit Loan Bank, in substantially the form of Exhibit A-1 hereto, evidencing the indebtedness of the Borrower to such Bank resulting from the Revolving Credit Loans made or deemed to have been made by such Lender.

 

“ Revolving Credit Loan/Term Loan Obligations ” shall have the meaning set forth in Section 9.01.

 

“ Revolving Credit Period ” means the period from and including the Effective Date to but excluding the Termination Date.

 

“ Revolving Fronting Bank ” means (i) with respect to each Existing Letter of Credit deemed to have been issued pursuant to the second sentence of Section 2.03(a), each Bank listed as issuer thereof on Appendix III hereto, as the case may be, (ii) each Revolving Credit Loan Bank listed on Schedule VII hereto and (iii) any other Revolving Credit Loan Bank and/or any Third Party Fronting Bank which has executed and delivered to the Agent a Revolving Fronting Bank Agreement pursuant to Section 10.15, in each case, unless such Bank has been released from its obligation as a Revolving Fronting Bank pursuant to Section 10.15(b).

 

“ Revolving Fronting Bank Agreement ” means an agreement, in substantially the form of Exhibit E hereto.

 

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“ Revolving L/C Cash Collateral Account ” has the meaning set forth in Section 2.14(a).

 

“ Revolving L/C Collateral” has the meaning set forth in Section 2.14(b).

 

“ Revolving L/C Drawing ” means a drawing effected under any Revolving Letter of Credit.

 

“ Revolving Letter of Credit ” means a letter of credit issued by a Revolving Fronting Bank pursuant to Section 2.03(a) and shall also include each Existing Letter of Credit.

 

“ Revolving Letter of Credit Commission Rate ” means a rate per annum equal to the Applicable Revolving Margin.

 

“ Revolving Letter of Credit Liabilities ” means, at any time and in respect of any Revolving Letter of Credit, the sum, without duplication, of (i) the Available Amount of such Revolving Letter of Credit plus (ii) the aggregate unpaid amount of all Reimbursement Obligations in respect of previous Revolving L/C Drawings made under such Revolving Letter of Credit.

 

“ Revolving Letter of Credit Termination Date ” has the meaning set forth in Section 2.03(h)(i).

 

“ SEC Filings ” means public filings made by the Borrower with the Securities and Exchange Commission on Form 8-K, Form 10-Q or Form 10-K, and any filed amendments to any of the foregoing.

 

“ Second-Priority Secured Debt ” means (i) the Borrower’s 8¾% Second Priority Senior Secured Notes due 2013, (ii) the Borrower’s 9% Second Priority Notes due 2015 and (iii) Debt of the Borrower that is secured by a Lien on the Creditor Group Collateral that is pari passu with the Lien securing the Notes described in clauses (i) or (ii) (or permitted refinancings thereof).

 

“ Secured Hedge Agreement ” means any Hedge Agreement permitted under Article V that (i) is entered into by and between the Borrower and any Hedge Bank and (ii) specifies by its terms that it is secured by the Collateral.

 

“ Secured Holders ” has the meaning set forth in the Collateral Trust Agreement.

 

“ Secured Obligations ” has the meaning specified in the Collateral Trust Agreement.

 

“ Secured Treasury Management Service Agreements ” means any agreement between the Borrower or any of its Subsidiaries and a Bank Party or an Affiliate of a Bank Party to provide treasury management services to the Borrower.

 

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“ Security Agreement ” means the Security Agreement dated as of December 12, 2002 made by the grantors thereunder in favor of the Collateral Trustees, as amended by Amendment No. 1 dated as of July 29, 2003 and as further amended from time to time.

 

“ Security Agreement Collateral ” means the “Collateral” referred to in the Security Agreement.

 

“ Senior Secured Exchange Notes ” means the 10% Exchange Notes due December 15, 2005 issued by the Borrower pursuant to the Senior Secured Exchange Note Indenture and any other Debt issued by the Borrower under the Senior Secured Exchange Note Indenture.

 

“ Senior Secured Exchange Note Indenture ” means that certain indenture between the Borrower and Wells Fargo Bank Minnesota, National Association, as Trustee to be dated as of December 13, 2002.

 

“ Senior Subordinated Notes ” means the 8.375% Senior Subordinated Notes due August 2007 and the 8.50% Senior Subordinated Notes due November 2007 issued by the Borrower pursuant to the Senior Subordinated Notes Indentures.

 

“ Senior Subordinated Notes Indentures ” means (i) that certain indenture between the Borrower and The Bank of New York, as Trustee dated as of July 17, 1997 and (ii) that certain indenture between the Borrower and Wells Fargo Bank Minnesota, National Association (successor to The First National Bank of Chicago), as Trustee dated as of October 29, 1997.

 

“ Shared Collateral Documents ” means the Security Agreement, the Collateral Trust Agreement, the BVI Cayman Pledge Agreement and any other agreement that creates or purports to create a Lien in favor of the Collateral Trustees for the Lender Parties.

 

“ Significant AES Entity ” means (i) any Material AES Entity, (ii) AES BVI II and (iii) any other Person (other than any Excluded AES Entity) in which the Borrower has a direct or indirect equity Investment if (A) such Person’s contribution to Parent Operating Cash Flow for the four most recently completed fiscal quarters of the Borrower constitutes 10% or more of Parent Operating Cash Flow for such period, or (B) on any date of determination, the Borrower’s direct or indirect interest in the total assets of such Person if such Person is a Consolidated Subsidiary or in the net assets of such Person in all other cases is at least equal to 10% of the consolidated assets of the Borrower and its Consolidated Subsidiaries, taken as a whole, on such date of determination.

 

“ Solvent ” and “ Solvency ” mean, with respect to any Person on a particular date, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in business or a transaction, and is not about to engage in business or a

 

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transaction, for which such Person’s property would constitute an unreasonably small capital.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“ Special Purpose Financing Subsidiary ” means a Consolidated Subsidiary that has no direct or indirect interest in a Power Supply Business or other AES Business and (1) for purposes of Section 5.09(a)(v), was formed solely for the purpose of acquiring Equity Interests in the Borrower and obtaining financing (including the issuance of securities) the proceeds of which were intended to be used to acquire Equity Interests in the Borrower or (2) for any other purpose hereunder, was formed solely for the purpose of issuing Trust Preferred Securities.

 

“ Subsidiary ” means, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.

 

“ Subsidiary Guarantors ” means AES Oklahoma, AES Hawaii Management, AES Warrior Run and AES New York.

 

“ Subsidiary Guaranty ” has the meaning set forth in Section 9.01.

 

“ Sul Guarantee ” means the Guarantee in the Sponsor Agreement dated as of March 7, 2001 between the Borrower and BankBoston, N.A. Nassau Branch, as agent (“ BankBoston ”) for the lenders under the Sul Credit Agreement referred to below by the Borrower to Guarantee the obligations of AES Cayman Guaiba, Ltd., a Cayman Islands corporation (the “ Sul Borrower ”) under the Credit Agreement dated as of March 6, 2001 (the “ Sul Credit Agreement ”), with BankBoston, Banc of America Securities, LLC, Unibanco – Uniao de Bancos Brasilieros S.A. and Westdeutsche Landesbank Girozentrale, New York Branch, and the lenders named therein (as the same may be amended or amended and restated from time to time) in an amount of up to a maximum aggregate amount of $50,000,000.

 

“ Supermajority Banks ” means, at any time, Bank Parties owed or holding at least a 66 2/3% interest of the aggregate principal amount (based in the case of any Revolving Letter of Credit denominated in an Alternative Currency other than Dollars, on the Dollar Equivalent at such time) of the sum of (i) the aggregate principal amount of the Loans outstanding at such time, (ii) the aggregate Revolving Letter of Credit Liabilities outstanding at such time and (iii) the aggregate Unused Revolving Credit Loan Commitments at such time.

 

“ Taxes ” has the meaning set forth in Section 8.04(a).

 

“ Temporary Cash Investment ” means any Investment (having a maturity of not greater than 60 days from the date of issuance thereof) in (A)(i) direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof; (ii) commercial paper rated at least the Minimum CP Rating by any two of Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc., Fitch IBCA, Inc. and Duff & Phelps Credit Rating Co., provided that one of such two Minimum CP Ratings is by Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc.; (iii) time deposits with, including

 

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certificates of deposit issued by, any office located in the United States of any bank or trust company which is organized or licensed under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500,000,000; (iv) medium term notes, auction rate preferred stock, asset backed securities, bonds, notes and letter of credit supported instruments, issued by any entity organized under the laws of the United States, or any state or municipality of the United States and rated in any of the three highest rated categories by Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc.; (v) repurchase agreements with respect to securities described in clause (i) above entered into with an office of a bank or trust company meeting the criteria specified in clause (iii) above; (vi) Euro-Dollar certificates of deposit issued by any bank or trust company which has capital and unimpaired surplus of not less than $500,000,000 or (vii) with respect to a Subsidiary, any category of investment designated as permissible investments under such Subsidiary’s loan documentation; provided that in each case (except clause (vii)) that such Investment matures within fifteen months from the date of acquisition thereof by the Borrower or a Subsidiary and (B) registered investment companies that are “money market funds” within the meaning of Rule 2a-7 under the Investment Company Act of 1940.

 

“ Term Loan ” means each Initial Term Loan and each Incremental Term Loan.

 

“ Term Loan Bank ” means each Initial Term Loan Bank and each Incremental Term Loan Bank.

 

“ Term Borrowings ” means a borrowing consisting of simultaneous Term Loans of the same type made by the appropriate Term Loan Banks.

 

“ Term Loan Commitments ” means the Initial Term Loan Commitments of the Initial Term Loan Banks at such time and the Incremental Term Loan Commitments of the Incremental Term Loan Banks at such time.

 

“ Term Loan Facilities ” means the Initial Term Loan Facility and the Incremental Term Loan Facility.

 

“ Term Loan Notes ” means the Initial Term Loan Notes and the Incremental Term Loan Notes.

 

“ Termination Date ” means (i) June 23, 2010 in the case of the Revolving Credit Loan Facility, (ii) August 10, 2011, in the case of the Initial Term Loan Facility (the “Initial Term Loan Termination Date” ) and (iii) the date agreed to by the Borrower, the Agent and the Incremental Term Loan Banks in the case of any Incremental Term Loan Facility (the “ Incremental Term Loan Termination Date ”); provided that the Incremental Term Loan Termination Date shall not occur prior to the Initial Term Loan Termination Date; provided , in each case, that if the Termination Date occurs on a day that is not a Euro-Dollar Business Day, the Termination Date shall occur on the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the Termination Date shall be the next preceding Euro-Dollar Business Day.

 

“ Third Party Fronting Bank ” means (i) the Agent, (ii) any Term Loan Bank or any Affiliate of any Term Loan Bank (A) a majority of whose common equity is owned, directly

 

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or indirectly, by such Term Loan Bank, (B) that owns, directly or indirectly, a majority of the common equity of such Term Loan Bank or (C) a majority of whose common equity is owned, directly or indirectly, by a Person that owns, directly or indirectly, a majority of the common equity of such Term Loan Bank and any Subsidiary of any Term Loan Bank a majority of whose common equity is owned directly or indirectly, by such Term Loan Bank, (iii) any commercial bank having total assets in excess of $5,000,000,000, (iv) any savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having a net worth in excess of $250,000,000 or (v) any other Person approved by the Agent, that shall, in the case of any such Agent, Term Loan Bank, Affiliate, Parent, Subsidiary or other financial institution or Person agree to issue letters of credit hereunder with the consent of the Agent (which consent will be deemed to have been given unless the Agent shall have notified the Borrower to the contrary within one day of the Agent’s receipt of notice that such Bank, Affiliate, Parent, Subsidiary or other financial institution or Person is to be a Third Party Fronting Bank).

 

“ Total Bank Exposure ” at any time means the sum of (i) the aggregate principal amount of the Loans outstanding at such time plus (ii) the aggregate amount of the Revolving Letter of Credit Liabilities at such time plus (iii) the aggregate amount of the Unused Revolving Credit Loan Commitments.

 

“ Total Exposure ” means at any time with respect to each Revolving Credit Loan Bank, its Revolving Credit Loan Commitment or, if the Revolving Credit Loan Commitments shall have terminated, its Total Outstandings.

 

“ Total Outstandings ” means at any time, as to any Revolving Credit Loan Bank, the sum of the aggregate outstanding principal amount of such Revolving Credit Loan Bank’s Loans and its participation in the Revolving Letter of Credit Liabilities and all unreimbursed Revolving L/C Drawings.

 

“ Total Term Loan Commitments ” means at any time in respect of a Term Loan Bank the sum of such Term Loan Bank’s Initial Term Loan Commitment at such time plus such Term Loan Bank’s Incremental Term Loan Commitment at such time.

 

“ Trust Preferred Securities ” means, at any date:

 

                (i)            any Existing Trust Preferred Securities, and

 

                (ii)           any other equity interests in a Special Purpose Financing Subsidiary of AES (such as those known as “TECONS”, “MIPS” or “RHINOS”): (I) that are not (A) required to be redeemed or redeemable at the option of the holder thereof prior to the fifth anniversary of the Termination Date or (B) convertible into or exchangeable for (unless solely at the option of AES) equity interests referred to in clause (A) above or Debt having a scheduled maturity, or requiring any repayments or prepayments of principal or any sinking fund or similar payments in respect of principal or providing for any such repayment, prepayment, sinking fund or other payment at the option of the holder thereof prior to the fifth anniversary of the Termination Date and (II) as to which,

 

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at such date, AES has the right to defer the payment of all dividends and other distributions in respect thereof for the period of at least 19 consecutive quarters beginning at such date.

 

“ Unfunded Liabilities ” means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

 

“ United States ” means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions.

 

“ Unrestricted Cash ” means all cash or cash equivalents of the Borrower and its Subsidiaries that would not appear as “restricted” on the consolidated balance sheet of the Borrower or any of its Subsidiaries; provided that Unrestricted Cash shall not include cash or cash equivalents of a Subsidiary that is not an Obligor to the extent such Subsidiary is not permitted (by law, contract or otherwise) from distributing such cash or cash equivalents to the Borrower.

 

“ Unused Revolving Credit Loan Commitments ” means, with respect to any Revolving Credit Loan Bank at any time, (i) such Bank’s Revolving Credit Loan Commitment at such time minus (ii) the sum of (A) the aggregate principal amount of all Revolving Credit Loans outstanding at such time and owed to such Revolving Credit Loan Bank plus (B) such Bank’s pro rata share of the Revolving Letter of Credit Liabilities and all unreimbursed Revolving L/C Drawings at such time.

 

“ Wholly-Owned Consolidated Subsidiary ” means any Consolidated Subsidiary all of the shares of Capital Stock or other ownership interests of which (except directors’ qualifying shares and shares owned by foreign nationals mandated by applicable law) are at the time directly or indirectly owned by AES.

 

Section 1.02  Accounting Terms and Determinations .

 

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower’s independent public accountants) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Banks (“ GAAP ”); provided that, if the Borrower notifies the Agent that the Borrower wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Agent notifies the Borrower that the Required Banks wish to amend Article 5 for such purpose), then

 

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the Borrower’s compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Banks.

 

Section 1.03  Types of Borrowing .

 

The term “ Borrowing ” denotes (a) the aggregation of Loans made (or deemed to have been made) or to be made to the Borrower by one or more Banks pursuant to Article 2 on the same day, all of which Loans are of the same type (subject to Article 8) and, except in the case of Base Rate Loans, have the same initial Interest Period or (b) if the context so requires, the borrowing of such Loans.  Borrowings are classified for purposes hereof by reference to the pricing of Loans comprising such Borrowing ( e.g. , a “ Euro-Dollar Borrowing ” is a Borrowing comprised of Euro-Dollar Loans).  It is understood and agreed that all Borrowings will be made in Dollars.

 

Section 1.04  Currency Equivalents Generally .

 

For purposes of this Agreement, the equivalent in any Alternative Currency of an amount in Dollars shall be determined at the rate of exchange quoted by the Agent in New York, at 11:00 A.M. (New York time) on the date of determination, to prime banks in New York for the spot purchase in the New York foreign exchange market of such amount of Dollars with such Alternative Currency.

 

ARTICLE II

THE CREDITS

 

Section 2.01  Commitment to Lend .

 

(a)   Revolving Credit Loan Facility .  (i)  Each Revolving Credit Loan Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans (each a “ Revolving Credit Loan ”) in Dollars to the Borrower pursuant to this Section 2.01(a) from time to time during the Revolving Credit Period in amounts such that the Total Outstandings of such Revolving Credit Loan Bank at any time shall not exceed the amount of its Revolving Credit Loan Commitment at such time.  Each Borrowing under this subsection (a) shall be in an aggregate principal amount of $5,000,000 or any larger multiple of $1,000,000 (except for Refunding Borrowings and that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(b)) and shall be made from the several Revolving Credit Loan Banks ratably in proportion to their respective Revolving Credit Loan Commitments.  Within the foregoing limits, the Borrower may borrow under this Section 2.01(a), repay, or, to the extent permitted by Section 2.10, prepay Revolving Credit Loans and reborrow at any time during the Revolving Credit Period.

 

(ii)           Any “Revolving Credit Loans” outstanding under the Existing Bank Credit Agreement on the Amendment and Restatement Effective Date shall be continued as Revolving Credit Loans hereunder.  As of the Amendment and Restatement Effective Date, the aggregate amount of outstanding Revolving Credit Loans is $263,257,731.61.

 

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(b)   Initial Term Loan Facility .  Subject to the terms and conditions set forth herein, on the Amendment and Restatement Effective Date any “Term Loan” outstanding under the Existing Bank Credit Agreement shall be continued as an Initial Term Loan hereunder.  As of the Amendment and Restatement Effective Date, the aggregate amount of outstanding Initial Term Loans is $200 million.

 

(c)   Term Loan Facilities .  The Term Loans are not revolving in nature, and amounts repaid or prepaid in respect thereof may not be reborrowed.

 

Section 2.02  Notice of Borrowing .

 

(a)   The Borrower shall give the Agent notice (a “ Notice of Borrowing ”) not later than 11:00 A.M. (New York City time) on (x) the date of each Base Rate Borrowing and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:

 

(i)            the date of such Borrowing, which shall be a Domestic Business Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing;

 

(ii)           the aggregate amount of such Borrowing;

 

(iii)          whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or the Adjusted London Interbank Offered Rate; and

 

(iv)          in the case of a Euro-Dollar Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of “Interest Period.”

 

(b)   Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank’s ratable share of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower.

 

(c)   Not later than 2:00 P.M. (New York City time) on the date of each Borrowing, each Bank shall (except as provided in subsection (d) of this Section 2.02) make available its ratable share of such Borrowing, in Federal or other funds immediately available in New York City, to the Agent at its address referred to in Section 10.01.  Unless the Agent determines that any applicable condition specified in Article 3 has not been satisfied, the Agent will make the funds so received from the Banks available to the Borrower requesting such Borrowing at the Agent’s aforesaid address.

 

(d)   If any Bank makes a new Loan hereunder to the Borrower on a day on which the Borrower is to repay all or any part of an outstanding Loan from such Bank, such Bank shall apply the proceeds of its new Loan to make such repayment and only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by such Bank to the Agent as provided in subsection (c) of this Section 2.02, or remitted by the Borrower to the Agent as provided in Section 2.11, as the case may be.

 

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(e)    Unless the Agent shall have received notice from a Bank prior to the date of any Borrowing that such Bank will not make available to the Agent such Bank’s share of such Borrowing, the Agent may assume that such Bank has made such share available to the Agent on the date of such Borrowing in accordance with subsections (c) and (d) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent that such Bank shall not have so made such share available to the Agent, such Bank and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.06 and (ii) in the case of such Bank, the Federal Funds Rate.  If such Bank shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Bank’s Loan included in such Borrowing for purposes of this Agreement.

 

Section 2.03  Revolving Letters of Credit .

 

(a)    Issuance of Letters of Credit .  Subject to the terms and conditions hereof, each Revolving Fronting Bank agrees to issue letters of credit under this Section 2.03(a) upon the Borrower’s request and for the Borrower account or the account of any of the Borrower’s Subsidiaries, from time to time during the Revolving Credit Period; provided , however , that in no event shall (i) the aggregate Available Amount for all Revolving Letters of Credit exceed the Revolving Credit Loan Facility at such time and (ii) a Revolving Letter of Credit be issued with an Available Amount in excess of the Unused Revolving Credit Commitments of the Revolving Credit Loan Banks at such time.  In addition, and notwithstanding any reference in any Existing Letter of Credit to the Former Bank Credit Agreement, on and as of the Effective Date, (x) each Existing Letter of Credit shall be deemed to be a Revolving Letter of Credit and to have been issued on the Effective Date (by the Revolving Fronting Bank that issued or was deemed to have issued such Existing Letter of Credit under the Former Bank Credit Agreement) pursuant to this Section 2.03(a), (y) participations in such Existing Letters of Credit held by the Revolving Credit Loan Banks under the Former Bank Credit Agreement shall be deemed to be cancelled and (z) the Revolving Credit Loan Banks under this Agreement shall be deemed to hold participations in such Existing Letters of Credit in the amount required so that the participations of such Revolving Credit Loan Banks shall be in proportion to their respective Revolving Credit Loan Commitments; provided , however , that nothing in this Section 2.03(a) shall extend, modify or otherwise affect the existing expiry date under any such Existing Letter of Credit.  Notwithstanding the foregoing, (x) each Revolving Credit Loan Bank that is a Revolving Fronting Bank, in its separate capacity as a Revolving Fronting Bank, shall only be obligated to issue at any time Revolving Letters of Credit having an aggregate face amount at any time that is equal to the unused Revolving Credit Loan Commitment of such Revolving Credit Loan Bank at such time and (y) each other Revolving Fronting Bank shall only be obligated to issue Revolving Letters of Credit having an aggregate face amount at any time that is equal to such Revolving Fronting Bank’s commitment at such time as set forth in the relevant Revolving Fronting Bank Agreement.  Any “Revolving Letters of Credit” outstanding under the Existing Bank Credit Agreement on the Amendment and Restatement Effective Date shall remain outstanding as Revolving Letters of Credit hereunder.

 

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(b)    Participations in Letters of Credit .  Upon the issuance (or deemed issuance) of each Revolving Letter of Credit by a Revolving Fronting Bank pursuant to Section 2.03(a), such Revolving Fronting Bank shall be deemed, without further action by any party hereto, to have sold to each Revolving Credit Loan Bank (other than such Revolving Fronting Bank in the case of Revolving Letters of Credit not issued by a Third Party Fronting Bank) and each such Revolving Credit Loan Bank shall be deemed, without further action by any party hereto, to have purchased from such Revolving Fronting Bank a participation in such Revolving Letter of Credit and the related Revolving Letter of Credit Liabilities in the amount required so that the participations of the Revolving Credit Loan Banks (including such Revolving Fronting Bank’s retained participation in the case of Revolving Letters of Credit not issued by a Third Party Fronting Bank) therein shall be in proportion to their respective Revolving Credit Loan Commitments.

 

(c)    Required Terms .  Each Revolving Letter of Credit issued hereunder shall:

 

(i)             by its terms expire no later than five Domestic Business Days prior to the Termination Date for the Revolving Credit Loan Facility; except that a Revolving Fronting Bank, at it sole discretion and without recourse to the Agent or any other Bank Party, may issue a Revolving Letter of Credit which expires after the Termination Date for the Revolving Credit Loan Facility, provided that five Domestic Business Days prior to the Termination Date for the Revolving Credit Loan Facility, the Borrower shall pay to such issuing Revolving Fronting Bank an amount in immediately available funds equal to the Available Amount of such Revolving Letter of Credit, to be held by such issuing Revolving Fronting Bank as cash collateral;

 

(ii)            be in a face amount of (x) not less than $300,000 (or the equivalent thereof in an Alternative Currency); provided that up to five Revolving Letters of Credit may be issued with stated amounts less than $300,000 (or the equivalent thereof in an Alternative Currency) and (y) not more than the amount that would, after giving effect to the issuance thereof (and the related purchase and sale of participations therein pursuant to Section 2.03(b)) cause the Total Outstandings of any Revolving Credit Loan Bank to equal its Revolving Credit Loan Commitment; and

 

(iii)           be in a form acceptable to the relevant Revolving Fronting Bank.

 

(d)    Notice of Issuance .  Except in the case of Existing Letters of Credit, the Borrower may request that a Revolving Letter of Credit be issued by giving the Agent and the Revolving Fronting Banks for such Revolving Letter of Credit a notice (a “ Notice of Issuance ”) at least two Domestic Business Days before such Revolving Letter of Credit is to be issued (or such shorter period of time as shall be acceptable to the Agent and the relevant Revolving Fronting Banks), specifying:

 

(i)             the date of issuance of such Revolving Letter of Credit;

 

(ii)            the expiry date of such Revolving Letter of Credit (which shall comply with the requirements of Section 2.03(c)(i));

 

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(iii)           the proposed terms of such Revolving Letter of Credit (or the proposed form thereof shall be attached to such Notice of Issuance), including the face amount thereof (which shall comply with the requirements of Section 2.03(c)(ii));

 

(iv)           the transaction that is to be supported or financed with such Revolving Letter of Credit, including identification of the Power Supply Business or other AES Business, if any, to which such transaction relates and the name of the proposed account party for such Revolving Letter of Credit (which may be the Borrower and any subsidiary of the Borrower); and

 

(v)            the identity of the Revolving Fronting Banks for such Revolving Letter of Credit, which shall comply with the definition of “Revolving Fronting Bank” hereunder.

 

Upon the receipt of a Notice of Issuance, the Agent shall promptly notify each Revolving Credit Loan Bank of the contents thereof and of the amount of such Revolving Credit Loan Bank’s participation in such Revolving Letter of Credit and such Notice of Issuance shall not thereafter be revocable by the Borrower.

 

(e)    Revolving L/C Drawings under Revolving Letters of Credit .

 

(i)             Upon receipt from the beneficiary of any Revolving Letter of Credit of demand for payment under such Revolving Letter of Credit, the relevant Revolving Fronting Bank shall determine in accordance with the terms of such Revolving Letter of Credit whether such request for payment should be honored.

 

(ii)            If the relevant Revolving Fronting Bank determines that a demand for payment by the beneficiary of a Revolving Letter of Credit should be honored, such Revolving Fronting Bank shall make available to the beneficiary in accordance with the terms of such Revolving Letter of Credit the amount of the Revolving L/C Drawing under such Revolving Letter of Credit.  Such Revolving Fronting Bank shall thereupon promptly notify the Borrower and the Agent of the amount of such Revolving L/C Drawing paid by it.  Upon receipt by the Agent of such notice from the relevant Revolving Fronting Bank, the Agent shall promptly notify each Revolving Credit Loan Bank of the amount of each such Revolving Credit Loan Bank’s participation therein (which, in the case of any Revolving L/C Drawing under an Alternative Currency Letter of Credit shall be the Dollar Equivalent thereof).

 

(f)     Reimbursement and Other Payments by the Borrower .

 

(i)             If any amount is drawn under any Revolving Letter of Credit issued at the request of or for the account of the Borrower or any Subsidiary of the Borrower, the Borrower irrevocably and unconditionally agrees to reimburse the applicable Revolving Fronting Bank in Dollars for all amounts paid by such Revolving Fronting Bank upon such Revolving L/C Drawing (which, in the case of any Revolving L/C Drawing under an Alternative Currency Letter of Credit shall be the Dollar Equivalent thereof), together with any and all reasonable charges and expenses which any Revolving Credit Loan Bank or Revolving Fronting Bank may pay or incur relative to such Revolving L/C Drawing and all such amounts due from the Borrower shall bear interest, payable on the date upon which such amounts shall be due and payable, on the amount drawn for each day from and including the date such amount is drawn to

 

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but excluding the date such reimbursement payment is due and payable at a rate per annum equal to the rate applicable to Base Rate Loans for such day.  If a Revolving Fronting Bank makes any payment under a Revolving Letter of Credit, the Borrower shall reimburse such Revolving Fronting Bank by paying such amount to the relevant Revolving Fronting Bank not later than 12:00 noon (New York City time) on the day that such payment is made, if the Borrower receives notice of such payment before 10:00 A.M. (New York City time) on such day, or if such notice has not been received by the Borrower before such time on such day, then not later than 12:00 noon (New York City time) on (i) the Domestic Business Day that the Borrower receives such notice, if such notice is received before 10:00 A.M. (New York City time) on the day of receipt, or (ii) the next Domestic Business Day, if such notice is not received before such time on the day of receipt; provided that if such payment is at least $1,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.02, that such payment be made with the proceeds of a Base Rate Borrowing (which shall consist of Revolving Credit Loans) in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Base Rate Borrowing (which shall consist of Revolving Credit Loans).  Any overdue reimbursement payment, or overdue interest thereon, shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of the rate applicable to Base Rate Loans for such day plus 2%.

 

(ii)            Each payment to be made by the Borrower pursuant to this Section 2.03(f) shall be made, in Federal or other funds immediately available, to the applicable Revolving Fronting Bank at its address referred to in Section 10.01.

 

(iii)           The obligations of the Borrower to reimburse any Revolving Fronting Bank under this Section 2.03(f) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including without limitation the following circumstances:

 

(A)   any lack of validity or enforceability of any Financing Document;

 

(B)    any amendment or waiver of or any consent to departure from any Financing Document (except, in the case of an effective amendment to, waiver of or consent to a departure from any provision of this Agreement, to the extent specified herein);

 

(C)    the existence of any claim, set-off, defense or other right which the Borrower may have at any time against the beneficiary of any Revolving Letter of Credit (or any Person or entity for whom such beneficiary may be acting), the Agent, any Revolving Fronting Bank or any Revolving Credit Loan Bank or any other Person or entity, whether in connection with this Agreement, any other Financing Document or any unrelated transaction;

 

(D)   any statement or any other document presented under any Revolving Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever;

 

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(E)    payment by a Revolving Fronting Bank under any Revolving Letter of Credit against presentation of a draft or document which does not comply with the terms of such Revolving Letter of Credit; or

 

(F)    to the extent permitted under applicable law, any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

 

(g)    Payments by Revolving Credit Loan Banks with Respect to Revolving Letters of Credit .

 

(i)             Each Revolving Credit Loan Bank shall make available an amount equal to its ratable share of any Revolving L/C Drawing under a Revolving Letter of Credit, in Federal or other funds immediately available in New York City, to the applicable Revolving Fronting Bank by 3:00 P.M. (New York City time) on the date on which the Borrower is required to reimburse such Revolving Fronting Bank with respect to such Revolving L/C Drawing pursuant to Section 2.03(f)(i), together with interest on such amount for the period from and including the date of such Revolving L/C Drawing to but excluding the date upon which such amount is to be made available at the Federal Funds Rate on the date of such Revolving L/C Drawing, at such Revolving Fronting Bank’s address referred to in Section 10.01; provided that each Revolving Credit Loan Bank’s obligation shall be reduced by its pro rata share of any reimbursement theretofore paid by the Borrower in respect of such Revolving L/C Drawing pursuant to Section 2.03(f)(i).  The applicable Revolving Fronting Bank shall notify each Revolving Credit Loan Bank of the amount of such Revolving Credit Loan Bank’s obligation (which, in the case of any payment under an Alternative Currency Letter of Credit, shall be the Dollar Equivalent thereof) in respect of any Revolving L/C Drawing under a Revolving Letter of Credit not later than 1:30 P.M. (New York City time) on the day such payment by such Revolving Credit Loan Bank is due.  Each Revolving Credit Loan Bank shall be subrogated to the rights of the applicable Revolving Fronting Bank against the Borrower to the extent such payment due from such Revolving Credit Loan Bank to such Revolving Fronting Bank is paid, plus interest thereon, from and including the day such amount is due from such Revolving Credit Loan Bank to such Revolving Fronting Bank to but excluding the day the Borrower makes payment to such Revolving Fronting Bank pursuant to Section 2.03(f)(i), whether before or after judgment, at a rate per annum equal to the sum of 2% plus the rate applicable to Base Rate Loans for such day.  In the event that, on the date of any Revolving L/C Drawing, (x) Total Outstandings exceeds the Maximum Outstanding Exposure, (y) the applicable Revolving Fronting Bank is not reimbursed by the Borrower on such date for the entire amount of such Revolving L/C Drawing, and (z) the Revolving Credit Loan Banks, pursuant to the last sentence of subsection (iv) below, are not obligated to reimburse such Revolving Fronting Bank for the entire amount of such Revolving L/C Drawing, the Agent shall, solely for purposes of determining the portion of such Revolving L/C Drawing to be reimbursed by each Revolving Credit Loan Bank, (A) allocate the respective Revolving Credit Loan Commitments of the Revolving Credit Loan Banks to the Revolving Letter of Credit Liabilities of each Revolving Letter of Credit on such date on a pro rata basis (based upon (1) the proportion of the Revolving Credit Loan Commitments to the aggregate amount of the Revolving Letter of Credit Liabilities of all outstanding Revolving Letters of Credit and (2) each Revolving Credit Loan Bank’s pro rata share of the Revolving Credit Loan Commitments), (B) based on such allocation, determine the reimbursement obligation of each Revolving Credit Loan Bank with respect to such Revolving L/C Drawing and (C) promptly

 

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notify each Revolving Credit Loan Bank of the amount of its reimbursement obligation with respect to such Revolving L/C Drawing.

 

(ii)            If any Revolving Credit Loan Bank fails to pay any amount required pursuant to subsection (i) of this Section 2.03(g) on the date on which such payment is due, interest, payable on demand, shall accrue on such Revolving Credit Loan Bank’s obligation to make such payment, for each day from and including the date such payment becomes due to but excluding the date such Revolving Credit Loan Bank makes such payment at a rate per annum equal to the Federal Funds Rate.  Any payment made by any Revolving Credit Loan Bank after 3:00 P.M. (New York City time) on any Domestic Business Day shall be deemed for purposes of the preceding sentence to have been made on the next succeeding Domestic Business Day.

 

(iii)           If the Borrower shall reimburse a Revolving Fronting Bank for any Revolving L/C Drawing under a Revolving Letter of Credit after the Revolving Credit Loan Banks shall have made funds available to such Revolving Fronting Bank with respect to such Revolving L/C Drawing in accordance with subsection (i) of this Section 2.03(g), such Revolving Fronting Bank shall promptly upon receipt of such reimbursement distribute to each Revolving Credit Loan Bank its pro rata share thereof, including interest, to the extent received by such Revolving Fronting Bank.

 

(iv)           The several obligations of the Revolving Credit Loan Banks to the Revolving Fronting Banks hereunder shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be affected by any circumstance, including, without limitation, (1) any set-off, counterclaim, recoupment, defense or other right which any such Revolving Credit Loan Bank or any other Person may have against the Agent, any Revolving Fronting Bank or any other Person for any reason whatsoever; (2) the occurrence or continuance of a Default or an Event of Default or the termination of the Revolving Credit Loan or any Revolving Letter of Credit; (3) any adverse change in the condition (financial or otherwise) of any Obligor or any other Person; (4) any breach of any Financing Document by any party thereto; (5) the fact that any condition precedent to the issuance of, or the making of any payment under, any Revolving Letter of Credit was not in fact met; (6) any violation or asserted violation of law by any Revolving Credit Loan Bank or any affiliate thereof; or (7) to the extent permitted under applicable law, any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.  Each payment by each Revolving Credit Loan Bank to a Revolving Fronting Bank for its own account shall be made without any offset, abatement, withholding or reduction whatsoever.  If a Revolving Fronting Bank is required at any time (whether before or after the Termination Date) to return to the Borrower or to a trustee, receiver, liquidator, custodian or other similar official any portion of the payments made by the Borrower to such Revolving Fronting Bank in payment of any Reimbursement Obligation or interest thereon upon the insolvency of the Borrower, or the commencement of any case or proceeding under any bankruptcy, insolvency or other similar law with respect to the Borrower, each Revolving Credit Loan Bank shall, on demand of such Revolving Fronting Bank, forthwith return to such Revolving Fronting Bank any amounts transferred to such Revolving Credit Loan Bank by such Revolving Fronting Bank in respect thereof pursuant to this subsection plus such Revolving Credit Loan Bank’s pro rata share of any interest on such payments required to be paid to the Person recovering such payments plus interest on the amount so demanded from the day such demand is made, if such demand is made by 2:00 P.M. (New

 

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York City time), or from the next following Domestic Business Day, if such demand is made after 2:00 P.M. (New York City time), to but not including the day such amounts are returned by such Revolving Credit Loan Bank to such Revolving Fronting Bank at a rate per annum for each day equal to (A) the Federal Funds Rate for the day of such demand and (B) the Base Rate plus 1% for each day thereafter.  Notwithstanding the foregoing or any other provision contained herein, in no event shall any Revolving Credit Loan Bank be obligated to make any payment to a Revolving Fronting Bank to the extent that such payment would cause such Bank’s pro rata share of the Total Outstandings hereunder to exceed such Bank’s Revolving Credit Loan Commitment; provided that the foregoing shall not affect the obligation of the Borrower (which is absolute, unconditional and irrevocable) to reimburse each Revolving Fronting Bank for the entire amount of each payment made by such Revolving Fronting Bank under a Revolving Letter of Credit, including any amount thereof that is not paid by any Revolving Credit Loan Bank to such Revolving Fronting Bank (pursuant to this sentence or otherwise).

 

(h)    Revolving Letter of Credit Commission; Issuance Fee .

 

(i)             Revolving Letter of Credit Commission .  The Borrower agrees to pay to the Agent a letter of credit commission with respect to each Revolving Letter of Credit issued at its request or for its account, computed for each day from and including the date of issuance of such Revolving Letter of Credit through and including the last day a Revolving L/C Drawing is available under such Revolving Letter of Credit (the “ Revolving Letter of Credit Termination Date ”), at the Revolving Letter of Credit Commission Rate on the aggregate amount available for drawing under such Revolving Letter of Credit from time to time (whether or not any conditions to drawing can then be met), such fee to be for the account of the Revolving Credit Loan Banks ratably in proportion to their Total Exposures.  Such fee shall be payable quarterly in arrears (A) on the last Domestic Business Day of each January, April, July and October occurring on or before October 31, 2005, (B) on each March 31, June 30, September 30 and December 31 commencing with December 31, 2005 and (C) upon the Termination Date.

 

(ii)            Issuance Fee .  The Borrower shall pay to each Revolving Fronting Bank for its own account such fees with respect to each Revolving Letter of Credit issued by such Revolving Fronting Bank for the account of the Borrower as shall have been agreed between the Borrower and such Revolving Fronting Bank.

 

(iii)           Limited Liability of the Revolving Fronting Bank .  As between a Revolving Fronting Bank, on the one hand, and the Borrower, on the other, the Borrower assumes all risks of any acts or omissions of the beneficiary and any transferee of any Revolving Letter of Credit with respect to its use of such Revolving Letter of Credit.  Neither a Revolving Fronting Bank nor any of its respective employees, officers or directors shall be liable or responsible for:  (1) the use which may be made of any Revolving Letter of Credit or for any acts or omissions of any beneficiary or transferee in connection therewith; (2) the validity, sufficiency or genuineness of documents, or of any endorsement(s) thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (3) payment by the Revolving Fronting Bank against presentation of documents which do not comply with the terms of any Revolving Letter of Credit, including failure of any documents to bear any reference or adequate reference to such Revolving Letter of Credit; or (4) any other circumstance whatsoever in making or failing to make payment under any Revolving Letter of Credit;

 

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provided that the Borrower shall have a claim against the applicable Revolving Fronting Bank, and such Revolving Fronting Bank shall be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or special, damages suffered by the Borrower which are found in a final, unappealable judgment of a court of competent jurisdiction to have been caused by (x) such Revolving Fronting Bank’s willful misconduct or gross negligence in determining whether documents presented under any Revolving Letter of Credit comply with the terms thereof or (y) such Revolving Fronting Bank’s willful failure to pay, or gross negligence resulting in a failure to pay, any Revolving L/C Drawing after the presentation to it by the beneficiary (or any transferee of the Revolving Letter of Credit) of a draft and other required documentation strictly complying with the terms and conditions of the Revolving Letter of Credit.  In furtherance and not in limitation of the foregoing, a Revolving Fronting Bank may accept documents that appear on their face to be in order, without responsibility for further investigation.

 

(iv)           Revolving Fronting Banks and Affiliates .  Each Revolving Fronting Bank shall have the same rights and powers under the Financing Documents as any other Bank and may exercise or refrain from exercising the same as though they were not Revolving Fronting Banks (in each case to the extent such Revolving Fronting Bank is also a Bank), and the Revolving Fronting Banks and their respective affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if they were not Revolving Fronting Banks hereunder.

 

(i)     Applicability of ISP98 .  Unless otherwise expressly agreed by the Revolving Fronting Bank and the Borrower when a Revolving Letter of Credit is issued (or deemed issued), the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law and Practice (or such later version thereof as may be in effect at the time issuance) shall apply to the Revolving Letter of Credit.

 

Section 2.04  Evidence of Debt .

 

(a)    Each Bank Party shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Bank Party resulting from each Loan owing to such Bank Party from time to time, including the amounts of principal and interest payable and paid to such Bank Party from time to time hereunder.  The Borrower agrees that upon notice by any Bank Party to the Borrower (with a copy of such notice to the Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Bank Party to evidence (whether for purposes of pledge, enforcement or otherwise) the Loans owing to, or to be made by, such Bank Party, the Borrower shall promptly execute and deliver to such Bank Party, with a copy to the Agent, a Revolving Credit Loan Note or a Term Loan Note, as applicable, in substantially the form of Exhibits A-1 and A-2 hereto, respectively, payable to the order of such Bank Party in a principal amount equal to the Loans owing to, or to be made by, such Bank Party.  All references to Notes in the Financing Documents shall mean Notes, if any, issued hereunder.

 

(b)    The Register maintained by the Agent pursuant to Section 10.06(f) shall include a control account, and a subsidiary account for each Bank Party, in which accounts

 

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(taken together) shall be recorded (i) the date and amount of each Loan made hereunder (or deemed to be made hereunder), whether such Loan bears interest at the Base Rate or the Adjusted London Interbank Offered Rate, and, if appropriate, the Interest Period applicable thereto; (ii) the terms of each Assignment and Assumption delivered to and accepted by it; (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Bank Party hereunder; and (iv) the amount of any sums received by the Agent from the Borrower hereunder and each Bank Party’s share thereof.

 

(c)    Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Bank Party in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Bank Party and, in the case of such account or accounts, such Bank Party, under this Agreement, absent manifest error; provided , however , that the failure of the Agent or such Bank Party to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts, shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

 

Section 2.05  Maturity of Loans .

 

(a) Each Revolving Credit Loan shall mature, and the principal amount thereof shall be due and payable (together with interest accrued thereon), on the Termination Date in respect of the Revolving Credit Loan Facility, (b) each Initial Term Loan shall mature, and the principal amount thereof shall be due and payable (together with interest accrued thereon), on the Initial Term Loan Termination Date and (c) each Incremental Term Loan shall mature, and the principal amount thereof shall be due and payable (together with interest accrued thereon) on the Incremental Term Loan Termination Date in respect of such Incremental Term Loan Facility.

 

Section 2.06  Interest Rates .

 

(a)    Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate Margin applicable to such Loan plus the Base Rate for such day.  Such interest shall be payable quarterly in arrears on each Quarterly Payment Date.

 

(b)    Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin applicable to such Loan for such day plus the Adjusted London Interbank Offered Rate applicable to such Interest Period.  Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof.

 

(c)    Upon the occurrence and during the continuance of an Event of Default described in Section 6.01(a) or an Event of Default described in Section 6.01(g) or 6.01(h) with respect to the Borrower, the Borrower shall pay interest on (x) (i) the outstanding principal amount of each Base Rate Loan owing to each Bank Party, payable on demand, at a

 

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rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Base Rate Loan pursuant to Section 2.06(a) above and (ii) to the fullest extent permitted by law, the amount of any interest that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, at a rate per annum equal to 2% per annum above the rate per annum required to be paid on the Base Rate Loans on which such interest has accrued pursuant to Section 2.06(a) above and (y)(i) the outstanding principal amount of each Euro-Dollar Loan owing to each Bank Party payable on demand, at a rate per annum equal at all times to a rate per annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin applicable to such Loan plus the Adjusted London Interbank Offered Rate applicable to such Euro-Dollar Loan and (ii) the sum of 2% plus the Euro-Dollar Margin applicable to such Loan plus the quotient obtained (rounded upward, if necessary, to the next higher 1/100 ^th of 1%) by dividing (x) the average (rounded upward, if necessary, to the next higher 1/16 ^th of 1%) of the respective rates per annum at which one day (or, if such amount due remains unpaid more than three Euro-Dollar Business Days, then for such other period of time not longer than three months as the Agent may select) deposits in dollars in an amount approximately equal to such overdue payment due to each of the Reference Banks are offered to such Reference Bank in the London interbank market for the applicable period determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 2% plus the relevant rate applicable to Base Rate Loans) (the “ Euro-Dollar Default Rate ”) and (ii) to the fullest extent permitted by law, the amount of any interest that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, at a rate per annum equal to the Euro-Dollar Default Rate for the Euro-Dollar Loans on which such interest has accrued pursuant to Section 2.06(b) above.

 

(d)    The Agent shall determine each interest rate applicable to the Loans and Reimbursement Obligations hereunder.  The Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error.

 

(e)    Each Reference Bank agrees to use its best efforts to furnish quotations to the Agent as contemplated by this Section.  If any Reference Bank does not furnish a timely quotation, the Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by the remaining Reference Bank or Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply.

 

(f)     The yield to maturity with respect to any First Priority Secured Debt issued after the Effective Date and consisting of a term loan facility or similar bank credit facility (taking into account upfront fees paid to the lenders under such new First Priority Secured Debt) may be no more than 0.25% per annum greater than the yield to maturity with respect to the Initial Term Loans on the Closing Date (and the Borrower agrees that the pricing of the Initial Term Loans (if any) will be increased and or additional fees will be paid to the Banks (if any) to the extent necessary to satisfy such requirement).

 

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Section 2.07  Method of Electing Interest Rates .

 

(a)    The Loans included in each Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Borrowing.  Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject to Section 2.07(d) and the provisions of Article 8), as follows:

 

(i)             if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;

 

(ii)            if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans as of any Domestic Business Day or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, subject to Section 2.13 if any such conversion is effective on any day other than the last day of an Interest Period applicable to such Loans.

 

Each such election shall be made by delivering a notice (a “ Notice of Interest Rate Election ”) to the Agent not later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective (unless the relevant Loans are to be converted from Euro-Dollar Loans to Base Rate Loans, in which case such notice shall be delivered to the Agent not later than 11:00 A.M. (New York City time) on the date such conversion is to be effective).  A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans; provided that (i) such portion is allocated ratably among the Loans comprising such Group of Loans and (ii) the portion to which such Notice applies, and the remaining portion to which it does not apply, are each at least $5,000,000 (unless such portion is comprised of Base Rate Loans).  If no such notice is timely received before the end of an Interest Period for any Group of Loans consisting of all Euro-Dollar Loans, the Borrower shall be deemed to have elected that such Group of Loans be converted to Base Rate Loans at the end of such Interest Period.

 

(b)    Each Notice of Interest Rate Election shall specify:

 

(i)             the Group of Loans (or portion thereof) to which such notice applies;

 

(ii)            the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of Section 2.07(a) above;

 

(iii)           if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans resulting from such conversion are to be Euro-Dollar Loans, the duration of the next succeeding Interest Period applicable thereto; and

 

(iv)           if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period.

 

Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of Interest Period.

 

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(c)    Promptly after receiving a Notice of Interest Rate Election from the Borrower pursuant to Section 2.07(a) above, the Agent shall notify each Bank of the contents thereof and such notice shall not thereafter be revocable by the Borrower.

 

(d)    The Borrower shall not be entitled to elect to convert any Loans to, or continue any Loans for an additional Interest Period as, Euro-Dollar Loans if (i) the aggregate principal amount of any Group of Loans consisting of all Euro-Dollar Loans created or continued as a result of such election would be less than $5,000,000 or (ii) a Default shall have occurred and be continuing when the Borrower delivers notice of such election to the Agent.

 

(e)    If any Loan is converted to a different type of Loan, the Borrower shall pay, on the date of such conversion, the interest accrued to such date on the principal amount being converted.

 

Section 2.08  Commitment Fee .

 

The Borrower shall pay to the Agent, for the account of the Revolving Credit Loan Banks, ratably in proportion to their Revolving Credit Loan Commitments, a commitment fee of ½ of 1% per annum on the daily amount by which the aggregate amount of the Revolving Credit Loan Commitments exceeds the aggregate Total Outstandings.  Such commitment fee shall accrue from and including the Effective Date to but excluding the Termination Date (or earlier date of termination of the Revolving Credit Loan Commitments in their entirety).  Accrued commitment fees under this Section 2.08 shall be payable quarterly in arrears on each March 31, June 30, September 30 and December 31 and upon the date of termination of the Revolving Credit Commitments in their entirety.

 

Section 2.09  Termination or Reduction of Revolving Credit Loan Commitments .

 

(a)    Optional .  The Borrower may, upon at least three Domestic Business Days’ notice to the Agent, (i) terminate the Revolving Credit Loan Commitments in their entirety at any time, if no Revolving Credit Loans or Revolving Letters of Credit are outstanding at such time or (ii) ratably reduce from time to time by an aggregate amount of $5,000,000 or any larger multiple thereof, the aggregate amount of the Revolving Credit Loan Commitments in excess of the aggregate Total Outstandings.

 

(b)    Mandatory .  (i)  Scheduled Termination .  The Revolving Credit Loan Commitments shall terminate on the Termination Date, and any Revolving Credit Loans and Reimbursement Obligations then outstanding (together with accrued interest thereon) shall be due and payable on such date.

 

(ii)            Net Cash Proceeds of Asset Sales .

 

(x)             Other than in the case of an Asset Sale involving the sale of assets or Equity Interests of, or other Investments in, IPALCO or any of its Subsidiaries (an “ IPALCO Asset Sale ”), on and after the date on which all of the Term Loan Facilities have been paid in full, in the event that the Borrower shall at any time, or from time to time, receive any Net Cash

 

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Proceeds from Asset Sales, the Revolving Credit Loan Commitments of the Revolving Credit Loan Banks shall, unless the Required Banks otherwise agree, be ratably reduced by such amounts and at such times as may be required to avoid any requirement that all or any portion of such Net Cash Proceeds be applied to repay, prepay, repurchase or defease any Debt of the Borrower that is subordinated in right of payment to the Debt of the Borrower under the Financing Documents.

 

(y)            In the case of an IPALCO Asset Sale, following the application of the Net Cash Proceeds thereof to repay Term Loans in accordance with Section 2.10(b)(i) or if the Term Loan Facilities have been paid in full, the Revolving Credit Loan Commitments of the Revolving Credit Loan Banks shall, (A) unless the Supermajority Banks otherwise agree or the Minimum Ratings Condition is met at such time (after giving effect to such IPALCO Asset Sale), be ratably reduced by an amount equal to the Banks’ Ratable Share of such remaining Net Cash Proceeds (concurrently with the prepayment of outstanding Revolving Credit Loans in accordance with Section 2.10(b)(i)) and (B) after giving effect to any reduction in clause (A), unless the Required Banks otherwise agree, be ratably reduced by such amounts and at such times as may be required to avoid any requirement that all or any portion of such Net Cash Proceeds be applied to repay, prepay, repurchase or defease any Debt of the Borrower that is subordinated in right of payment to the Debt of the Borrower under the Financing Documents.

 

(c)    Reductions Permanent .  All reductions of the Revolving Credit Loan Commitments pursuant to this Section 2.09 shall be permanent.

 

Section 2.10  Prepayment of the Loans .

 

(a)            Optional .  (i)  Subject in the case of any Euro-Dollar Loans to Section 2.12, the Borrower may, upon at least one Domestic Business Day’s notice to the Agent, prepay any Loans that bear interest at the Base Rate or upon at least three Euro-Dollar Business Days’ notice to the Agent, prepay any Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $5,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with (x) accrued interest thereon to the date of prepayment and (y) in the case of prepayments of Initial Term Loans prior to July 29, 2004, a premium equal to 1.00% of the aggregate principal amount so prepaid.

 

(ii)            Upon receipt of a notice of prepayment pursuant to this Section 2.10, the Agent shall promptly notify each Bank of the contents thereof and of such Bank’s ratable share of such prepayment and such notice shall not thereafter be revocable by the Borrower.

 

(b)    Mandatory .  (i)  The Borrower shall, on the third Business Day following the receipt by the Borrower after the Effective Date of (A) Net Cash Proceeds from any Asset Sales or (B) Net Cash Proceeds from the incurrence of any Bridge Debt, offer to prepay, on a pro rata basis, an aggregate principal amount of the Term Loans in an amount equal to the Banks’ Ratable Share of such Net Cash Proceeds and the Term Loan Banks shall have the option to accept or refuse such prepayment in accordance with the provisions set forth in Section 2.10(c).  Upon the payment in full of the Term Loans, the Borrower shall apply such Net Cash Proceeds to prepay the Revolving Credit Loans outstanding at such time (without

 

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any reduction of Revolving Credit Loan Commitments, except as set forth in Section 2.09(b)(ii)).

 

(ii)            The Borrower shall, on the third Business Day following the date of receipt of Net Cash Proceeds from the issuance of Debt by any Subsidiary of the Borrower permitted pursuant to Section 5.07(b)(ii) (but only to the extent applicable pursuant to the proviso thereof) and Section 5.07(b)(vi) (but only to the extent the Debt was incurred by IPALCO or a Subsidiary Guarantor), offer to prepay an aggregate principal amount of the Term Loans in an aggregate amount equal to the Banks’ Ratable Share of such Net Cash Proceeds (other than $200,000,000 of additional Debt of IPALCO and the Subsidiary Guarantors incurred after the Effective Date).  The Term Loan Banks shall have the option to accept or refuse any prepayment pursuant to this Section 2.10(b)(ii) in accordance with the provisions set forth in Section 2.10(c).  So long as Net Cash Proceeds referred to in this Section 2.10(b)(ii) are received by the Borrower, the Borrower agrees to use all reasonable efforts to cause all such Net Cash Proceeds permitted to be distributed to be so distributed.  Upon the payment in full of the Term Loans, the Borrowe