==================================
THE AES CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
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SECOND SUPPLEMENTAL INDENTURE
Dated as of October 29, 1997
TO
JUNIOR SUBORDINATED INDENTURE
Dated as of March 1, 1997
---------------------------
5.50% Junior Subordinated Debentures
Due 2012
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1
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GENERAL TERMS AND CONDITIONS OF THE SERIES 5.50% DEBENTURES
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SECTION 1.01. .................................................................................3
SECTION 1.02. .................................................................................3
SECTION 1.03. .................................................................................4
SECTION 1.04. .................................................................................6
ARTICLE 2
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OPTIONAL REDEMPTION OF THE SERIES 5.50% DEBENTURES
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SECTION 2.01. ................................................................................11
SECTION 2.02. ................................................................................13
SECTION 2.03. ................................................................................14
ARTICLE 3
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EXTENSION OF INTEREST PAYMENT PERIOD
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SECTION 3.01. ................................................................................14
SECTION 3.02. ................................................................................15
SECTION 3.03. ................................................................................16
ARTICLE 4
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COVENANTS APPLICABLE TO SERIES 5.50% DEBENTURES
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SECTION 4.01. ................................................................................16
SECTION 4.02. ................................................................................16
SECTION 4.03. ................................................................................16
SECTION 4.04. ................................................................................16
ARTICLE 5
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CONVERSION OF DEBENTURES
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SECTION 5.01. ................................................................................17
SECTION 5.02. ................................................................................17
SECTION 5.03. ................................................................................19
SECTION 5.04. ................................................................................28
SECTION 5.05. ................................................................................32
PAGE
SECTION 5.06. ................................................................................33
SECTION 5.07. ................................................................................34
SECTION 5.08. ................................................................................34
ARTICLE 6
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FORM OF SERIES 5.50% DEBENTURES
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SECTION 6.01. ................................................................................35
ARTICLE 7
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ORIGINAL ISSUE OF SERIES 5.50% DEBENTURES
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SECTION 7.01. ................................................................................54
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.01. ................................................................................54
SECTION 8.02. ................................................................................54
SECTION 8.03. ................................................................................54
SECTION 8.04. ................................................................................55
ii
The Second Supplemental INDENTURE, dated as of the 29th day of October,
1997 (the "SECOND SUPPLEMENTAL INDENTURE"), between THE AES CORPORATION, a
corporation duly organized and existing under the laws of the State of Delaware
(hereinafter sometimes referred to as the "COMPANY") and THE FIRST NATIONAL BANK
OF CHICAGO, a national banking association, as trustee (hereinafter sometimes
referred to as the "TRUSTEE") under the Junior Subordinated Indenture dated as
of March 1, 1997 between the Company and the Trustee (the "INDENTURE") (except
as otherwise set forth herein, all terms used and not defined herein are used as
defined in the Indenture or in the Declaration of Trust);
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of its junior subordinated securities
(the "DEBENTURES"), said Debentures to be issued from time to time in series as
might be determined by the Company under the Indenture, in an unlimited
aggregate principal amount which may be authenticated and delivered thereunder
as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Debentures to be known as
its 5.50% Junior Subordinated Debentures due 2012 (said series being hereinafter
referred to as the "SERIES 5.50% DEBENTURES"), the form and substance of such
Series 5.50% Debentures and the terms, provisions and conditions thereof to be
set forth as provided in the Indenture and this Second Supplemental Indenture;
and
WHEREAS, the Company has caused to be formed AES Trust II ("AES TRUST
II" or the "TRUST") as a statutory business trust under the Business Trust Act
of the State of Delaware (12 Del. Code ss. 3801 et seq.) pursuant to a
declaration of trust dated November 1, 1996 (the "ORIGINAL DECLARATION") and the
filing of a restated certificate of trust with the Secretary of State of the
State of Delaware on March 27, 1997; and
WHEREAS, the Original Declaration is to be amended and restated in its
entirety pursuant to an Amended and Restated Declaration of Trust dated as of
October 29, 1997 (such Amended and Restated Declaration of Trust, as amended
from time to time, the "DECLARATION OF TRUST"); and
WHEREAS, AES Trust II desires to issue its $2.75 Term Convertible
Securities, Series A (the "PREFERRED SECURITIES" or "TECONS") and sell such
Preferred Securities to initial purchasers; and
WHEREAS, in connection with such purchases of Preferred Securities and
the related purchase by the Company of the Common Securities (as defined in the
Declaration of Trust) of AES Trust II, AES Trust II will purchase as trust
assets Series 5.50% Debentures; and
WHEREAS, pursuant to the Declaration of Trust, the legal title to the
Series 5.50% Debentures shall be owned and held of record in the name of The
First National Bank of Chicago or its successor under the Declaration of Trust,
as Property Trustee (the "PROPERTY TRUSTEE"), in trust for the benefit of
holders of the Preferred Securities and the Common Securities; and
WHEREAS, upon the occurrence of a Special Event (as defined in the
Declaration of Trust) the Regular Trustees (as defined in the Declaration of
Trust) of AES Trust II shall, unless the Series 5.50% Debentures are redeemed as
described herein, dissolve AES Trust II and cause to be distributed to the
holders of Preferred Securities and Common Securities, on a Pro Rata basis
(determined as provided in the terms of the Preferred Securities and Common
Securities attached as Exhibits B and C to the Declaration of Trust), Series
5.50% Debentures and, in connection with a Liquidation Distribution (as defined
in the Declaration of Trust), the Regular Trustees may cause to be distributed
to holders of Preferred Securities and Common Securities, on such a Pro Rata
basis, Series 5.50% Debentures (each a "DISSOLUTION EVENT"); and
WHEREAS, the Company desires and has requested the Trustee to join with
it in the execution and delivery of this Second Supplemental Indenture, and all
requirements necessary to make this Second Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Series 5.50%
Debentures when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company, have been performed and
fulfilled, and the execution and delivery hereof have been in all respects duly
authorized;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Series 5.50% Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Series 5.50%
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
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ARTICLE 1
GENERAL TERMS AND CONDITIONS OF THE SERIES 5.50% DEBENTURES
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "5.50% JUNIOR SUBORDINATED DEBENTURES DUE 2012",
limited in aggregate principal amount to $309,278,400 (except as provided in
this Section 1.01 and 7.01). Upon exercise of the overallotment option set forth
in the Purchase Agreement (as defined in the Declaration of Trust), additional
Series 5.50% Debentures in the aggregate principal amount of up to $46,391,800
may be executed by the Company and delivered to the Trustee for authentication,
and the Trustee shall thereupon authenticate and deliver said Series 5.50%
Debentures to or upon the written order of the Company, which order shall be
accompanied by evidence satisfactory to the Trustee that the overallotment
option has been exercised. The Series 5.50% Debentures shall mature and the
principal shall be due and payable together with all accrued and unpaid interest
thereon, including Compounded Interest (as hereinafter defined) on September 30,
2012 (the "MATURITY DATE").
SECTION 1.02. (a) Except as provided in Section 1.02(b), the Series
5.50% Debentures shall be issued in fully registered certificated form without
interest coupons in denominations of $50 or integral multiples thereof.
Principal and interest on the Series 5.50% Debentures issued in certificated
form will be payable, the transfer of such Series 5.50% Debentures will be
registrable and such Series 5.50% Debentures will be exchangeable for Series
5.50% Debentures bearing identical terms and provisions at the office or agency
of the Company in the Borough of Manhattan, The City and State of New York;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall appear
in the Debenture register and that the payment of principal with respect to the
Series 5.50% Debentures will only be made upon surrender of the Series 5.50%
Debentures to the Trustee. Notwithstanding the foregoing, so long as the
Property Trustee is the legal owner and record holder of the Series 5.50%
Debentures, the payment of the principal of and interest (including Compounded
Interest, if any) on the Series 5.50% Debentures held by the Property Trustee
will be made by the Company in immediately available funds on the payment date
therefor at such place and to the Property Account (as defined in the
Declaration of Trust) established and maintained by the Property Trustee
pursuant to the Declaration of Trust.
(b) In connection with a Dissolution Event:
(i) Series 5.50% Debentures in certificated form may be presented
to the Trustee by the Property Trustee in exchange for a Global
Debenture representing the Series 5.50% Debentures in an aggregate
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principal amount equal to all Outstanding Series 5.50% Debentures, to
be registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the
Regular Trustees (as defined in the Declaration of Trust). The Company
upon any such presentation shall execute a Global Debenture
representing the Series 5.50% Debentures in such aggregate principal
amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Indenture and this Second Supplemental
Indenture. Payments on the Series 5.50% Debentures issued as a Global
Debenture will be made to the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, Series 5.50% Debentures in certificated form may be
presented to the Trustee by the Property Trustee and any Preferred
Security Certificate (as defined in the Declaration of Trust) which
represents Preferred Securities other than Preferred Securities held by
the Clearing Agency (as defined in the Declaration of Trust) or its
nominee ("NON BOOK-ENTRY PREFERRED SECURITIES") will be deemed to
represent beneficial interests in Series 5.50% Debentures presented to
the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non Book-Entry
Preferred Securities until such Preferred Security Certificate are
presented to the Debenture Registrar for transfer or reissuance at
which time such Preferred Security Certificate will be canceled and a
Series 5.50% Debenture, registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder of such
Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the
Preferred Security Certificate canceled will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this Second Supplemental Indenture.
On issue of such Series 5.50% Debentures, Series 5.50% Debentures with
an equivalent aggregate amount that were presented by the Property
Trustee to the Trustee will be deemed to have been canceled.
SECTION 1.03. Each Series 5.50% Debenture will bear interest at the
rate of 5.50% per annum from October 29, 1997 until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum, compounded quarterly,
payable (subject to the provisions of Article Three) quarterly in arrears on the
last day of each calendar quarter (each an "INTEREST PAYMENT DATE", commencing
on December 31, 1997),
4
to the person in whose name such Series 5.50% Debenture or any predecessor
Series 5.50% Debenture is registered, at the close of business on the regular
record date for such interest installment, which, except as set forth below,
shall be, in respect of any Series 5.50% Debentures of which the Property
Trustee is the registered holder of or a Global Debenture, the close of business
on the business day next preceding that Interest Payment Date. Notwithstanding
the foregoing sentence, if the Preferred Securities are no longer in book-entry
only form or if pursuant to the provisions of Section 2.11(c) of the Indenture
the Series 5.50% Debentures are not represented by a Global Debenture, the
regular record dates for such interest installment shall be the close of
business on the fifteenth day of the month in which that Interest Payment Date
occurs. Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the registered holders on such regular
record date, and may be paid to the person in whose name the Series 5.50%
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of the Series 5.50% Debentures not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Series 5.50% Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Series 5.50% Debentures is not a business day,
then payment of interest payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding business day, in each case with the same force and effect as if made
on such date.
If at any time AES Trust II shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the U.S., or any other taxing authority, then, in any such
case, the Company will pay as additional interest ("ADDITIONAL INTEREST") on the
Series 5.50% Debentures such additional amounts as shall be required so that the
net amounts received and retained by AES Trust II after paying any such taxes,
duties, assessments or other governmental charges will be equal to the amounts
AES Trust II would have received had no such taxes, duties, assessments, or
other governmental charges been imposed.
SECTION 1.04. If distributed to holders of Preferred Securities in
connection with a Dissolution Event, the Series 5.50% Debentures will be issued
5
to such holders in the same form as the Preferred Securities that such Series
5.50% Debentures replace in accordance with the following procedures:
So long as Series 5.50% Debentures are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all Series
5.50% Debentures that are so eligible may be represented by one or more Series
5.50% Debentures in global form registered in the name of the Depositary or the
nominee of the Depositary, except as otherwise specified below. The transfer and
exchange of beneficial interests in any such Series 5.50% Debenture in global
form shall be effected through the Depositary in accordance with this Indenture
and the procedures of the Depositary therefor.
Series 5.50% Debentures that are distributed to "qualified
institutional buyers" within the meaning of Rule 144A ("QIBs") under the
Securities Act of 1933, as amended (the "Securities Act") or to institutional
"accredited investors" as defined in Rule 501(a)(1),(2),(3) or (7) ("IAIs")
under the Securities Act in replacement of Preferred Securities represented by a
global Preferred Security will be represented by one or more global Series 5.50%
Debentures (the "144A GLOBAL DEBENTURE"). Series 5.50% Debentures that are
distributed to Non-U.S. Persons in replacement of Preferred Securities
represented by a global Preferred Security will be represented by one or more
global Series 5.50% Debenture (the "REGULATION S GLOBAL DEBENTURE"). Each of the
144A Global Debenture and the Regulation S Global Debenture shall be referred to
herein as a Global Debenture. Series 5.50% Debentures that are distributed to
QIBs, IAIs or Non-U.S. Persons in replacement of Certificated Preferred
Securities will be represented by definitive Series 5.50% Debentures as set
forth in this Section 1.04. If Global Debentures are issued, transfers of
interests in the Series 5.50% Debentures between the 144A Global Debenture and
the Regulation S Global Debenture will be made in accordance with the standing
instructions and procedures of the Depositary and its participants and the
Trustee shall make appropriate endorsements to reflect increases or decreases in
the principal amounts of such Global Debentures to reflect any such transfers.
Except as provided below, beneficial owners of a Series 5.50% Debenture
in global form shall not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Series 5.50% Debentures in global form.
(i) Preferred Securities held in certificated form, except for
certificates representing Preferred Securities held by the Depositary
or its nominee (or any successor Clearing Agency or its nominee), shall
upon presentation to the Trustee by the Property Trustee or by the
holder thereof
6
or by the Property Trustee on behalf of such holders shall be exchanged
for Series 5.50% Debentures in fully registered certificated form of
like aggregate principal amount and tenor.
So long as the Series 5.50% Debentures are eligible for book-entry
settlement, and to the extent that Series 5.50% Debentures are held by QIBs or
Non-U.S. Persons, as the case may be, in a Global Debenture, or unless otherwise
required by law, upon any transfer of a definitive Series 5.50% Debenture to a
QIB in accordance with Rule 144A or to a Non-U.S. Person in accordance with
Regulation S, unless otherwise requested by the transferor, and upon receipt of
the definitive Series 5.50% Debentures or Series 5.50% Debentures being so
transferred, together with a certification from the transferor that the transfer
is being made in compliance with Rule 144A or Regulation S, as the case may be
(or other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on any 144A Global Debenture or any Regulation S Global Debenture,
as the case may be, to reflect an increase in the aggregate principal amount of
the Series 5.50% Debentures represented by such Global Debenture, and the
Trustee shall cancel such definitive Series 5.50% Debenture or Series 5.50%
Debentures in accordance with the standing instructions and procedures of the
Depositary, the aggregate principal amount of Series 5.50% Debentures
represented by such Global Debenture to be increased accordingly; provided that
no definitive Series 5.50% Debenture, or portion thereof, in respect of which
the Company or an Affiliate of the Company held any beneficial interest shall be
included in such Global Debenture until such definitive Series 5.50% Debenture
is freely tradable in accordance with Rule 144(k); provided further that the
Trustee shall, at the written request of the Company, issue Series 5.50%
Debentures in definitive form upon any transfer of a beneficial interest in the
Global Debenture to the Company or any Affiliate of the Company.
Any Global Debenture may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Depositary, by the
National Association of Securities Dealers, Inc. in order for the Series 5.50%
Debentures to be tradeable on the PORTAL Market or as may be required for the
Series 5.50% Debentures to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
any securities exchange upon which the Series 5.50% Debentures may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Series 5.50%
Debentures are subject.
Each Debenture that bears or is required to bear the legend set forth
in this Section 1.04 (a "RESTRICTED SECURITY") shall be subject to the
restrictions on
7
transfer provided in the legend set forth in this Section 1.04, unless such
restrictions on transfer shall be waived by the written consent of the Company,
and the Holder of each Restricted Security, by such securityholder's acceptance
thereof, agrees to be bound by such restrictions on transfer. As used in this
Section 1.04, the terms "transfer" encompasses any sale, pledge, transfer or
other disposition of any Restricted Security.
Prior to the Transfer Restriction Termination Date (as defined in the
Declaration of Trust), any certificate evidencing a Series 5.50% Debenture or
Common Stock issued upon the conversion or exchange of any Series 5.50%
Debenture shall bear a legend in substantially the following form, unless
otherwise agreed by the Company (with written notice thereof to the Trustee):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR")), OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION (2) AGREES
THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO AES OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, BEFORE
SUCH TRANSFER FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES
8
LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE TRUST THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
PRIOR TO THE EXPIRATION DATE OF THE HOLDING PERIOD APPLICABLE TO SALES
OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), THE TRANSFEROR MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE PROPERTY TRUSTEE.
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
TRANSFEROR MUST, BEFORE SUCH TRANSFER, FURNISH TO THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Following the Transfer Restriction Termination Date or the sale of a
Debenture or Common Stock issued upon the conversion or exchange of a Debenture
pursuant to an effective registration statement or Rule 144 (or any successor
provision) under the Securities Act, any Debenture or security issued in
exchange or substitution therefor (other than (i) Series 5.50% Debentures
acquired by the Company or any Affiliate thereof since the issue date of the
Preferred Securities and (ii) Common Stock issued upon the conversion or
exchange of any
9
Debenture described in clause (i) above) may upon surrender of such Debenture
for exchange to the Debenture Registrar in accordance with the provisions of
this Section 1.04, be exchanged for a new Debenture or Series 5.50% Debentures,
of like tenor and aggregate principal amount, which shall not bear the
restrictive legend required by this Section 1.04.
Notwithstanding any other provisions of the Indenture (other than the
provisions set forth in this Section 1.04), a Global Debenture may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee to a
successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Series 5.50% Debentures in global form.
Initially, the Global Debentures shall be issued to the Depositary, registered
in the name of Cede & Co., as the nominee of the Depositary, and deposited with
the Trustee as custodian for Cede & Co.
If at any time the Depositary for the Global Debentures notifies the
Company that it is unwilling or unable to continue as Depositary for such Series
5.50% Debentures, the Company may appoint a successor Depositary with respect to
such Series 5.50% Debentures. If a successor Depositary for the Series 5.50%
Debentures is not appointed by the Company within 90 days after the Company
receives such notice, the Company will execute, and the Trustee, upon receipt of
an Officers' Certificate for authentication and delivery of Series 5.50%
Debentures, will authenticate and deliver, Series 5.50% Debentures in definitive
form, in an aggregate principal amount equal to the principal amount of the
Global Debentures, in exchange for such Global Debentures.
Definitive Series 5.50% Debentures issued in exchange for all or a part
of a Global Debenture pursuant to this Section 1.04 shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such definitive Series 5.50% Debentures to the person in whose names
such definitive Series 5.50% Debentures are so registered.
At such time as all interests in a Global Debenture have been redeemed,
converted, exchanged, repurchased or canceled, such Global Debenture shall be,
upon receipt thereof, canceled by the Trustee in accordance with standing
procedures and instructions of the Depositary. At any time prior to such
cancellation, if any interest in a Global Debenture is exchanged for definitive
10
Series 5.50% Debentures, redeemed by the Company pursuant to Article 2 or
canceled, or transferred for part of a Global Debenture, the principal amount of
such Global Debenture shall, in accordance with the standing procedures and
instructions of the Depositary be reduced or increased, as the case may be, and
an endorsement shall be made on such Global Debenture by, or at the direction
of, the Trustee to reflect such reduction or increase. Following such redemption
by the Company or cancellation, or transfer, the Company will execute and
Trustee will authenticate and make available for delivery to the transferee (or
such transferee's nominee, as the case may be), a Series 5.50% Debenture in the
appropriate aggregate principal amount and bearing such restrictive legends as
may be required by this Indenture.
Any Series 5.50% Debenture or Common Stock issued upon the conversion
or exchange of a Series 5.50% Debenture that, prior to the Transfer Restriction
Termination Date, is purchased or owned by the Company or any Affiliate thereof
may not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such Series
5.50% Debentures or Common Stock, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).
ARTICLE 2
OPTIONAL REDEMPTION OF THE SERIES 5.50% DEBENTURES
SECTION 2.01. Except as provided in Section 2.02 and subject to the
provisions below, Series 5.50% Debentures may not be redeemed by the Company
prior to September 30, 2000. Subject to the terms of Article Three of the
Indenture, the Company shall have the right to redeem the Series 5.50%
Debentures, in whole or in part, from time to time, on or after September 30,
2000, upon not less than 30 nor more than 60 days notice to the Holder of the
Series 5.50% Debentures, at the following prices (expressed as percentages of
the principal amount of the Series 5.50% Debentures) (the "OPTIONAL REDEMPTION
PRICE"), together with any accrued and unpaid interest thereon, including
Compounded Interest (as defined herein), if any, to, but excluding, the date of
such redemption, if redeemed during the 12-month period beginning September 30.
11
YEAR REDEMPTION PRICE
---- ----------------
2000 103.438%
2001 102.750%
2002 102.063%
2003 101.375%
2004 100.688%
and 100% if redeemed on or after September 30, 2005.
If the Series 5.50% Debentures are redeemed on any Interest Payment
Date, accrued and unpaid interest shall be payable to Holders of record on the
relevant record date.
The Company may not redeem any Series 5.50% Debenture unless all
accrued and unpaid interest thereon, including Compounded Interest, if any, has
been paid for all quarterly periods terminating on or prior to the date of
notice of redemption. So long as the corresponding Trust Securities are
outstanding, the proceeds from the redemption of the Series 5.50% Debentures
will be used to redeem the Trust Securities.
If the Company gives a notice of redemption in respect of Junior
Subordinated Debentures (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, the Company will deposit irrevocably
with the Indenture Trustee funds sufficient to pay the applicable Redemption
Price and will give irrevocable instructions and authority to pay such
Redemption Price to the holders of the Junior Subordinated Debentures.
If any date fixed for redemption of Junior Subordinated Debentures is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calender year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption.
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Junior
Subordinated Debentures during a period beginning at the opening of business 15
days before any selection for redemption of Junior Subordinated Debentures and
ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all holders of Junior
Subordinated Debentures to be redeemed and (ii) register the transfer of or
exchange any Junior Subordinated
12
Debentures so selected for redemption, in whole or in part, except the
unredeemed portion of any Junior Subordinated Debentures being redeemed in part.
SECTION 2.02. If, at any time, a Tax Event (as defined below) shall
occur or be continuing and (i) the Regular Trustees and the Company shall have
received an opinion (a "REDEMPTION TAX OPINION") of a nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that the Company would be
precluded from deducting the interest on the Series 5.50% Debentures for United
States federal income tax purposes even if the Series 5.50% Debentures were
distributed to the holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in AES Trust II as set forth in the
Declaration of Trust or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion (as defined below) cannot be
delivered to AES Trust II, the Company shall have the right at any time, upon
not less than 30 nor more than 60 days' notice, to redeem the Series 5.50%
Debentures in whole or in part for cash at a price equal to 100% of the
principal amount thereof, together with any accrued and unpaid interest thereon,
including Compounded Interest, if any, to, but excluding the date of redemption,
within 90 days following the occurrence of such Tax Event; provided, however,
that, if at the time there is available to the Company or the Regular Trustees
on behalf of AES Trust II the opportunity to eliminate, within such 90 day
period, the Tax Event by taking some ministerial action ("MINISTERIAL ACTION"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on AES Trust II, the Company or
the holders of the Preferred Securities, the Company or the Regular Trustees on
behalf of AES Trust II will pursue such measure in lieu of redemption and
provided further that the Company shall have no right to redeem the Series 5.50%
Debentures while the Regular Trustees on behalf of AES Trust II are pursuing any
such Ministerial Action.
"TAX EVENT" means that the Company and the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "DISSOLUTION TAX OPINION") to the effect that on or after
October 23, 1997 as a result of (a) any amendment to, or change in, the laws (or
any regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority (including the
enactment of any legislation and the publication of any judicial decision or
regulatory determination), (c) any interpretation or pronouncement that provides
for a position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued
13
or effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after October 23, 1997 there is more
than an insubstantial risk that (i) AES Trust II is, or will be within 90 days
of the date thereof, subject to United States federal income tax with respect to
income accrued or received on the Series 5.50% Debentures, (ii) AES Trust II is,
or will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest payable
by the Company to AES Trust II on the Series 5.50% Debentures is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes.
"NO RECOGNITION OPINION" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
any then applicable published revenue ruling of the Internal Revenue Service, to
the effect that the holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of a
dissolution of AES Trust II and distribution of the Series 5.50% Debentures as
provided in the Declaration of Trust.
SECTION 2.03. If the Series 5.50% Debentures are only partially
redeemed pursuant to this Article Two, the Series 5.50% Debentures will be
redeemed pro rata or by lot or by any other method utilized by the Trustee,
provided that if at the time of redemption, the Series 5.50% Debentures are
registered as a Global Debenture, the Depository shall determine by lot the
principal amount of such Series 5.50% Debentures held by each Debenture Holder
to be redeemed in accordance with its customary procedures. Notwithstanding the
foregoing, if a partial redemption of the Series 5.50% Debentures would result
in the delisting of the Preferred Securities by any national securities exchange
or other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and will only
redeem the Series 5.50% Debentures in whole.
ARTICLE 3
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.01. So long as the Company is not in default in the payment
of interest on the Series 5.50% Debentures, the Company shall have the right, at
any time during the term of the Series 5.50% Debentures, from time to time to
extend the interest payment period of such Series 5.50% Debentures for up to 20
consecutive quarterly interest periods (the "EXTENDED INTEREST PAYMENT PERIOD"),
at the end of which period the Company shall pay all interest accrued
14
and unpaid thereon (together with interest thereon at the rate of 5.50% per
annum to the extent permitted by applicable law, compounded quarterly
("COMPOUNDED INTEREST")); provided that no Extended Interest Payment Period may
extend beyond the Maturity Date or redemption date of the Series 5.50%
Debentures. During such Extended Interest Payment Period the Company shall not
declare or pay any dividend on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock or
preferred stock or make any guarantee payments with respect thereto; provided
that the foregoing will not apply to any stock dividends paid by the Company in
Common Stock. Prior to the termination of any such Extended Interest Payment
Period, the Company may pay all or any portion of the interest accrued on the
Series 5.50% Debentures on any Interest Payment Date to holders of record on the
regular record date for such Interest Payment Date or from time to time further
extend such Period; provided that such Period together with all such further
extensions thereof shall not exceed 20 consecutive quarterly interest periods.
Upon the termination of any Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest then due, together with Compounded
Interest, the Company may select a new Extended Interest Payment Period, subject
to the foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof. At the end of the
Extended Interest Payment Period the Company shall pay all interest accrued and
unpaid on the Series 5.50% Debentures including any Compounded Interest which
shall be payable to the holders of the Series 5.50% Debentures in whose names
the Series 5.50% Debentures are registered in the Debenture register on the
first record date after the end of the Extended Interest Payment Period.
SECTION 3.02. (a) So long as the Property Trustee is the legal owner
and holder of record of the Series 5.50% Debentures, at the time the Company
selects an Extended Interest Payment Period, the Company shall give both the
Property Trustee and the Trustee written notice of its selection of such
Extended Interest Payment Period one business day prior to the earlier of (i)
the next succeeding date on which distributions on the Preferred Securities are
payable or (ii) the date AES Trust II is required to give notice of the record
date or the date such distributions are payable to holders of the Preferred
Securities, but in any event not less than one business day prior to such record
date. The Company shall cause AES Trust II to give notice of the Company's
selection of such Extended Interest Payment Period to the holders of the
Preferred Securities.
(b) If as a result of a Dissolution Event Series 5.50% Debentures have
been distributed to holders of Preferred Securities and Common Securities, at
the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the Series 5.50% Debentures and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
15
business days prior to the earlier of (i) the next succeeding Interest Payment
Date or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Series 5.50%
Debentures.
SECTION 3.03. The quarter in which any notice is given pursuant to
Section 3.02 shall be counted as one of the quarters permitted in the maximum
Extended Interest Payment Period permitted under this Article Three.
ARTICLE 4
COVENANTS APPLICABLE TO SERIES 5.50% DEBENTURES
SECTION 4.01. So long as any Preferred Securities remain outstanding,
the Company will not declare or pay any dividends on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock or make any guarantee payments with respect
thereto if at such time (i) the Company shall be in default with respect to its
Guarantee Payments (as defined in the Guarantee Agreement) or other payment
obligations under the Guarantee Agreement, (ii) there shall have occurred any
Event of Default under the Indenture with respect to the Series 5.50% Debentures
or (iii) the Company shall have given notice of its election of an Extended
Interest Payment Period and such Period, or any extension thereof, is
continuing; provided that the foregoing will not apply to any stock dividends
paid by the Company in Common Stock.
SECTION 4.02. In connection with the distribution of the Series 5.50%
Debentures to the holders of the Preferred Securities upon a Dissolution Event,
the Company will use its best efforts to list such Series 5.50% Debentures on
the New York Stock Exchange or on such other exchange as the Preferred
Securities are then listed and traded.
SECTION 4.03. The Company covenants and agrees for the benefit of the
holders of the Preferred Securities to comply fully with all of its obligations
and agreements under the Declaration of Trust, including, without limitation,
its obligations under Article 4 thereof.
SECTION 4.04. Prior to the distribution of Series 5.50% Debentures to
the holders of Preferred Securities upon a Dissolution Event, the Company
covenants and agrees for the benefit of the holders of the Preferred Securities
(i) not to cause or permit the Common Securities to be transferred except as
16
permitted by the Declaration of Trust and (ii) that it will use reasonable
efforts to cause the Trust to continue to be treated as a grantor trust for
United States federal income tax purposes, except in connection with a
distribution of the Series 5.50% Debentures as provided in the Declaration of
Trust.
ARTICLE 5
CONVERSION OF DEBENTURES
SECTION 5.01. Subject to and upon compliance with the provisions of
this Article Five, the Series 5.50% Debentures are convertible at the option of
the Holder, at any time through the close of business on September 30, 2012 (or,
in the case of Series 5.50% Debentures called for redemption, prior to the close
of business on the Business Day prior to the corresponding redemption date) into
fully paid and nonassessable shares of Common Stock of the Company at an initial
conversion rate of 0.8914 shares of Common Stock for each $50 in aggregate
principal amount of Series 5.50% Debentures (equal to a conversion price (as
adjusted from time to time, the "CONVERSION PRICE") of $56.09 per share of
Common Stock), subject to adjustment as described in this Article Five. A Holder
of Series 5.50% Debentures may convert any portion of the principal amount of
the Series 5.50% Debentures into that number of fully paid and nonas sessable
shares of Common Stock obtained by dividing the principal amount of the Series
5.50% Debentures to be converted by such conversion price. All calculations
under this Article Five shall be made to the nearest cent or to the nearest
1/100th of a share, as the case may be.
SECTION 5.02. (a) In order to convert all or a portion of the Series
5.50% Debentures, the Holder thereof shall deliver to the Conversion Agent an
irrevocable Notice of Conversion setting forth the principal amount of Series
5.50% Debentures to be converted, together with the name or names, if other than
the Holder, in which the shares of Common Stock should be issued upon conversion
and, if such Series 5.50% Debentures are definitive Series 5.50% Debentures,
surrender to the Conversion Agent the Series 5.50% Debentures to be converted,
duly endorsed or assigned to the Company or in blank. In addition, a holder of
Preferred Securities may exercise its right under the Declaration of Trust to
convert such Preferred Securities into Common Stock by delivering to the
Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
Agent to (i) exchange such Preferred Security for a portion of the Series 5.50%
Debentures held by the Trust (at an exchange rate of $50 principal amount of
Series 5.50% Debenture for each Preferred Security) and (ii) immediately convert
such Series 5.50% Debenture, on behalf of such holder, into Common Stock of
17
the Company pursuant to this Article Five and, if such Preferred Securities are
in definitive form, surrendering such Preferred Securities, duly endorsed or
assigned to the Company or in blank. So long as any Preferred Securities are
outstanding, the Trust shall not convert any Series 5.50% Debenture except
pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder
of Preferred Securities. Any reference herein to a "HOLDER" of Preferred
Securities shall mean a "HOLDER" of such securities as defined in the
Declaration of Trust.
If a Preferred Security is surrendered for conversion after the close
of business on any regular record date for payment of a Distribution and before
the opening of business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such Distribution
payment date will be paid in cash to the person in whose name the Series 5.50%
Debenture is registered at the close of business on such record date, and (other
than a Series 5.50% Debenture or a portion of a Series 5.50% Debenture called
for redemption on a redemption date occurring after such record date and on or
prior to such Distribution payment date) when so surrendered for conversion, the
Series 5.50% Debenture must be accompanied by payment of an amount equal to the
Distribution payable on such Distribution payment date. Except as otherwise
provided in the immediately preceding sentence, in the case of any Series 5.50%
Debenture which is converted, interest whose Maturity Date is after the date of
conversion of such Series 5.50% Debenture shall not be payable, and the Company
shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest on the Series 5.50%
Debenture being converted, which shall be deemed to be paid in full. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"CONVERSION DATE") by the Conversion Agent from the Holder or from a holder of
the Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
as of the Conversion Date. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless otherwise directed by the Holder in the Notice of Conversion, a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same. The Conversion Agent shall deliver such certificate or certificates to
such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Series 5.50% Debentures are convertible
18
(together with the cash payment, if any, in lieu of fractional shares) shall be
deemed to satisfy the Company's obligation to pay the principal amount at
maturity of the portion of Series 5.50% Debentures so converted and any unpaid
interest (including Compounded Interest) accrued on such Series 5.50% Debentures
at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a
cash adjustment in an amount equal to the same fraction of the Closing Price of
such fractional interest on the date on which the Series 5.50% Debentures were
duly surrendered to the Conversion Agent for conversion, or, if such day is not
a day on which any securities are traded on the national securities exchange or
quotation system used to determine the Closing Price (a "TRADING DAY"), on the
next Trading Day, and the Conversion Agent in turn will make such payment, if
any, to the Holder of the Series 5.50% Debentures or the holder of the Preferred
Securities so converted.
(d) In the event of the conversion of any Series 5.50% Debenture in
part only, a new Series 5.50% Debenture or Series 5.50% Debentures for the
unconverted portion thereof will be issued in the name of the Holder thereof
upon the cancellation thereof in accordance with Section 2.05 of the Indenture.
(e) In effecting the conversion transactions described in this Section
5.02, the Conversion Agent is acting as agent of the holders of Preferred
Securities (in the exchange of Preferred Securities for Series 5.50% Debentures)
and as agent of the Holders of Series 5.50% Debentures (in the conversion of
Series 5.50% Debentures into Common Stock), as the case may be. The Conversion
Agent is hereby authorized (i) to exchange Series 5.50% Debentures held by the
Trust from time to time for Preferred Securities in connection with the
conversion of such Preferred Securities in accordance with this Article Five and
(ii) to convert all or a portion of the Series 5.50% Debentures into Common
Stock and thereupon to deliver such shares of Common Stock in accordance with
the provisions of this Article Five and to deliver to the Trust a new Series
5.50% Debenture or Series 5.50% Debentures for any resulting unconverted
principal amount.
SECTION 5.03. (a) The Conversion Price shall be adjusted from time to
time as follows:
(i) In case the Company shall pay or make a dividend or other
distribution on Common Stock in shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders entitled
to receive such
19
dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination and the denominator of which
shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction
to become effective immediately after the opening of business on the
day following the date fixed for such determination. For the purposes
of this subparagraph (i), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company (except to the extent such dividend or distribution is being
made with respect to such shares) but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Common Stock.
(ii) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller amount of
shares of Common Stock, then the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iii) In case the Company shall issue rights or warrants to all
holders of Common Stock entitling them (for a period expiring within 45
days after the record date fixed for a distribution of such rights or
warrants) to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price (as hereinafter
defined) per share (determined as provided in subparagraph (vii) below)
of Common Stock on the date fixed for the determination of shareholders
entitled to receive such rights or warrants (other than pursuant to a
dividend reinvestment plan), then the Conversion Price in effect at the
opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by
a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
20
Current Market Price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this subparagraph (iii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Company agrees not to issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Company. To the extent that
shares of Common Stock are not delivered after the expiration of such
rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
in respect of the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered.
(iv) Subject to the second paragraph of this subparagraph (iv), in case
the Company shall, by dividend or otherwise, distribute to all holders
of Common Stock (A) shares of capital stock of the Company (other than
Common Stock), (B) evidence of indebtedness of the Company and/or (C)
other assets (including securities, but excluding (1) any rights or
warrants referred to in subparagraph (iii) above, (2) any rights or
warrants to obtain capital stock of a company other than the Company or
any subsidiary of the Company (including any rights offerings of the
Company with respect to capital stock of companies in which the Company
has an investment (a "RIGHTS OFFERING")), (3) dividends or
distributions in connection with the liquidation, dissolution or
winding-up of the Company, (4) dividends payable solely in cash that
may from time to time be fixed by the Board of Directors of the Company
and (5) dividends or distributions referred to in subparagraph (i)
above), then in each case (unless the Company makes the election
referred to in the next sentence) the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
close of business on such record date by a fraction the numerator of
which shall be the Current Market Price per share (determined as
provided in subparagraph (vii) below) of the Common Stock on such
record date (the "REFERENCE DATE") less the then fair market value on
the Reference Date (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and
shall be described in a statement filed with the Depositary and the
Trustee) of the portion of the shares of capital stock of the Company,
evidences of indebtedness or other assets so
21
distributed (and for which an adjustment to the Conversion Price has
not been made previously pursuant to the terms of this Article Five)
applicable to one share of Common Stock and the denominator shall be
such Current Market Price per share of the Common Stock, such
adjustment to become effective immediately prior to the opening of
business on the day following the Reference Date. However, the Company
may elect, in its sole discretion, in lieu of the foregoing adjustment,
to make adequate provision so that each holder of Securities shall have
the right to receive upon conversion thereof the amount and kind of
shares of capital stock, evidences of indebtedness or other assets such
holder would have received had such holder converted such shares on
such record date. If the Board of Directors of the Company determines
the fair market value of any distribution for purposes of this
subparagraph (iv) by reference to the actual or when issued trading
market for any securities (including shares of capital stock or
evidence of indebtedness of the Company) comprising a distribution of
securities, it must in doing so consider the price in such market over
the period used in computing the Current Market Price of the Common
Stock.
For purposes of this subparagraph (iv), any dividend or
distribution that includes both (x) any of the items described in
clauses (A), (B) or (C) of the first paragraph of this subparagraph
(iv) and (y) Common Stock or rights or warrants to subscribe for or
purchase Common Stock of the type referred to in subparagraph (iii)
shall be deemed to be (1) a dividend or distribution of shares of
capital stock of the Company (other than Common Stock), evidences of
indebtedness of the Company or other assets of the type referred to in
clause (C) of the first paragraph of this subparagraph (iv) (making any
Conversion Price reduction required by this subparagraph (iv))
immediately followed by (2) a dividend or distribution of such Common
Stock or rights or warrants to purchase Common Stock of the type
referred to in subparagraph (iii) (making any further Conversion Price
reduction required by subparagraph (i) or (iii) of this Section
5.03(a)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted
as "the date fixed for the determination of shareholders entitled to
receive such rights or warrants" and "the date fixed for such
determination" within the meaning of subparagraphs (i) and (iii) of
this Section 5.03(a) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination" within the
meaning of subparagraph (i) of this Section 5.03(a).
22
The occurrence of a distribution or the occurrence of any
other event as a result of which holders of Series 5.50% Debentures
converting such notes into Common Stock hereunder will not be entitled
to receive rights issued pursuant to any shareholder protective rights
agreement now or hereafter in effect (the "OTHER RIGHTS") in the same
amount and manner as if such holders had converted such shares
immediately prior to the occurrence of such distribution or other event
shall be deemed a distribution of Other Rights for the purposes of
conversion adjustments pursuant to this subparagraph (iv). In lieu of
making any adjustment to the Conversion Price under this subparagraph
(iv) as a result of such a distribution of Other Rights, the Company
may elect, in its sole discretion, to provide that Other Rights shall
be issuable in the same amount and manner upon conversion of the Series
5.50% Debentures without regard to whether the shares of Common Stock
issuable upon conversion of the Series 5.50% Debentures were issued
before or after such distribution or other event.
(v) In case the Company shall, by dividend or otherwise, at any
time distribute cash to all holders of Common Stock, excluding (A) any
cash dividends on Common Stock to the extent that the aggregate cash
dividends per share of Common Stock in any consecutive 12-month period
do not exceed the greater of (x) the amount per share of Common Stock
of the cash dividends paid on the Common Stock in the immediately
preceding 12-month period, to the extent that such dividends for the
immediately preceding 12-month period did not require an adjustment to
the Conversion Price pursuant to this subparagraph (v) (as adjusted to
reflect subdivisions or combinations of the Common Stock) and (y) 15%
of the average of the daily Closing Prices (as hereinafter defined) of
the Common Stock for the ten consecutive Trading Days immediately prior
to the date of declaration of such dividend and (B) any dividend or
distribution in connection with the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary; or any
redemption of any Other Rights; provided, however, that no adjustment
shall be made pursuant to this subparagraph (v) if such distribution
would otherwise constitute a Fundamental Change (as hereinafter
defined) and be reflected in a resulting adjustment to the Conversion
Price as provided in this Article Five) then, in each case (unless the
Company makes the election referred to in the proviso following this
clause), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in
effect at the close of business on such record date by a fraction the
numerator of which shall be the Closing Price of a share of Common
Stock on such record date less the amount of cash so distributed (to
the extent not excluded as provided above) applicable to
23
one share of Common Stock, and the denominator shall be the Closing
Price of a share of Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following such
record date; provided, however, that the Company may elect, in its sole
discretion, in lieu of the foregoing adjustment, to make adequate
provision so that each holder of Securities shall thereafter have the
right to receive upon conversion the amount of cash such holder would
have received had such holder converted each Security on such record
date. If any adjustment is required to be made as set forth in this
subparagraph (v) as a result of a distribution which is a dividend
described in clause (A) of this subparagraph (v), such adjustment will
be based upon the amount by which such distribution exceeds the amount
of the dividend permitted to be excluded pursuant to such clause (A) of
this subparagraph (v). If an adjustment is required to be made pursuant
to this subparagraph (v) as a result of a distribution which is not
such a dividend, such adjustment would be based upon the full amount of
such distribution.
(vi) In case of the consummation of a tender or exchange offer
(other than an odd-lot tender offer) made by the Company or any
subsidiary of the Company for all or any portion of the outstanding
shares of Common Stock to the extent that the cash and fair market
value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive and shall be described
in a resolution of such Board) of any other consideration included in
such payment per share of Common Stock at the last time (the
"EXPIRATION TIME") tenders or exchanges may be made pursuant to such
tender or exchange offer (as amended) exceed by more than 10%, with any
smaller excess being disregarded in computing the adjustment to the
Conversion Price provided in this subparagraph (vi), the first reported
sale price per share of Common Stock on the Trading Day next succeeding
the Expiration Time, then the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Expiration Time by a fraction
the numerator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the first reported sale price of the
Common Stock on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as
the "PURCHASED SHARES") and (y) the
24
product of the number of shares of Common Stock outstanding (less any
Purchased Shares) on the Expiration Time and the first reported sale
price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time.
(vii) For the purpose of any computation under this Article Five,
the "CURRENT MARKET PRICE PER SHARE" of Common Stock on any day shall
be deemed to be the average of the daily Closing Prices (as hereinafter
defined) per share of Common Stock for the ten consecutive Trading Days
prior to and including the date in question; provided, however, that
(1) if the "ex" date (as hereinafter defined) for any event (other than
the issuance, distribution or Fundamental Change requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to this Article Five (the "OTHER EVENT") occurs during such
ten consecutive Trading Days and prior to the "ex" date for the
issuance, distribution or Fundamental Change requiring such computation
(the "CURRENT EVENT"), the Closing Price for each Trading Day prior to
the "ex" date for such Other Event shall be adjusted by multiplying
such Closing Price by the same fraction by which the Conversion Price
is so required to be adjusted as a result of such Other Event, (2) if
the "ex" date for any Other Event occurs on or after the "ex" date for
the Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so required
to be adjusted as a result of such Other Event (provided that in the
event that such fraction is required to be determined at a date
subsequent to the date in question and with reference to events taking
place subsequent to the date in question, the Board of Directors of the
Company or, to the extent permitted by applicable law, a duly
authorized committee thereof, whose determination shall be conclusive
and described in a resolution of the Board of Directors of the Company
or such duly authorized committee thereof, as the case may be, shall in
good faith estimate such fraction based on assumptions it deems
reasonable regarding such events taking place subsequent to the date in
question, and such estimated fraction shall be used for purposes of
such adjustment until such time as the actual fraction by which the
Conversion Price is so required to be adjusted as a result of such
Other Event is determined), and (3) if the "ex" date for the Current
Event is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (1) or (2) of this proviso,
the Closing Price for each Trading Day on or after such "ex" date shall
be adjusted by adding thereto the amount of any cash and the fair
market value (as determined in good
25
faith by the Board of Directors of the Company or, to the extent
permitted by applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for purposes of
this Article Five, whose determination shall be conclusive and
described in a resolution of the Board of Directors of the Company or
such duly authorized committee thereof, as the case may be) of the
shares of capital stock, evidences of indebtedness or other assets
being distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For purposes of
this subparagraph (vii), the term "ex" date, (1) when used with respect
to any issuance, distribution or Fundamental Change, means the first
date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance, such distribution
or the cash, securities, property or other assets distributable in such
Fundamental Change to holders of the Common Stock, (2) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such
subdivision or combination becomes effective and (3) when used with
respect to any tender or exchange offer means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the Expiration Time of such offer.
(viii) No adjustment in the Conversion Price shall be required
pursuant to this Section 5.03(a) unless the adjustment would require a
change of at least 1% of such price; provided, however, that any
adjustments which by reason of this subparagraph (viii) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the
nearest cent (with .005 being rounded upward) or to the nearest 1/100th
of a share (with .005 of a share being rounded upward), as the case may
be. Notwithstanding anything to the contrary in this Article Five, the
Company from time to time may, to the extent permitted by law, reduce
the Conversion Price by any amount for any period of at least 20
Business Days, in which case the Company shall give at least 15 days'
notice of such reduction to the holders of Series 5.50% Debentures and
the Trustee. In addition, the Company may, at its option, make such
reductions in the Conversion Price in addition to those set forth in
this Article Five, as it considers to be advisable in order to avoid or
diminish any income tax to any holders of shares of Common Stock
resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
26
(ix) In any case in which this Article Five provides that an
adjustment shall become effective immediately after a record date for
an event, the Company may defer until the occurrence of such event (A)
issuing to the holder of any Series 5.50% Debentures converted after
such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment
and (B) paying to such holder any amount in cash in lieu of any
fractional shares pursuant to this Article Five.
(x) For purposes of this Article Five, "COMMON STOCK" includes any
stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and
which is not subject to redemption by the Company. However, subject to
the provisions of this Article Five, shares issuable on conversion of
Series 5.50% Debentures shall include only shares of the class
designated as the Company Common Stock on the date of the initial
issuance of Series 5.50% Debentures by the Company or shares of any
class or classes resulting from any reclassification or
reclassification thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and
which are not subject to redemption by the Company; provided, however,
that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially
in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
(b) Whenever the Conversion Price is adjusted as herein provided:
(i) the Company shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or
the Treasurer of the Company setting forth the adjusted Conversion
Price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed with
the Trustee and the transfer agent for the Preferred Securities and the
Series 5.50% Debentures; and
27
(ii) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of Preferred
Securities and the Series 5.50% Debentures at their last addresses as
they appear upon the stock transfer books of the Company and the Trust.
SECTION 5.04. (a) In the event that the Company shall be a party to any
transaction or series of transactions constituting a Fundamental Change,
including, without limitation, (i) any recapitalization or reclassification of
shares of Common Stock (other than a change in the par value or as a result of a
subdivision or combination of the Common Stock), (ii) any consolidation of the
Company with, or merger of the Company into, any other corporation or any merger
of another corporation into the Company as a result of which holders of Common
Stock shall be entitled to receive securities or other property or assets
(including cash) with respect to or in exchange for Common Stock (other than a
merger which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), (iii) any sale or transfer
of all or substantially all of the assets of the Company, or (iv) any compulsory
share exchange, pursuant to any of which the holders of Common Stock shall be
entitled to receive other securities, cash or other property, then appropriate
provision shall be made as part of the terms of such transaction or series of
transactions so that the holder of each Series 5.50% Debenture then outstanding
shall have the right thereafter to convert such Series 5.50% Debenture only into
(A) if any such transaction does not constitute a Common Stock Fundamental
Change (as hereinafter defined), the kind and amount of the securities, cash or
other property that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange by a
holder of the number of shares of Common Stock into which such Series 5.50%
Debenture might have been converted immediately prior to such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange,
after, in the case of a Non-Stock Fundamental Change (as hereinafter defined),
giving effect to any adjustment in the Conversion Price required by the
provisions which follow in subparagraph (i) of Section 5.04(c), and (B) if any
such transaction constitutes a Common Stock Fundamental Change, common stock of
the kind received by holders of Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the provisions which
follow in subparagraph (ii) of Section 5.04(c). The company formed by such
consolidation or resulting from such merger or which acquires such assets or
which acquires the Common Stock, as the case may be, shall enter into a
supplemental indenture with the Trustee, satisfactory in form to the Trustee,
the provisions of which establishes such right and provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this
Article Five. The above
28
provisions shall similarly apply to successive recapitalization,
reclassifications, consolidations, mergers, sales, transfers or share exchanges.
(b) Notwithstanding any other provisions in this Article Five to the
contrary, if any Fundamental Change (as hereinafter defined) occurs, then the
Conversion Price in effect will be adjusted immediately following such
Fundamental Change as described below in Section 5.04(c). In addition, in the
event of a Common Stock Fundamental Change, each Series 5.50% Debenture shall be
convertible solely into common stock of the kind received by holders of Common
Stock as the result of such Common Stock Fundamental Change as more specifically
provided below in Section 5.04(c).
(c) For purposes of calculating any adjustment to be made pursuant to
this Article Five in the event of a Fundamental Change, immediately following
such Fundamental Change (and for such purposes a Fundamental Change shall be
deemed to occur on the earlier of (a) the occurrence of such Fundamental Change
and (b) the date, if any, fixed for determination of shareholders entitled to
receive the cash, securities, property or other assets distributable in such
Fundamental Change to holders of the Common Stock):
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price per share of Common Stock immediately following such Non-Stock
Fundamental Change shall be the lower of (A) the Conversion Price in
effect immediately prior to such Non-Stock Fundamental Change, but
after giving effect to any other adjustments effected pursuant to this
Article Five, and (B) the product of (1) the greater of the Applicable
Price (as hereinafter defined) or the then applicable Reference Market
Price (as hereinafter defined) and (2) a fraction the numerator of
which shall be $100 and the denominator of which shall be the amount
based on the date on which such Non-Stock Fundamental Change occurs.
For the twelve month period beginning October 29, 1997, the denominator
will be 105.50, and the denominator will decrease by 0.6875 during each
successive 12-month period; provided, that the denominator shall in no
event be less than 100.0.
(ii) in the case of a Common Stock Fundamental Change, the
Conversion Price per share of Common Stock immediately following the
Common Stock Fundamental Change shall be the Conversion Price in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other adjustments effected pursuant to this
Article Five, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as hereinafter defined) and the denominator of
which is the Applicable Price; provided, however, that in the event of
a
29
Common Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of
the successor, acquiror or other third party (and cash, if any, paid
with respect to any fractional interests in such common stock resulting
from such Common Stock Fundamental Change) and (B) all of the Common
Stock shall have been exchanged for, converted into or acquired for
common stock (and cash, if any, with respect to fractional interests)
of the successor, acquiror or other third party, the Conversion Price
per share of Common Stock immediately following such Common Stock
Fundamental Change shall be the Conversion Price in effect immediately
prior to such Common Stock Fundamental Change divided by the number of
shares of common stock of the successor, acquiror, or other third party
received by a holder of one share of Common Stock as a result of such
Common Stock Fundamental Change.
(d) The following definitions shall apply to terms used in this
Article Five:
(i) "APPLICABLE PRICE" shall mean (A) in the event of a Non- Stock
Fundamental Change in which the holders of Common Stock receive only
cash, the amount of cash receivable by a holder of one share of Common
Stock and (B) in the event of any other Fundamental Change, the average
of the Closing Prices for one share of Common Stock during the ten
Trading Days immediately prior to the record date for the determination
of the holders of Common Stock entitled to receive cash, securities,
property or other assets in connection with such Fundamental Change or,
if there is no such record date, prior to the date upon which the
holders of Common Stock shall have the right to receive such cash,
securities, property or other assets.
(ii) "CLOSING PRICE" with respect to any securities on any day
shall mean the closing sale price, regular way, on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New York
Stock Exchange or, if such security is not listed or admitted to
trading on such Exchange, on the principal national securities exchange
or quotation system on which such security is quoted or listed or
admitted to trading or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the
over-the-counter market on the date in question as reported by the
National Quotation Bureau Incorporated, or a similarly generally
accepted reporting service or, if not so available, in such manner as
furnished by any New York Stock Exchange member firm
30
selected from time to time by the Board of Directors of the Company for
that purpose or a price determined in good faith by the Board of
Directors of the Company.
(iii) "COMMON STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith
by the Board of Directors of the Company) of the consideration received
by the holders of Common Stock pursuant to such transactions consists
of shares of common stock that, for the ten consecutive Trading Days
immediately prior to such Fundamental Change, has been admitted for
listing or admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the Nasdaq National Market;
provided, however, that a Fundamental Change shall not be a Common
Stock Fundamental Change unless either (A) the Company continues to
exist after the occurrence of such Fundamental Change and the
outstanding Preferred Securities continue to exist as outstanding
Preferred Securities, or (B) the outstanding Preferred Securities
continue to exist as Preferred Securities and are convertible into
common stock of the successor to the Company.
(iv) "FUNDAMENTAL CHANGE" shall mean the occurrence of any
transaction or event or series of transactions or events pursuant to
which all or substantially all of the Common Stock shall be exchanged
for, converted into, acquired for or constitutes solely the right to
receive cash, securities, property or other assets (whether by means of
an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise);
provided, however, in the case of a plan involving more than one such
transaction or event, for purposes of adjustment of the Conversion
Price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock has been exchanged for, converted
into, or acquired for or constitutes solely the right to receive cash,
securities, property or other assets, but the adjustment shall be based
upon the consideration which the holders of Common Stock received in
such transaction or event as a result of which more than 50% of the
Common Stock shall have been exchanged for, converted into, or acquired
for or shall constitute solely the right to receive cash, securities,
property or other assets.
(v) "NON-STOCK FUNDAMENTAL CHANGE" shall mean any Fundamental
Change other than a Common Stock Fundamental Change.
(vi) "PURCHASER STOCK PRICE" shall mean, with respect to any
Common Stock Fundamental Change, the average of the Closing Prices
31
for one share of the common stock received by holders of Common Stock
in such Common Stock Fundamental Change during the ten Trading Days
immediately prior to the record date for the determination of the
holders of Common Stock entitled to receive such common stock or, if
there is no such record date, prior to the date upon which the holders
of Common Stock shall have the right to receive such common stock.
(vii) "REFERENCE MARKET PRICE" shall initially mean $29.92 (which
is an amount equal to 66-2/3% of the last reported sale price for the
Common Stock on the New York Stock Exchange on October 23, 1997) and,
in the event of any adjustment to the Conversion Price other than as a
result of a Fundamental Change, the Reference Market Price shall also
be adjusted so that the ratio of the Reference Market Price to the
Conversion Price after giving effect to any such adjustment shall
always be the same as the ratio of the initial Reference Market Price
to the initial Conversion Price set forth in this Article Five.
(e) In determining the amount and type of consideration received by a
holder of Common Stock in the event of a Fundamental Change, consideration
received by a holder of Common Stock pursuant to a statutory right of appraisal
will be disregarded.
SECTION 5.05. In case:
(i) the Company shall declare a dividend (or any other
distribution) on Common Stock that would cause an adjustment to the
Conversion Price of the Series 5.50% Debentures pursuant to the terms
of any of the subparagraphs above (including such an adjustment that
would occur but for the terms of the first sentence of Section
5.03(a)(viii) above); or
(ii) the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock or combined into a
smaller number of shares of Common Stock; or
(iii) the Company shall authorize the granting to the holders of
Common Stock generally of rights or warrants (for a period expiring
within 45 days after the record date fixed for a distribution of such
rights and warrants) to subscribe for or purchase any shares of the
Company's capital stock or other capital stock of any class or of any
other rights (including any Rights Offerings); or
32
(iv) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock),
or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company or a compulsory share exchange; or
(v) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then the Company shall (i) if any Preferred Securities are outstanding,
cause to be filed with the transfer agent for the Preferred Securities, and
shall cause to be mailed to the holders of record of the Preferred Securities,
at their last addresses as they shall appear upon the stock transfer books of
the Trust or (ii) shall cause to be mailed to all Holders at their last
addresses as they shall appear in the books and records of the Trust, at least
15 days prior to the applicable record or effective date hereinafter specified,
a notice stating (A) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined or (B) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 5.06. The Company shall reserve, free from pre-emptive rights,
out of its authorized but unissued shares, sufficient shares to provide for the
conversion of the Series 5.50% Debentures from time to time as such Series 5.50%
Debentures are presented for conversion, provided, that nothing contained herein
shall be construed to preclude the Company from satisfying its obligations in
respect of the conversion of Series 5.50% Debentures by delivery of repurchased
shares of Common Stock which are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of
conversion of Series 5.50% Debentures hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be validly issued or delivered upon conversion, then the
33
Company covenants that it will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be, provided,
however, that nothing in this Section 5.06 shall be deemed to affect in any way
the obligations of the Company to convert Series 5.50% Debentures into Common
Stock as provided in this Article Five.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Series 5.50% Debentures will upon issue be fully paid
and non-assessable by the Company and free of pre-emptive rights.
SECTION 5.07. Notwithstanding the foregoing provisions, the issuance of
any shares of Common Stock pursuant to any plan providing for the reinvestment
of dividends or interest payable on securities of the Company and the investment
of additional optional amounts in shares of Common Stock under any such plan,
and the issuance of any shares of Common Stock or options or rights to purchase
such shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of October 29, 1997, shall not be deemed to
constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the Conversion
Price in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article Five.
SECTION 5.08. In case the Company shall, by dividend or otherwise,
declare or make a distribution on the Common Stock referred to in Section
5.03(a)(iv) or 5.03(a)(v) (including, without limitation, dividends or
distributions referred to in the last sentence of Section 5.03(a)(vi)), the
Holder of the Series 5.50% Debenture, upon the conversion thereof subsequent to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution and prior to the effectiveness of the
Conversion Price adjustment in respect of such distribution, shall also be
entitled to receive for each share of Common Stock into which the Series 5.50%
Debentures are converted, the portion of the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however, that, at
the election of the Company (whose election shall be evidenced by a resolution
of the Board of
34
Directors) with respect to all Holders so converting, the Company may, in lieu
of distributing to such Holder any portion of such distribution not consisting
of cash or securities of the Company, pay such Holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors). If any conversion of Series 5.50% Debentures
described in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which the Holder of Series 5.50%
Debentures so converted is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which such Holder is so
entitled, provided, that such due bill (a) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (b) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or delivery thereof to
holders of shares of Common Stock receiving such distribution.
ARTICLE 6
FORM OF SERIES 5.50% DEBENTURES
SECTION 6.01. The Series 5.50% Debentures and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE NOTE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture is a
Global Debenture within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depositary or a nominee of a Depositary. This
Debenture is exchangeable for Debentures registered in the name of a person
other than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized representative to
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by
35
an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
[IF THE DEBENTURE IS TO BE A DEFINITIVE CERTIFICATE ISSUED TO AN
INSTITUTIONAL ACCREDITED INVESTOR ATTACH "ACCREDITED INVESTOR LETTER" IN THE
FORM ATTACHED HERETO]
No. $
CUSIP NO. ____________
THE AES CORPORATION
5.50% JUNIOR SUBORDINATED DEBENTURE
DUE 2012
[If prior to the Transfer Restriction Termination Date or sale pursuant
to an effective registration statement or Rule 144, add legend from Section 1.04
of this Second Supplemental Indenture].
The AES Corporation, a corporation duly organized and existing under
the laws of the State of Delaware (herein referred to as the "COMPANY", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to , or registered assigns, the
principal sum of $___________ on September 30, 2012, and to pay interest on said
principal sum from October 29, 1997 or from the most recent interest payment
date (each such date, an "INTEREST PAYMENT DATE") to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears commencing December 31, 1997 at the rate of 5.50% per annum plus
Compounded Interest, if any, until the principal hereof shall have become due
and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year twelve 30-day months. In the event that
any date on which interest is payable on this Debenture is not a business day,
then payment of interest payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day is in
the next succeeding calendar year,
36
such payment shall be made on the immediately preceding business day, in each
case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor Debentures, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, [which shall be the close of business on the
day next preceding such Interest Payment Date, provided if the Preferred
Securities of AES Trust II are no longer in book-entry only form, the regular
record dates shall be the close of business on the fifteenth (15th) day of the
month in which such Interest Payment Date occurs] [IF PURSUANT TO THE PROVISIONS
OF SECTION 2.11(c) OF THE INDENTURE OR SECTION 1.04 OF THE SECOND SUPPLEMENTAL
INDENTURE THE SERIES 5.50% DEBENTURES ARE NOT REPRESENTED BY A GLOBAL DEBENTURE
- -- which shall be the close of business on the fifteenth (15th) day of the month
in which such Interest Payment Date occurs.] Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holders on such regular record date, and may be paid to the person in
whose name this Debenture (or one or more Predecessor Debentures) is registered
at the close of business on a special record date to be fixed by the Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
registered holders of this series of Debentures not less than 10 days prior to
such special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City and State of New York, in any coin or currency of the United
States of America which at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered holder at
such address as shall appear in the Debenture register and that the payment of
principal will only be made upon the surrender of this Debenture to the Trustee.
Notwithstanding the foregoing, so long as the owner and record holder of this
Debenture is the Property Trustee (as defined in the Indenture referred to on
the reverse hereof), the payment of the principal of (and premium, if any) and
interest (including Compounded Interest, if any) on this Debenture will be made
at such place and to such account of the Property Trustee as may be designated
by the Property Trustee.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior and Subordinated Debt, and this Debenture is
issued subject to
37
the provisions of the Indenture with respect thereto. Each Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior and Subordinated Debt,
whether now outstanding or hereafter incurred, and waives reliance by each such
Holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be
executed.
Dated:
------------------------------------
The AES Corporation
By:
---------------------------------
Attest:
By:
--------------------------------------
Secretary
38
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in
the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF
CHICAGO
as Trustee or as Authentication Agent
By By
-------------------------------- -----------------------------
Authorized Signatory Authorized Signatory
39
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "DEBENTURES"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of March 1, 1997 duly executed and delivered between
the Company and The First National Bank of Chicago, a national banking
association, as Trustee (herein referred to as the "TRUSTEE"), as supplemented
by the Second Supplemental Indenture dated as of October 29, 1997 between the
Company and the Trustee (said Indenture as so supplemented being hereinafter
referred to as the "INDENTURE"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Debentures, and, to the extent
specifically set forth in the Indenture, the holders of Senior and Subordinated
Debt and Preferred Securities. By the terms of the Indenture, the Debentures are
issuable in series which may vary as to amount, date of maturity, rate of
interest and in other respects as in the Indenture provided. This series of
Debentures is designated the 5.50% Junior Subordinated Debentures due 2012 and
is limited in aggregate principal amount as specified in said Second
Supplemental Indenture.
Except as provided in the next paragraph, the Debentures may not be
redeemed by the Company prior to September 30, 2000. The Company shall have the
right to redeem this Debenture at the option of the Company, without premium or
penalty, in whole or in part at any time on or after September 30, 2000 (an
"OPTIONAL REDEMPTION"), upon not less than 30 nor move than 60 days notice to
the Holder of the Series 5.50% Debentures, at the following prices (as expressed
as percentages of the principal amount of the Debentures) (the "OPTIONAL
REDEMPTION PRICE"), together with any accrued but unpaid interest, including any
Compounded Interest, if any, to, but including, the date of such redemption, if
redeemed during the 12-month period beginning September 30:
YEAR REDEMPTION PRICE
---- ----------------
2000 103.438%
2001 102.750%
2002 102.063%
2003 101.375%
2004 100.688%
and 100% if redeemed on or after September 30, 2005.
40
If the Series 5.50% Debentures are redeemed on any Interest Payment
Date, accrued and unpaid interest shall be payable to Holders of record on the
relevant record date.
The Company may not redeem any Series 5.50% Debentures unless all
accrued and unpaid interest thereon, including Compounded Interest, if any, has
been paid for all quarterly periods terminating on or prior to the date of
notice of redemption. So long as the corresponding Preferred Securities are
outstanding, the proceeds from the redemption of the Series 5.50% Debentures
will be used to redeem the Preferred Securities.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or
by any other method utilized by the Trustee; provided if, at the time of
redemption, the Debentures are registered as a Global Debenture, the Depository
shall determine the principal amount of such Debentures held by each holder of
Debentures to be redeemed in accordance with its customary procedures.
If, at any time, a Tax Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and (i)
the Regular Trustees and the Company shall have received an opinion (a
"REDEMPTION TAX OPINION") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Debentures for United States federal income tax purposes even if
the Debentures were distributed to the holders of Preferred Securities and
Common Securities in liquidation of such holder's interest in AES Trust II as
set forth in the Declaration of Trust or (ii) the Regular Trustees shall have
been informed by such tax counsel that a No Recognition Opinion (as defined
below) cannot be delivered to AES Trust II, the Company shall have the right at
any time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash at a price equal to 100% of the
principal amount thereof, together with any accrued and unpaid interest thereon,
including Compounded Interest if any, to, but excluding the date of redemption,
within 90 days following the occurrence of such Tax Event; provided, however,
that, if at the time there is available to the Company or the Regular Trustees
on behalf of AES Trust II the opportunity to eliminate, within such 90 day
period, the Tax Event by taking some ministerial action ("MINISTERIAL ACTION"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on AES Trust II, the Company or
the holders of the Preferred Securities, the Company or the Regular Trustees on
behalf of AES Trust II will pursue such measure in lieu of redemption and
provided further that the Company shall have
41
no right to redeem the Debentures while the Regular Trustees on behalf of AES
Trust II are pursuing any such Ministerial Action.
"TAX EVENT" means that the Company and the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "DISSOLUTION TAX OPINION") to the effect that on or after
October 23, 1997, as a result of (a) any amendment to, or change in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any amendment to, or
change in, an interpretation or application of any such laws or regulations by
any legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any judicial
decision or regulatory determination), (c) any interpretation or pronouncement
that provides for a position with respect to such laws or regulations that
differs from the theretofore generally accepted position or (d) any action taken
by any governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after October 23, 1997, there is more than an insubstantial risk that (i) AES
Trust II is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to income accrued or received on the
Debentures, (ii) AES Trust II is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of taxes, duties or other governmental
charges or (iii) interest payable by the Company to AES Trust II on the
Debentures is not, or within 90 days of the date thereof will not be, deductible
by the Company for United States federal income tax purposes.
"NO RECOGNITION OPINION" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
any then applicable published revenue ruling of the Internal Revenue Service, to
the effect that the holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of a
dissolution of AES Trust II and distribution of the Debentures as provided in
the Declaration of Trust.
If the Debentures are only partially redeemed by the Company pursuant
to an Optional Redemption or as a result of a Tax Event as described above, the
Debentures will be redeemed pro rata or by lot or in some other equitable manner
determined by the Trustee. Notwithstanding the foregoing, if a partial
redemption of the Debentures would result in the delisting of the Preferred
Securities by any national securities exchange or other organization on which
the Preferred Securities are then listed, the Company shall not be permitted to
effect such partial redemption and will only redeem the Debentures in whole.
42
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Debenture upon compliance by the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture (and, in the case of any series of
Debentures held as trust assets of an AES Trust and with respect to which a
Security Exchange has not theretofore occurred, such consent of holders of the
Preferred Securities and the Common Securities of such AES Trust) as may be
required under the Declaration of Trust of such AES Trust to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Debentures; provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any Debentures of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the holder of each Debenture so affected or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Debenture (and, in the case of any series of Debentures held as trust
assets of an AES Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of the holders of the Preferred Securities
and the Common Securities of such AES Trust as may be required under the
Declaration of Trust of such AES Trust) then outstanding and affected thereby.
The Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Debentures of a series at the time outstanding
affected thereby (subject, in the case of any series of Debentures held as trust
assets of an AES Trust and with respect to which a Securities Exchange has not
theretofore occurred, to such consent of holders of Preferred Securities and
Common Securities of such AES Trust as may be required under the Declaration of
Trust of such AES Trust), on behalf of the Holders of the Debentures of such
series, to waive any past default in the
43
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to such series, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Debentures of such series. Any such consent or waiver by
the registered Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Debenture and of any Debenture issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Debenture.
Subject to Section 13.12 of the Indenture, no reference herein to the
Indenture (other than such Section) and no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and interest on
this Debenture at the time and place at the rate and in the money herein
prescribed.
So long as the Company is not in default in the payment of interest on
the Debentures, the Company shall have the right, at any time during the term of
the Debentures, from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarterly interest periods (the "EXTENDED
INTEREST PAYMENT PERIOD"), at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate of
5.50% per annum to the extent permitted by applicable law, compounded quarterly
("COMPOUNDED INTEREST")); provided that no Extended Interest Payment Period may
extend beyond the date of maturity or any redemption date of the Debentures.
During such Extended Interest Payment Period the Company shall not declare or
pay any dividend on, or redeem, purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred stock,
or make any guarantee payments with respect thereto, provided that the foregoing
will not apply to any stock dividends, paid by the Company in Common Stock.
Prior to the termination of any such Extended Interest Payment Period, the
Company may pay all or any portion of the interest accrued on the Debentures on
any Interest Payment Date to holders of record on the regular record date for
such Interest Payment Date or from time to time further extend such Extended
Interest Payment Period, provided that such Period together with all such
further extensions thereof shall not exceed 20 consecutive quarterly interest
periods. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest then due, together with
Compounded Interest, the Company may select a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest on this Debenture
shall be due and payable during an Extended Interest Payment Period, except at
the end thereof. At the end of the Extended Interest Payment Period the Company
shall pay all interest accrued and unpaid on the Debentures including any
Compounded
44
Interest which shall be payable to the holders of the Debentures in whose names
the Debentures are registered in the Debenture register on the first record date
after the end of the Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered holder hereof on the
Debenture register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City and State of New York accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company or the Trustee
duly executed by the registered holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any paying agent nor any
Debenture Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Holder of any Debenture has the right, exercisable at any time
through the close of business (New York time) on September 30, 2012 (or, in the
case of a Debenture called for redemption, prior to the close of business on the
Business Day prior to the corresponding redemption date), to convert the
principal amount thereof (or any portion thereof that is an integral multiple of
$50) into shares of Common Stock at the initial conversion rate of 0.8914 shares
of Common Stock
45
for each Debenture (equivalent to a Conversion Price of $56.09 per share of
Common Stock), subject to adjustment under certain circumstances.
To convert a Debenture, a Holder must (a) complete and sign a
conversion notice substantially in the form attached hereto, (b) surrender the
Debenture to a Conversion Agent, (c) furnish appropriate endorsements or
transfer documents if required by the Conversion Agent and (d) pay any transfer
or similar tax, if required. If a Debenture is surrendered for conversion after
the close of business on any regular record date for payment of a Distribution
and before the opening of business on the corresponding Distribution payment
date, then, notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose name the
Debenture is registered at the close of business on such record date, and (other
than a Debenture or a portion of a Debenture called for redemption on a
redemption date occurring after such record date and on or prior to such
Distribution payment date) when so surrendered for conversion, the Debenture
must be accompanied by payment of an amount equal to the Distribution payable on
such Distribution payment date. The number of shares issuable upon conversion of
a Debenture is determined by dividing the principal amount of the Debenture
converted by the Conversion Price in effect on the Conversion Date. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest. The outstanding principal amount of any
Debenture shall be reduced by the portion of the principal amount thereof
converted into shares of Common Stock.
[If CERTIFICATED DEBENTURES -- The Debentures of this series are
issuable only in registered form without coupons in denominations of $50 and any
integral multiple thereto.] [If GLOBAL DEBENTURE -- This Global Debenture is
exchangeable for Debentures in definitive form under certain limited
circumstances set forth in the Indenture. Debentures of this series so issued
are issuable only in registered form without coupons in denominations of $50 or
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations [If GLOBAL DEBENTURE -- herein and] therein set forth,
Debentures of this series [If GLOBAL DEBENTURE -- so issued] are exchangeable
for a like aggregate principal amount of Debentures of this series of a
different authorized denomination, as requested by the Holder surrendering the
same.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
46
[FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: The AES Corporation
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture, or the portion below designated, into
Common Stock of THE AES CORPORATION, in accordance with the terms of the
Indenture referred to in this Debenture, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Date: _________, ____
in whole Portions of Debenture to be converted ($50
or integral multiples thereof):
$__________
-------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
----------------------
----------------------
----------------------
Signature Guarantee:1____
- -------------------
1 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include
membership of participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Conversion Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities and Exchange Act of 1934, as
amended.
47
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Debenture to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
- --------------------------------------------------------------------------------
___________________________________________________ agent to transfer
this Debenture on the books of the Trust. The agent may substitute another to
act for him or her.
Date:_______________________________________
Signature:_________________________________________
(Sign exactly as your name appears on the other side of this Debenture)
Signature
Guarantee2:_________________________________________________
- -------------------
2 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include
membership of participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Conversion Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities and Exchange Act of 1934, as
amended.
48
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH (I) TRANSFERS OF INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL DEBENTURE AND
(II) TRANSFERS OF INTEREST TO NON-U.S. PERSONS
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administration
Re: The AES Corporation (the "Company")
Series 5.50% Debentures
Dear Sirs or Mesdames:
In connection with our proposed sale of the number of Series 5.50%
Debentures designated below, the undersigned owner confirms that such sale has
been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended, and, accordingly, represents that:
(1) the offer of the Series 5.50% Debentures was not made to a person
in the United States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
49
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Date: ___________, ____
Very truly yours,
[Name of Transferor]
By:
----------------------
Authorized Signature
Number of Series 5.50% Debentures to
be sold:
------------------------
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number:
------------------------
------------------------
------------------------
50
ACCREDITED INVESTOR LETTER
, 199
The First National Bank of
Chicago
One First National Plaza
Chicago, Illinois 60670-0126
Dear Sirs:
In connection with our proposed transfer of 5.50% Junior Subordinated
Debentures due 2012 described below (the "Debentures") of The AES Corporation
(the "Issuer"), we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated October 24, 1997, relating to the Debentures
and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Debentures except in compliance
with, such restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
2. We understand that any subsequent transfer of the Debentures is
subject to certain restrictions and conditions set forth in the
Indenture as amended by the second supplemental indenture relating
to the Debentures and the undersigned agrees to be bound by, and
not to resell, pledge or otherwise transfer the Debentures except
in compliance with, such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and the sale of the Debentures has
not been registered under the Securities Act, and that the
Debentures may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of
any accounts for which we are acting as hereinafter stated, that
if we should sell any Debentures or Common Stock (together, the
"Securities") prior to the expiration of the holding period
applicable to sales of the security evidenced hereby under Rule
144(k) under the Securities Act (or any successor provision), we
will do so only (A) to The AES Corporation (the "Company") or any
subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a
51
"qualified institutional buyer" (as defined therein), (C) inside
the United States to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes to the
Trustee a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the
Debenture (the form of which letter can be obtained from the
Trustee) and, if such transfer is in respect of Debenture with an
aggregate liquidation preference of less than $250,000, an opinion
of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States
in accordance with the Rule 904 under the Securities Act (E)
pursuant to the exemption from registration provided by Rule 144
under the Securities Act (if available) or (F) pursuant to an
effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing any of the
Debenture from us a notice advising such purchaser that resales of
the Debenture are restricted as stated herein.
4. We understand that, on any proposed resale of any Securities, we
will be required to furnish to the Issuer and the Trustee such
certifications, legal opinions and other information as the Issuer
and the Trustee may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend
to the foregoing effect.
5. We are a institutional "accredited investor" (as defined in rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
risks of our investment in the Preferred Securities, and we and
any accounts for which we are acting are each able to bear the
economic risks of our or their investment.
6. We are acquiring the Debenture purchased by us for our own account
for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole
investment discretion.
The Issuer and the Trustee are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
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Very truly yours,
By:
------------------------
Name:
Title:
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ARTICLE 7
ORIGINAL ISSUE OF SERIES 5.50% DEBENTURES
SECTION 7.01. Except as provided in Section 1.01 and this Section 7.01,
Series 5.50% Debentures in the aggregate principal amount equal to $309,278,400
may, upon execution of this Second Supplemental Indenture, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and make available for delivery said Debentures to or
upon the written order of the Company, signed by its Chairman, its President, or
any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company. Upon exercise of the overallotment option set
forth in the Underwriting Agreement, additional Series 5.50% Debentures in the
aggregate principal amount of up to $46,391,800 may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Series 5.50% Debentures
executed as aforesaid by the Company, to or upon the written order of the
Company, which order shall be accompanied by evidence satisfactory to the
Trustee that the overallotment option has been exercised.
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.01. Except as otherwise expressly provided in this Second
Supplemental Indenture or in the form of Series 5.50% Debenture or otherwise
clearly required by the context hereof or thereof, all terms used herein or in
said form of Series 5.50% Debenture that are defined in the Indenture shall have
the several meanings respectively assigned to them thereby.
SECTION 8.02. The Indenture, as supplemented by this Second
Supplemental Indenture, is in all respects ratified and confirmed. This Second
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
SECTION 8.03. The recitals herein contained are made by the Company and
not by the Trustee, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representation as to the validity or
sufficiency of this Second Supplemental Indenture.
SECTION 8.04. This Second Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
THE AES CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
- ---------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:
--------------------------------
Name:
Title:
Attest:
- ---------------------------------------
Name:
Title:
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