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AMENDED AND RESTATED DECLARATION OF TRUST
OF
AES TRUST II
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DATED AS OF OCTOBER 29, 1997
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1
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DEFINITIONS
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SECTION 1.01. Definitions....................................................2
ARTICLE 2
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TRUST INDENTURE ACT
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SECTION 2.01. Trust Indenture Act; Application...............................9
SECTION 2.02. Lists of Holders of Preferred Securities......................10
SECTION 2.03. Reports by the Property Trustee...............................10
SECTION 2.04. Periodic Reports to Property Trustee..........................10
SECTION 2.05. Evidence of Compliance with Conditions Precedent..............10
SECTION 2.06. Events of Default; Waiver.....................................10
SECTION 2.07. Disclosure of Information.....................................12
ARTICLE 3
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ORGANIZATION
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SECTION 3.01. Name..........................................................13
SECTION 3.02. Office........................................................13
SECTION 3.03. Issuance of the Trust Securities..............................13
SECTION 3.04. Purchase of Debentures........................................14
SECTION 3.05. Purpose.......................................................14
SECTION 3.06. Authority.....................................................15
SECTION 3.07. Title to Property of the Trust................................15
SECTION 3.08. Powers and Duties of the Regular Trustees.....................15
SECTION 3.09. Prohibition of Actions by Trust and Trustees..................18
SECTION 3.10. Powers and Duties of the Property Trustee.....................19
SECTION 3.11. Delaware Trustee..............................................22
SECTION 3.12. Certain Rights and Duties of the Property Trustee.............22
SECTION 3.13. Filing of Amendments to Certificate of Trust..................25
SECTION 3.14. Execution of Documents by Regular Trustees....................25
SECTION 3.15. Trustees Not Responsible for Recitals or Issuance of
Securities..........................................................25
SECTION 3.16. Duration of Trust.............................................26
ARTICLE 4
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SPONSOR
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SECTION 4.01. Purchase of Common Securities by Sponsor......................26
SECTION 4.02. Expenses......................................................26
ARTICLE 5
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TRUSTEES
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SECTION 5.01. Number of Trustees; Qualifications............................27
SECTION 5.02. Appointment, Removal and Resignation of Trustees..............29
SECTION 5.03. Vacancies among Trustees......................................31
SECTION 5.04. Effect of Vacancies...........................................31
SECTION 5.05. Meetings......................................................31
SECTION 5.06. Delegation of Power...........................................32
ARTICLE 6
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DISTRIBUTIONS
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SECTION 6.01. Distributions.................................................32
ARTICLE 7
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ISSUANCE OF SECURITIES
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SECTION 7.01. General Provisions Regarding Securities.......................32
SECTION 7.02. Conversion Agent..............................................34
ARTICLE 8
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TERMINATION OF TRUST
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SECTION 8.01. Termination of Trust..........................................35
ARTICLE 9
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TRANSFER OF INTERESTS
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SECTION 9.01. Transfer of Securities........................................35
SECTION 9.02. Transfer of Certificates......................................38
SECTION 9.03. Deemed Security Holders.......................................39
SECTION 9.04. Book Entry Interests..........................................39
SECTION 9.05. Notices to Holders of Certificates............................42
SECTION 9.06. Appointment of Successor Clearing Agency......................42
SECTION 9.07. Definitive Preferred Securities Certificates..................42
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates.............43
ii
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ARTICLE 10
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LIMITATION OF LIABILITY; INDEMNIFICATION
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SECTION 10.01. Exculpation..................................................43
SECTION 10.02. Indemnification..............................................44
SECTION 10.03. Outside Business.............................................45
ARTICLE 11
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ACCOUNTING
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SECTION 11.01. Fiscal Year..................................................45
SECTION 11.02. Certain Accounting Matters...................................45
SECTION 11.03. Banking......................................................46
SECTION 11.04. Withholding..................................................46
ARTICLE 12
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AMENDMENTS AND MEETINGS
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SECTION 12.01. Amendments...................................................47
SECTION 12.02. Meetings of the Holders of Securities; Action by Written
Consent.............................................................48
ARTICLE 13
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REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
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SECTION 13.01. Representations and Warranties of Property Trustee
...................................................................49
ARTICLE 14
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MISCELLANEOUS
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SECTION 14.01. Notices......................................................51
SECTION 14.02. Undertaking for Costs........................................52
SECTION 14.03. Governing Law................................................52
SECTION 14.04. Headings.....................................................52
SECTION 14.05. Partial Enforceability.......................................53
SECTION 14.06. Counterparts.................................................53
SECTION 14.07. Intention of the Parties.....................................53
SECTION 14.08. Successors and Assigns.......................................53
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AES TRUST II
OCTOBER 29, 1997
AMENDED AND RESTATED DECLARATION OF TRUST
("Declaration") dated and effective as of October 29, 1997 by the undersigned
trustees (together with all other Persons from time to time duly appointed and
serving as trustees in accordance with the provisions of this Declaration, the
"Trustees"), The AES Corporation, a Delaware corporation, as trust sponsor
("AES" or the "Sponsor"), and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration.
WHEREAS, the Sponsor and the certain of the Trustees entered into a
Declaration of Trust dated as of November 1, 1996 (the "Original Declaration")
in order to establish a statutory business trust (the "Trust") under the
Business Trust Act (as hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust") of the
Trust was filed with the office of the Secretary of State of the State of
Delaware on November 5, 1996 and was restated on March 27, 1997;
WHEREAS, the Trustees and the Sponsor desire to continue the Trust
pursuant to the Business Trust Act for the purpose of, as described more fully
in Sections 3.03 and 3.04 hereof, (i) issuing and selling Preferred Securities
(as defined herein) representing preferred undivided beneficial interests in the
assets of the Trust for cash and investing the proceeds thereof in Debentures
(as hereinafter defined) of AES issued under the Indenture (as hereinafter
defined) to be held as assets of the Trust and (ii) issuing and selling Common
Securities (as defined herein) representing common undivided beneficial
interests in the assets of the Trust to AES in exchange for cash and investing
the proceeds thereof in additional Debentures issued under the Indenture to be
held as assets of the Trust;
NOW, THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Business Trust Act, that the
Original Declaration be amended and restated in its entirety as provided herein
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets referred to in clauses (i) and (ii)
of the previous Whereas clause purchased by the Trust will be held in trust for
the benefit of the Holders (as defined herein) from time to time, of the
Certificates (as defined
2
herein) representing undivided beneficial interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.01;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Amended and Restated Declaration of Trust (including Exhibits A, B and C
hereto (the "Exhibits")) as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this Declaration unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Clearing Agency as described in Section 9.04.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in the City of New York, in the State of New
York are authorized or required by applicable law to close.
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"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code ss. 3801 et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Certificate of Trust" has the meaning set forth in the second Whereas
clause above.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the Closing Date as specified in the Purchase
Agreement, which date is also the date of execution and delivery of this
Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section ((Sec.))
of the Code refers not only to such specific section but also to any
corresponding provision of any federal tax statute enacted after the date of
this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.01(b).
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Annex I to Exhibit C.
"Common Stock" means the common stock of AES, par value $.01 per share.
"Conversion Agent" has the meaning specified in Section 7.02.
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"Covered Person" means (i) any officer, director, shareholder, partner,
member, representative, employee or agent of the Trust or its Affiliates, (ii)
any officer, director, shareholder, employees, representatives or agents of AES
or its Affiliates and (iii) the Holders from time to time of the Securities.
"Debenture Trustee" means The First National Bank of Chicago, as
trustee under the Indenture until a successor is appointed thereunder and
thereafter means such successor trustee.
"Debentures" means the series of Junior Subordinated Convertible
Debentures issued by AES under the Indenture to the Property Trustee and
entitled the "5.50% Junior Subordinated Debentures due 2012".
"Definitive Preferred Security Certificates" has the meaning set forth
in Section 9.04.
"Delaware Trustee" has the meaning set forth in Section 5.01(a)(3).
"Depositary Agreement" means the agreement among the Trust, the
Property Trustee and DTC dated as of the Closing Date, as the same may be
amended or supplemented from time to time.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.01.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Indenture
Event of Default has occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time or any successor legislation.
"Fiscal Year" has the meaning specified in Section 11.01.
"Global Certificate" has the meaning set forth in Section 9.04.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
5
"Indemnified Person" means any Trustee, any Affiliate of any Trustee,
any Conversion Agent, any Paying Agent, any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Trustee,
Conversion Agent or Paying Agent, or any employee or agent of the Trust or its
Affiliates.
"Indenture" means the Junior Subordinated Indenture dated as of March
1, 1997 between AES and the Debenture Trustee as supplemented by the First
Supplemental Indenture thereto dated as of March 31, 1997 and by the Second
Supplemental Indenture thereto dated as of October 29, 1997, pursuant to which
the Debentures are to be issued.
"Indenture Event of Default" means an event or condition defined as an
"Event of Default" with respect to the Debentures under Section 6.01(a) of the
Indenture has occurred and is continuing.
"Initial Purchasers" means the initial purchasers as defined in the
Purchase Agreement.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time or any successor legislation.
"Institutional Accredited Investor" means an institutional investor
that is an "accredited investor" within the meaning of Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Legal Action" has the meaning specified in Section 3.08(g).
"Liquidation Distribution" has the meaning set forth in Exhibits B and
C hereto establishing the terms of the Securities.
"Majority in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities
voting separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
6
represents more than 50% of the liquidation amount of all outstanding Securities
of such class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"144A Global Security" has the meaning specified in Section 9.04(b).
"Option Closing Date" means the Option Closing Date as specified in the
Purchase Agreement.
"Original Declaration" has the meaning set forth in the first WHEREAS
clause above.
"Paying Agent" has the meaning specified in Section 3.10(i).
"Permanent Regulation S Global Security" has the meaning set forth in
Section 9.04(b).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PORTAL Market" means the Private Offerings, Resales and Trading
through Automated Linkages Market operated by the National Association of
Securities Dealers, Inc. (or any successor thereto).
"Preferred Guarantee" means the Guarantee Agreement dated as of October
29, 1997 of AES in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.01(b).
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive certificate in
fully registered form representing a Preferred Security substantially in the
form of Annex I to Exhibit B.
7
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.01(c) and having the duties set forth for
the Property Trustee herein.
"Purchase Agreement" means the Purchase Agreement dated as of October
23, 1997 among the Trust, the Sponsor, J.P. Morgan Securities Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Unterberg Harris.
"Property Account" has the meaning specified in Section 3.10(c)(i).
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both such Regular Trustees.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of October 29, 1997 among The AES Corporation, AES Trust II, J.P.
Morgan Securities, Inc., Donaldson, Lufkin & Jennrette Securities Corporation
and Unterberg Harris, L.P.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in Section
9.04(b).
"Regulation S Securities Exchange Date" has the meaning set forth in
Section 9.04(b).
"Restricted Security" has the meaning specified in Section 9.01(d).
"Rule 144" means Rule 144 as promulgated under the Securities Act.
"Rule 144A" means Rule 144A as promulgated under the Securities Act.
"Rule 144(k)" means Rule 144(k) as promulgated under the Securities
Act.
"Regular Trustee" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"Related Party" means any direct or indirect wholly owned subsidiary of
AES or any other Person which owns, directly or indirectly, 100% of the
outstanding voting securities of AES.
8
"Resignation Request" has the meaning specified in Section 5.02(d).
"Responsible Officer" means, with respect to the Property Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Property Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Special Event" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"Sponsor" or "AES" means The AES Corporation, a Delaware corporation,
or any successor entity in a merger, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.02(b)(ii).
"Successor Property Trustee" means a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.01(c).
"Temporary Regulation S Global Security" has the meaning set forth in
Section 9.04(b).
"10% in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities,
voting separately as a class, who are the record owners of a relevant class of
Securities whose
9
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) represents 10% or
more of the liquidation amount of all outstanding Securities of such class.
"Transfer Restriction Termination Date" means the first date on which
the Securities and any Common Stock issued or issuable upon the conversion or
exchange thereof (other than (i) Securities acquired by the Trust or any
Affiliate thereof and (ii) Common Stock issued upon the conversion or exchange
of any Security described in clause (i) above) may be sold pursuant to Rule
144(k).
"Treasury Regulations" means the income tax regulations including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by ss.ss.310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall control;
(c) the Property Trustee, to the extent permitted by applicable law
and/or the rules and regulations of the Commission, shall be the only Trustee
which is a trustee for the purposes of the Trust Indenture Act; and
10
(d) the application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.02. Lists of Holders of Preferred Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee with such information as is required under
ss. 312(a) of the Trust Indenture Act at the times and in the manner provided in
ss. 312(a); and
(b) the Property Trustee shall comply with its obligations under ss.ss.
310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Property Trustee. Within 60 days after May
15 of each year, commencing May 1998, the Property Trustee shall provide to the
Holders of the Securities such reports as are required by ss. 313 of the Trust
Indenture Act, if any, in the form, in the manner and at the times provided by
ss. 313 of the Trust Indenture Act. The Property Trustee shall also comply with
the requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Property Trustee. Each of the Sponsor
and the Regular Trustees on behalf of the Trust shall provide to the Property
Trustee, the Commission and the Holders of the Securities, as applicable, such
documents, reports and information as required by ss. 314(a)(1)-(3) (if any) of
the Trust Indenture Act and the compliance certificates required by ss.
314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be
provided in the form, in the manner and at the times required by ss. 314(a)(4)
and (c) of the Trust Indenture Act (provided that any certificate to be provided
pursuant to ss. 314(a)(4) of the Trust Indenture Act shall be provided within
120 days of the end of each Fiscal Year).
SECTION 2.05. Evidence of Compliance with Conditions Precedent. Each of
the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Declaration which relate to any of the matters set
forth in ss. 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given pursuant to ss. 314(c) shall comply with ss. 314(e) of the
Trust Indenture Act.
SECTION 2.06. Events of Default; Waiver. (a) Subject to Section
2.06(c), Holders of Preferred Securities may, by vote of at least a Majority in
liquidation amount of the Preferred Securities (A) in accordance with the terms
of the
11
Preferred Securities, direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee, or (B) on behalf of the
Holders of all Preferred Securities, waive any past Event of Default in respect
of the Preferred Securities and its consequences; provided that if the Event of
Default arises out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, the Event of
Default under this Declaration shall also be not waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority
in principal amount of the Debentures, or (2) each holder of
Debentures, the Event of Default under this Declaration may only be
waived by, in the case of clause (1) above, the vote of Holders of
Preferred Securities representing such specified percentage of the
aggregate liquidation amount of the Preferred Securities or, in the
case of clause (2) above, each Holder of Preferred Securities.
Upon such waiver, any such default shall cease to exist, and any Event
of Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Preferred Securities or impair any right consequent thereon.
(b) Subject to Section 2.06(c), Holders of Common Securities may by
vote of at least a Majority in liquidation amount of the Common Securities, (A)
in accordance with the terms of the Common Securities, direct the time, method
and place of conducting any proceeding for any remedy available to the Property
Trustee or exercising any trust or power conferred upon the Property Trustee or
(B) on behalf of the Holders of all of the Common Securities, waive any past
Event of Default with respect to the Common Securities and its consequences,
provided that, if the Event of Default arises out of an Indenture Event of
Default:
(i) which is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below, the Event of
Default under this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority
in principal amount of the Debentures or (2) each holder of Debentures,
except where the holders of the Common Securities are deemed to have
12
waived such Event of Default under this Declaration as provided below,
the Event of Default under this Declaration may only be waived by, in
the case of clause (1) above, the vote of Holders of Common Securities
representing such specified percentage of the aggregate liquidation
amount of the Common Securities or, in the case of clause (2) above,
each holder of Common Securities; and
provided, further, that each Holder of Common Securities will be deemed to have
waived any Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the Preferred
Securities have been cured, waived by the Holders of Preferred Securities as
provided in this Declaration or otherwise eliminated and until all Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of this Declaration or the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in this Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under this Declaration without any further act, vote or consent of the Holders
of the Common Securities. Subject to the foregoing provisions of this Section
2.06(b), upon such waiver, any such default shall cease to exist and any Event
of Default with respect to the Common Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) The right of any Holder of Securities to receive payment of
Distributions on the Securities in accordance with this Declaration and the
terms of the Securities set forth in Exhibits B and C on or after the respective
payment dates therefor, or to institute suit for the enforcement of any such
payment on or after such payment dates, shall not be impaired without the
consent of such Holder.
(d) As provided in the terms of the Securities set forth in Exhibits B
and C hereto, a waiver of an Indenture Event of Default by the Property Trustee
at the written direction of the Holders of the Preferred Securities constitutes
a waiver of the corresponding Event of Default under this Declaration in respect
of the Securities.
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SECTION 2.07. Disclosure of Information. The disclosure of information
as to the names and addresses of the Holders of the Securities in accordance
with ss. 312 of the Trust Indenture Act, regardless of the source from which
such information was derived, shall not be deemed to be a violation of any
existing law, or any law hereafter enacted which does not specifically refer to
ss. 312 of the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made under
ss. 312(b) of the Trust Indenture Act.
ARTICLE 3
ORGANIZATION
SECTION 3.01. Name. The Trust continued by this Declaration is named
"AES Trust II" as such name may be modified from time to time by the Regular
Trustees following written notice to the Holders of Securities. The Trust's
activities may be conducted under the name of the Trust or any other name deemed
advisable by the Regular Trustees.
SECTION 3.02. Office. The address of the principal office of the Trust
is c/o The AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209.
Upon ten days' written notice to the Holders, the Regular Trustees may change
the location of the Trust's principal office.
SECTION 3.03. Issuance of the Trust Securities. On October 23, 1997 the
Sponsor, on behalf of the Trust and pursuant to the Original Declaration,
executed and delivered the Purchase Agreement. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall execute and deliver to (i) the
Initial Purchasers named in the Purchase Agreement, Global Certificates
registered in the name of the nominee of the initial Clearing Agency as
specified in Section 9.04, and, as the case may be, Definitive Preferred
Security Certificates, in an aggregate amount of 6,000,000 Preferred Securities
having an aggregate liquidation amount of $300,000,000, against receipt of the
aggregate purchase price of such Preferred Securities of $300,000,000, and (ii)
the Sponsor, Common Securities Certificates, registered in the name of the
Sponsor, in an aggregate amount of 185,568 Common Securities having an aggregate
liquidation amount of $9,278,400, against receipt of the aggregate purchase
price of such Common Securities of $9,278,400. In the event and to the extent
the overallotment option granted by the Trust pursuant to the Purchase Agreement
is exercised by such Initial Purchasers, on the Option Closing Date the Regular
Trustees, on behalf of the Trust, shall execute and deliver to (i) such Initial
Purchasers Global Certificates registered in
14
the name of the nominee of the initial Clearing Agency as specified in Section
9.04 and Definitive Preferred Security Certificates, as the case may be, in an
aggregate amount of up to 900,000 Preferred Securities having an aggregate
liquidation amount of up to $45,000,000 against receipt of the aggregate
purchase price of such Preferred Securities of up to $45,000,000, and (ii) the
Sponsor, Common Security Certificates, registered in the name of the Sponsor, in
an aggregate amount of 27,836 Common Securities having an aggregate liquidation
of $1,391,800, against receipt of the aggregate purchase price of such Common
Securities of up to $1,391,800.
SECTION 3.04. Purchase of Debentures. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall purchase from the Sponsor with
the proceeds received by the Trust from the sale of the Securities on such date
pursuant to Section 3.03, at a purchase price of 100% of the principal amount
thereof, Debentures, registered in the name of the Property Trustee, acting in
such capacity, and having an aggregate principal amount equal to $309,278,400,
and, in satisfaction of the purchase price for such Debentures, the Regular
Trustee, on behalf of the Trust, shall deliver or cause to be delivered to the
Sponsor the sum of $309,278,400. In the event the overallotment option granted
by the Trust with respect to the Preferred Securities pursuant to the Purchase
Agreement is exercised by the Initial Purchasers named therein, on the Option
Closing Date the Regular Trustees, on behalf of the Trust, shall purchase from
the Sponsor with the proceeds received by the Trust from the sale of the
Preferred Securities on such date pursuant to Section 3.03, at a purchase price
of 100% of the principal amount thereof, additional Debentures, registered in
the name of the Property Trustee, acting in such capacity, and having an
aggregate principal amount of up to $46,391,800, and, in satisfaction of the
purchase price for such Debentures, the Regular Trustees, on behalf of the
Trust, shall deliver or cause to be delivered to the Sponsor an amount equal to
the aggregate principal amount of the Debentures being purchased.
SECTION 3.05. Purpose. The exclusive purposes and functions of the
Trust are: (a)(i) to issue and sell Preferred Securities for cash and use the
proceeds of such sales to acquire from AES Debentures issued under the Indenture
having an aggregate principal amount equal to the aggregate liquidation amount
of the Preferred Securities so issued and sold; (ii) to enter into such
agreements and arrangements as may be necessary in connection with the sale of
Preferred Securities to the initial purchasers thereof (including the Purchase
Agreement) and to take all action, and exercise such discretion, as may be
necessary or desirable in connection therewith and to file such registration
statements or make such other filings under the Securities Act, the Exchange Act
or state securities or "Blue Sky" laws as may be necessary or desirable in
15
connection therewith and the issuance of the Preferred Securities; and (iii) to
issue and sell Common Securities to AES for cash and use the proceeds of such
sale to purchase as trust assets an equal aggregate principal amount of
Debentures issued under the Indenture; and (b) except as otherwise limited
herein, to engage in only those other activities necessary, convenient or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets or at any time while
the Securities are outstanding, otherwise undertake (or permit to be undertaken)
any activity that would result in or cause the Trust to be treated as anything
other than a grantor trust for United States federal income tax purposes.
SECTION 3.06. Authority. Subject to the limitations provided in this
Declaration and to the specific duties of the Property Trustee, the Regular
Trustees shall have exclusive and complete authority to carry out the purposes
of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action
taken by the Property Trustee in accordance with its powers shall constitute the
act of and serve to bind the Trust. In dealing with the Trustees acting on
behalf of the Trust, no Person shall be required to inquire into the authority
of the Trustees to bind the Trust. Persons dealing with the Trust are entitled
to rely conclusively on the power and authority of the Trustees as set forth in
this Declaration.
SECTION 3.07. Title to Property of the Trust. Except as provided in
Section 3.10 with respect to the Debentures and the Property Account or unless
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an individual undivided beneficial
interest in the assets of the Trust.
SECTION 3.08. Powers and Duties of the Regular Trustees. The Regular
Trustees shall have the exclusive power, authority and duty to cause the Trust,
and shall cause the Trust, to engage in the following activities:
(a) to issue Preferred Securities and Common Securities, in each case
in accordance with this Declaration; provided, however, that the Trust may issue
no more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities and the issuance of Securities shall be
limited to (x) a one-time, simultaneous issuance of both Preferred Securities
and Common Securities on the Closing Date and (y) any subsequent issuance of
Preferred Securities on the Option Closing Date pursuant to an exercise of the
over-allotment option granted to Initial Purchasers in the Purchase Agreement;
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(b) in connection with the issuance of the Preferred Securities, at the
direction of the Sponsor, to effect or cause to be effected the filings, if
necessary, and to execute, deliver and perform on behalf of the Trust the
Depositary Agreement;
(c) to acquire as trust assets Debentures with the proceeds of the sale
of the Preferred Securities and Common Securities; provided, however, that the
Regular Trustees shall cause legal title to all of the Debentures to be vested
in, and the Debentures to be held of record in the name of, the Property Trustee
for the benefit of the Trust and the Holders of the Preferred Securities and the
Common Securities;
(d) to cause the Trust to enter into the Purchase Agreement and such
other agreements and arrangements as may be necessary or desirable in connection
with the sale of Preferred Securities to the initial purchasers thereof and the
consummation thereof, and to take all action, and exercise all discretion, as
may be necessary or desirable in connection with the consummation thereof;
(e) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event; provided, that the Regular Trustees shall
consult with the Sponsor and the Property Trustee before taking or refraining to
take any Ministerial Action in relation to a Special Event;
(f) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including for the purposes
of Section 316(c) of the Trust Indenture Act and with respect to Distributions,
voting rights, redemptions, and exchanges, and to issue relevant notices to
Holders of the Preferred Securities and Common Securities as to such actions and
applicable record dates;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.10(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
17
(j) to give the certificate to the Property Trustee required by ss.
314(a)(4) of the Trust Indenture Act, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses which are necessary or incidental to carrying out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities, the Regular Trustees hereby initially
appointing the Property Trustee for such purposes;
(m) to take all actions and perform such duties as may be required of
the Regular Trustee pursuant to the terms of the Securities set forth in
Exhibits B and C hereto;
(n) to execute all documents or instruments, perform all duties and
powers and do all things for and on behalf of the Trust in all matters necessary
or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust has been created;
(p) to take all action, not inconsistent with this Declaration or with
applicable law, which the Regular Trustees determine in their discretion to be
reasonable and necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.08, in order that:
(i) the Trust will not be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) the Trust will not be classified for United States federal
income tax purposes as an association taxable as a corporation or a
partnership and will be treated as a grantor trust for United States
federal income tax purposes; and
(iii) the Trust will comply with any requirements imposed by any
taxing authority on holders of instruments treated as indebtedness for
United States federal income tax purposes;
18
provided that such action does not adversely affect the interests of Holders;
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(r) subject to the requirements of Rule 3a-7 and ss. 317(b) of the
Trust Indenture Act, to appoint one or more Paying Agents in addition to the
Property Trustee.
The Regular Trustees must exercise the powers set forth in this Section
3.08 in a manner which is consistent with the purposes and functions of the
Trust set out in Section 3.05 and the Regular Trustees shall not take any action
which is inconsistent with the purposes and functions of the Trust set forth in
Section 3.05.
Subject to this Section 3.08, the Regular Trustees shall have none of
the powers nor any of the authority of the Property Trustee set forth in Section
3.10.
SECTION 3.09. Prohibition of Actions by Trust and Trustees. The Trust
shall not, and the Trustees (including the Property Trustee) shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Trustees (including
the Property Trustee) shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the
Debentures but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans, other than loans represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial ownership of,
or beneficial interests in, the Trust other than the Securities;
(g) incur any indebtedness for borrowed money; or
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(h) (i) direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to the Debentures, (ii)
waive any past default that is waivable under Section 6.06 of the Indenture,
(iii) exercise any right to rescind or annul any declaration that the principal
of all of the Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Debentures, where
such consent shall be required, unless in the case of this clause (h) the
Property Trustee shall have received an unqualified opinion of nationally
recognized independent tax counsel recognized as expert in such matters to the
effect that such action will not cause the Trust to be classified for United
States federal income tax purposes as an association taxable as a corporation or
partnership and that the Trust will continue to be classified as a grantor trust
for United States federal income tax purposes.
SECTION 3.10. Powers and Duties of the Property Trustee. (a) The legal
title to the Debentures shall be owned by and held of record in the name of the
Property Trustee in trust for the benefit of the Trust and the Holders of the
Securities. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Article 5. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or, if the Property Trustee
does not also act as the Delaware Trustee, the Delaware Trustee.
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing bank
account (the "Property Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders of the
Securities and on the receipt of payments of funds made in respect of
the Debentures held by the Property Trustee, deposit such funds into
the Property Account and, without any further acts of the Property
Trustee or the Regular Trustees, promptly make payments to the Holders
of the Preferred Securities and Common Securities from the Property
Account in accordance with Section 6.01. Funds in the Property Account
shall be held uninvested, and without liability for interest thereon,
until disbursed in accordance with this Declaration. The Property
Account shall be an account which is maintained with a banking
institution whose long term unsecured indebtedness is rated by a
"nationally recognized statistical rating organization", as such term
is defined for purposes of Rule
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436(g)(2) under the Securities Act, at least equal to (but in no event
less than "A" or the equivalent) the rating assigned to the Preferred
Securities by a nationally recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect promptly the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature;
(iii) upon notice of distribution issued by the Regular Trustees
in accordance with the terms of the Preferred Securities and the Common
Securities, engage in such ministerial activities as shall be necessary
or appropriate to effect promptly the distribution pursuant to terms of
the Securities of Debentures to Holders of Securities upon the
occurrence of a Special Event; and
(iv) have the legal power to exercise all of the rights, powers
and privileges of a holder of the Debentures under the Indenture and,
if an Event of Default occurs and is continuing, the Property Trustee,
subject to Section 2.06(b), shall for the benefit of the Holders of the
Securities, enforce its rights as holder of the Debentures under the
Indenture, subject to the rights of the Holders of the Preferred
Securities pursuant to the terms of this Declaration, the Business
Trust Act and the Trust Indenture Act.
(d) The Property Trustee shall take all actions and perform such duties
as may be specifically required of the Property Trustee pursuant to the terms of
the Securities set forth in Exhibits B and C hereto.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with an Event of Default or the Property Trustee's duties
and obligations under this Declaration, the Business Trust Act or the Trust
Indenture Act; provided however, that the holders of a Majority in liquidation
amount of the Preferred Securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee or to direct the exercise of any trust or power conferred upon
the Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Property Trustee fails to enforce its rights under the
Debentures, a Holder of Preferred Securities, to the extent permitted by law,
may institute a legal proceeding directly against AES to enforce the Property
Trustee's rights under the Debentures without first instituting any legal
proceeding against the Property Trustee or any other Person; provided further,
that, if an Event of Default has occurred and is continuing and
21
such event is attributed to the failure of the Sponsor to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such Holder (a "Holder Direct Action") on or after the respective
due date specified in the Debentures. In connection with such Holder Direct
Action, the rights of the Holders of the Common Securities will be subrogated to
the rights of such Holder of Preferred Securities to the extent of any payment
made by the Sponsor to such Holders of Preferred Securities in such Holder
Direct Action. Except as provided in the preceding sentences, the Holders of
Preferred Securities will not be able to exercise directly any remedy available
to the Holders of the Debentures.
(f) All moneys deposited in the Property Account, and all Debentures
held by the Property Trustee for the benefit of the Holders of the Securities
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of, or for the benefit of the Property Trustee or its agents
or their creditors.
(g) The Property Trustee shall, within 90 days after the occurrence of
a default with respect to the Securities known to the Property Trustee, transmit
by mail, first class postage prepaid, to the holders of the Securities, as their
names and addresses appear upon the register, notice of all such defaults with
respect to the Securities, unless such defaults shall have been cured before the
giving of such notice (the term "defaults" for the purposes of this Section
3.10(g) being hereby defined to be an Indenture Event of Default, not including
any periods of grace provided for in the Indenture and irrespective of the
giving of any notice provided therein); provided, that, except in the case of
default in the payment of the principal of (or premium, if any) or interest on
any of the Debentures, the Property Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee or
a trust committee of directors and/or Responsible Officers, of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities. The Property Trustee shall not be
deemed to have knowledge of any default, except (i) a default in the payment of
principal, premium or interest on the Debentures or (ii) any default as to which
the Property Trustee shall have received written notice or a Responsible Officer
charged with the administration of this Declaration shall have obtained written
notice.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
22
(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Property Trustee has been appointed and accepted
that appointment in accordance with Article 5.
(i) The Property Trustee shall act as paying agent in respect of the
Common Securities and the Preferred Securities and, subject to Section 3.08(r),
may authorize one or more Persons (each, a "Paying Agent") to pay Distributions,
redemption payments or liquidation payments on behalf of the Trust with respect
to the Preferred Securities. Any such Paying Agent shall comply with ss. 317(b)
of the Trust Indenture Act. Any Paying Agent may be removed by the Property
Trustee, after consultation with the Regular Trustees, at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee, subject to Section 3.08(r).
(j) The Property Trustee shall give prompt written notice to the
Holders of the Securities of any notice received by it from AES of its election
to defer payments of interest on the Debentures by extending the interest
payment period with respect thereto.
(k) Subject to this Section 3.10, the Property Trustee shall have none
of the powers or the authority of the Regular Trustees set forth in Section
3.08.
(l) The Property Trustee shall exercise the powers, duties and rights
set forth in this Section 3.10 and Section 3.12 in a manner which is consistent
with the purposes and functions of the Trust set out in Section 3.05, and the
Property Trustee shall not take any action which is inconsistent with the
purposes and functions of the Trust set forth in Section 3.05.
SECTION 3.11. Delaware Trustee. Notwithstanding any other provision of
this Declaration other than Section 5.01(a)(3), the Delaware Trustee shall not
be entitled to exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities described in this Declaration (except as
required under the Business Trust Act) . Except as set forth in Section
5.01(a)(3), the Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of ss. 3807 of the Business Trust Act. No
implied covenants or obligations shall be read into this Declaration against the
Delaware Trustee.
SECTION 3.12. Certain Rights and Duties of the Property Trustee. (a)
The Property Trustee, before the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to
perform only
23
such duties as are specifically set forth in this Declaration, and no implied
covenants shall be read into this Declaration against the Property Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.06), the Property Trustee shall exercise such of the
rights and powers vested in it by this Declaration, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this
Declaration, and the Property Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this Declaration
against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions
that by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders as provided herein relating to the
time, method and place of conducting any proceeding for any remedy
available to the
24
Property Trustee hereunder or under the Indenture, or exercising any
trust or power conferred upon the Property Trustee under this
Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
ground for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Declaration or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(c) Subject to the provisions of Section 3.12(a) and (b):
(i) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part
and, if the Trust is excluded from the definition of Investment Company
solely by means of Rule 3a-7, subject to the requirements of Rule 3a-7,
request and rely upon a certificate, which shall comply with the
provisions of ss. 314(e) of the Trust Indenture Act, signed by any two
of the Regular Trustees or by an authorized officer of the Sponsor, as
the case may be;
(ii) The Property Trustee (A) may consult with counsel (which may
be counsel to the Sponsor or any of its Affiliates and may include any
of its employees) selected by it in good faith and with due care and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon and in accordance with such advice
and opinion and (B) shall have the right at any time to seek
instructions concerning the administration of this Declaration from any
court of competent jurisdiction;
(iii) The Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed by it in good faith and with due care;
(iv) The Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the
request or
25
direction of any Holders, unless such Holders shall have offered to
the Property Trustee reasonable security and indemnity against the
costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such
request or direction; provided that nothing contained in this clause
(iv) shall relieve the Property Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured or waived)
to exercise such of the rights and powers vested in it by this
Declaration, and to use the same degree of care and skill in this
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; and
(v) Any action taken by the Property Trustee or its agents
hereunder shall bind the Holders of the Securities and the signature of
the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action; and no third party shall be
required to inquire as to the authority of the Property Trustee to so
act, or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action.
SECTION 3.13. Filing of Amendments to Certificate of Trust. The
Restated Certificate of Trust as filed with the Secretary of State of the State
of Delaware on November 1, 1996 and restated on March 27, 1997 is attached
hereto as Exhibit A. On or after the date of execution of this Declaration, the
Trustees shall cause the filing with the Secretary of State of the State of
Delaware of such amendments to the Certificate of Trust as the Trustees shall
deem necessary or desirable.
SECTION 3.14. Execution of Documents by Regular Trustees. Unless
otherwise determined by the Regular Trustees and except as otherwise required by
the Business Trust Act with respect to the Certificate of Trust or otherwise, a
majority of, or if there are only two, both of, the Regular Trustees are
authorized to execute and deliver on behalf of the Trust any documents which the
Regular Trustees have the power and authority to execute or deliver pursuant to
this Declaration.
SECTION 3.15. Trustees Not Responsible for Recitals or Issuance of
Securities. The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
26
SECTION 3.16. Duration of Trust. The Trust, absent termination pursuant
to the provisions of Article 8 hereof, shall have existence until November 1,
2031.
ARTICLE 4
SPONSOR
SECTION 4.01. Purchase of Common Securities by Sponsor. On the Closing
Date the Sponsor will purchase all of the Common Securities issued by the Trust
at the same time as the Preferred Securities to be issued on such date are
issued, such purchase to be in an amount equal to 3% of the total capital of the
Trust (including for this purpose the maximum amount of Preferred Securities, if
any, which may be issued on the Option Closing Date pursuant to the exercise of
the overallotment option set forth in the Purchase Agreement).
SECTION 4.02. Expenses. (a) In connection with the purchase of the
Debentures by the Trust, the Sponsor, in its capacity as Sponsor and not as a
Holder, shall be responsible for and shall pay for all debts and obligations
(other than with respect to the Securities) and all costs and expenses of the
Trust (including, but not limited to, costs and expenses relating to the
organization of the Trust, the issuance of the Preferred Securities to initial
purchasers thereof, the fees and expenses (including reasonable counsel fees and
expenses) of the Trustees (including any amounts payable under Article 10), the
costs and expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the disposition of Trust assets).
(b) In connection with the purchase of the Debentures by the Trust,
the Sponsor, in its capacity as Sponsor and not as a Holder, will pay any and
all taxes (other than United States withholding taxes attributable to the Trust
or its assets) and all liabilities, costs and expenses with respect to such
taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.02 shall be for the
benefit of, and shall be enforceable by, any Person to whom any such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 4.02 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the
27
Sponsor. The Sponsor agrees to execute such additional agreements as may be
necessary or desirable in order to give full effect to the provisions of this
Section 4.02.
ARTICLE 5
TRUSTEES
SECTION 5.01. Number of Trustees; Qualifications. (a) The number of
Trustees initially shall be five (5). At any time (i) before the issuance of the
Securities, the Sponsor may, by written instrument, increase or decrease the
number of, and appoint, remove and replace the Trustees, and (ii) after the
issuance of the Securities the number of Trustees may be increased or decreased
solely by, and Trustees may be appointed, removed or replaced solely by, vote of
Holders of Common Securities representing a Majority in liquidation amount of
the Common Securities voting as a class; provided that in any case:
(i) the number of Trustees shall be at least five (5) unless the
Trustee that acts as the Property Trustee also acts as the Delaware
Trustee, in which cases the number of Trustees shall be at least four
(4);
(ii) at least a majority of the Trustees shall at all times be
officers, directors or employees of AES;
(iii) if required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be either a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and
otherwise is permitted to act as a Trustee hereunder under the laws of
the State of Delaware, except that if the Property Trustee has its
principal place of business in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the laws of the State of
Delaware, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application; and
(iv) there shall at all times be a Property Trustee hereunder
which shall satisfy the requirements of Section 5.01(c).
Each of the Regular Trustees and the Delaware Trustee shall be either a natural
person at least 21 years of age or a legal entity which shall act through one or
more duly appointed representatives.
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(b) The initial Regular Trustees shall be:
William R. Luraschi
Willard Hoagland
Barry J. Sharp
c/o THE AES CORPORATION
1001 North 19th Street
Arlington, Virginia 22209
(c) There shall at all times be one Trustee which shall act as Property
Trustee. In order to act as Property Trustee hereunder, such Trustee shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation or national banking association organized
and doing business under the laws of the United States of America or
any State or Territory thereof or of the District of Columbia, or a
corporation, national banking association or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000, and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation or national banking
association publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.01(c)(ii),
the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7 and to the extent Rule
3a-7 requires a trustee having certain qualifications to hold title to
the "eligible assets" (as defined in Rule 3a-7) of the Trust, the
Property Trustee shall possess those qualifications.
If at any time the Property Trustee shall cease to satisfy the
requirements of clauses (i)-(iii) above, the Property Trustee shall immediately
resign in the manner and with the effect set out in Section 5.02(d). If the
Property Trustee has or shall acquire any "conflicting interest" within the
meaning of ss. 310(b) of the Trust Indenture Act, the Property Trustee and the
Holders of the Common Securities (as if such Holders were the obligor referred
to in ss. 310(b) of the Trust Indenture Act) shall in all respects comply with
the provisions of ss. 310(b) of the Trust Indenture Act. The Preferred Guarantee
shall be deemed to be specifically
29
described in this Declaration for the purposes of clause (i) of the first
proviso contained in ss. 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the Property Trustee is The
First National Bank of Chicago, a national banking association, whose address is
as set forth in Section 14.01(b).
(d) The initial Trustee which shall serve as the Delaware Trustee is
First Chicago Delaware Inc., a Delaware corporation, whose address is as set
forth in Section 14.01(c).
(e) Any action taken by Holders of Common Securities pursuant to this
Article 5 shall be taken at a meeting of Holders of Common Securities convened
for such purpose or by written consent as provided in Section 12.02.
(f) No amendment may be made to this Section 5.01 which would change
any rights with respect to the number, existence or appointment and removal of
Trustees, except with the consent of each Holder of Common Securities.
SECTION 5.02. Appointment, Removal and Resignation of Trustees. (a)
Subject to Section 5.02(b), Trustees may be appointed or removed without cause
at any time:
(i) until the issuance of the Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of the Securities by vote of the Holders
of a Majority in liquidation amount of the Common Securities voting as
a class.
(b) (i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.02(a) until a Successor Property Trustee possessing
the qualifications to act as Property Trustee under Section 5.01(c) has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Regular Trustees, the
Sponsor and the Property Trustee being removed; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.02(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Section
5.1(a)(3) (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
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Successor Delaware Trustee and delivered to the Regular Trustees, the
Sponsor and the Delaware Trustee being removed.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation.
(d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective until:
(A) a Successor Property Trustee possessing the
qualifications to act as Property Trustee under Section 5.01(c)
has been appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to the
Trust, the Sponsor and the resigning Property Trustee; or
(B) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7, until the assets
of the Trust have been completely liquidated and the proceeds
thereof distributed to the Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor
and the resigning Delaware Trustee.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.02 within 60 days after delivery to the Sponsor and the Trust of a Resignation
Request, the resigning Property Trustee or Delaware Trustee may petition any
court of competent jurisdiction for appointment of a Successor Property Trustee
or Successor Delaware Trustee. Such court may thereupon after such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
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SECTION 5.03. Vacancies among Trustees. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.01 or if the number of Trustees is increased pursuant to Section 5.01,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
a majority of the Regular Trustees shall be conclusive evidence of the existence
of such vacancy. The vacancy shall be filled with a Trustee appointed in
accordance with the requirements of this Article 5.
SECTION 5.04. Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee, or any one of them, shall not operate to annul
the Trust. Whenever a vacancy in the number of Regular Trustees shall occur
until such vacancy is filled as provided in this Article 5, the Regular Trustees
in office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.05. Meetings. Meetings of the Regular Trustees shall be held
from time to time upon the call of any Trustee. Regular meetings of the Regular
Trustees may be held at a time and place fixed by resolution of the Regular
Trustees. Notice of any in-person meeting of the Regular Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic meeting of the Regular Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before such meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such meeting
except where a Regular Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Regular Trustees may be taken at a meeting by
vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter; provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees.
SECTION 5.06. Delegation of Power. (a) Any Regular Trustee may, by
power of attorney consistent with applicable law, delegate to any other natural
person over the age of 21 his or her power for the purpose of executing any
registration statement or amendment thereto or other document or schedule filed
with the Commission or making any other governmental filing.
32
(b) The Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
ARTICLE 6
DISTRIBUTIONS
SECTION 6.01. Distributions. Holders shall receive periodic
distributions, redemption payments and liquidation distributions in accordance
with the applicable terms of the relevant Holder's Securities ("Distributions").
Distributions shall be made to the Holders of Preferred Securities and Common
Securities in accordance with the terms of the Securities as set forth in
Exhibits B and C hereto. If and to the extent that AES makes a payment of
interest (including Compounded Interest (as defined in the Indenture)), premium
and principal on the Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee shall and is
directed to promptly make a Distribution of the Payment Amount to Holders in
accordance with the terms of the Securities as set forth in Exhibits B and C
hereto.
ARTICLE 7
ISSUANCE OF SECURITIES
SECTION 7.01. General Provisions Regarding Securities. (a) The Regular
Trustees shall issue on behalf of the Trust securities representing undivided
beneficial interests in the assets of the Trust in accordance with Section
7.01(b) and for the consideration specified in Section 3.03.
(b) The Regular Trustees shall issue on behalf of the Trust one class
of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Exhibit B (the
"Preferred Securities") which terms are incorporated by reference in, and made a
part of, this Declaration as if specifically set forth herein, and one class of
common securities representing undivided beneficial interests in the assets of
the Trust having such terms as are set forth in Exhibit C (the "Common
Securities") which terms are incorporated by reference in, and made a part of,
this Declaration as if specifically set forth herein.
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The Trust shall have no securities or other interests in the assets of the Trust
other than the Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular Trustees by any two of
the Regular Trustees). Such signatures may be the manual or facsimile signatures
of the present or any future Regular Trustee. Typographical and other minor
errors or defects in any such reproduction of any such signature shall not
affect the validity of any Certificate. In case any Regular Trustee of the Trust
who shall have signed any of the Certificates shall cease to be such Regular
Trustee before the Certificate so signed shall be delivered by the Trust, such
Certificate nevertheless may be delivered as though the person who signed such
Certificate had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons as, at the actual date of the
execution of such Certificate, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Securities may be listed, or to conform to usage. Pending the preparation of
definitive Certificates, the Regular Trustees on behalf of the Trust may execute
temporary Certificates (printed, lithographed or typewritten), in substantially
the form of the definitive Certificates in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Certificates, all as may be determined by the Regular Trustees. Each
temporary Certificate shall be executed by the Regular Trustees on behalf of the
Trust upon the same conditions and in substantially the same manner, and with
like effect, as definitive Certificates. Without unnecessary delay, the Regular
Trustees on behalf of the Trust will execute and furnish definitive Certificates
and thereupon any or all temporary Certificates may be surrendered to the
transfer agent and registrar in exchange therefor (without charge to the
Holders). Each Certificate whether in temporary or definitive form shall be
countersigned by the manual or facsimile signature of an authorized signatory of
the Person acting as registrar and transfer agent for the Securities, which
shall initially be the Property Trustee.
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
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(e) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(f) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by this Declaration.
(g) Upon issuance of the Securities as provided in this Declaration,
the Regular Trustees on behalf of the Trust shall return to AES the $10
constituting initial trust assets as set forth in the Original Declaration.
SECTION 7.02. Conversion Agent. The Trust shall maintain an office or
agency where Preferred Securities may be presented for conversion ("Conversion
Agent"). The Trust may appoint the Conversion Agent and may appoint one or more
additional Conversion Agents in such other locations as it may determine. The
term "Conversion Agent" includes any additional Conversion Agent. The Trust may
change any Conversion Agent without prior notice to any Holders. If the Trust
fails to appoint or maintain another entity as Conversion Agent, the Property
Trustee will act as such. The Trust or any of its Affiliates may act as
Conversion Agent. The Trust shall act as Conversion Agent for the Common
Securities. The Conversion Agent shall be entitled to the rights and protections
extended to the Property Trustee when acting in such capacity.
The Property Trustee is hereby initially appointed as Conversion Agent
for the Preferred Securities.
ARTICLE 8
TERMINATION OF TRUST
SECTION 8.01. Termination of Trust. This Declaration and the Trust
shall terminate and be of no further force or effect when:
(a) all of the Securities shall have been called for redemption and the
amounts necessary for redemption thereof shall have been paid to the Holders of
Securities in accordance with the terms of the Securities; or
(b) all of the Debentures shall have been distributed to the Holders of
Securities in exchange for all of the Securities in accordance with the terms of
the Securities; or
35
(c) upon the expiration of the term of the Trust as set forth in
Section 3.16; or,
(d) upon the distribution of the Sponsor's common stock to all
Securities Holders upon conversion of all outstanding Preferred Securities,
and a certificate of cancellation is filed by the Trustees with the Secretary of
State of the State of Delaware. The Trustees shall so file such a certificate as
soon as practicable after the occurrence of an event referred to in this Section
8.01.
The provisions of Sections 3.12 and 4.02 and Article 10 shall survive
the termination of the Trust.
ARTICLE 9
TRANSFER OF INTERESTS
SECTION 9.01. Transfer of Securities. (a) Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article 9, Preferred Securities shall be freely
transferable.
(c) Subject to this Article 9, AES and any Related Party may only
transfer Common Securities to AES or a Related Party; provided that any such
transfer shall be subject to the condition that the transferor shall have
obtained (1) either a ruling from the Internal Revenue Service or an unqualified
written opinion addressed to the Trust and delivered to the Trustees of
nationally recognized independent tax counsel experienced in such matters to the
effect that such transfer will not (i) cause the Trust to be treated as issuing
a class of interests in the Trust differing from the class of interests
represented by the Common Securities originally issued to AES, (ii) result in
the Trust acquiring or disposing of, or being deemed to have acquired or
disposed of, an asset, or (iii) result in or cause the Trust to be treated as
anything other than a grantor trust for United States federal income tax
purposes and (2) an unqualified written opinion addressed to the Trust and
delivered to the Trustees of a nationally recognized independent counsel
experienced in such matters that such transfer will not cause the Trust to be an
Investment Company or controlled by an Investment Company.
36
(d) Each Security that bears or is required to bear the legend set
forth in this Section 9.01(d) (a "Restricted Security") shall be subject to the
restrictions on transfer provided in the legend set forth in this Section
9.01(d), unless such restrictions on transfer shall be waived by the written
consent of the Regular Trustees, 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 9.01(d), the term "transfer"
encompasses any sale, pledge, transfer or other disposition of any Restricted
Security.
Prior to the Transfer Restriction Termination Date, the 144A Global
Security, Temporary Regulation S Global Security, each Definitive Preferred
Security and any certificate evidencing Common Stock issued upon conversion
thereof shall bear a legend in substantially the following form, unless
otherwise agreed by the Regular Trustees (with written notice thereof to the
Indenture 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
37
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 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
38
"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
Security or Common Stock for which a Security has been exchanged pursuant to an
effective registration statement or Rule 144, any Security or security issued in
exchange or substitution therefor (other than (i) Securities acquired by the
Sponsor or any Affiliate and (ii) Common Stock issued upon the conversion or
exchange of any Security described in clause (i) above) may upon surrender of
such Security for exchange to any Regular Trustee on behalf of the Trust in
accordance with the provisions of this Section 9.01(d), be exchanged for a new
Security or Securities, of like tenor and aggregate liquidation amount, which
shall not bear the restrictive legend required by this Section 9.01(d).
SECTION 9.02. Transfer of Certificates. The Regular Trustees shall
provide for the registration of Certificates and of transfers of Certificates,
which will be effected without charge but only upon payment (with such indemnity
as the Regular Trustees may require) in respect of any tax or other government
charges which may be imposed in relation to it. Upon surrender for registration
of transfer of any Certificate, the Regular Trustees shall cause one or more new
Certificates to be issued in the name of the designated transferee or
transferees. Every Certificate surrendered for registration of transfer shall be
accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Certificate surrendered for registration of transfer
shall be canceled by the Regular Trustees. A transferee of a Certificate shall
be entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.03. Deemed Security Holders. The Trustees may treat the
Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trustees shall have actual or other notice
thereof.
39
SECTION 9.04. Book Entry Interests. (a) Except as provided in Section
9.07 and unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance (including Preferred
Securities, if any, issued on the Option Closing Date pursuant to the exercise
of the overallotment option set forth in the Purchase Agreement), will be issued
in the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.07.
(b) Preferred Securities that upon initial issuance are beneficially
owned by QIBs may, at the option of the Trust, be represented by one or more
Global Certificates (a "144A Global Security"), and Preferred Securities that
upon initial issuance are beneficially owned by Non-U.S. Persons may, at the
option of the Trust, be represented by one or more Global Certificates (a
"Temporary Regulation S Global Security"). At any time on or after December 9,
1997 (the "Regulation S Securities Exchange Date"), one or more permanent Global
Certificates without the legend set forth in Section 9.01(d) (the "Permanent
Regulation S Global Security", and together with the Temporary Regulation S
Global Security, the "Regulation S Global Securities") shall be deposited with
the Clearing Agency, and the Property Trustee shall make endorsements reflecting
a decrease in the principal amount of the Temporary Regulation S Global Security
in an amount equal to the principal amount of the beneficial interest in the
Temporary Regulation S Global Security transferred. Transfers of interests in
the Preferred Securities between any 144A Global Security and any Regulation S
Global Security will be made in accordance with the standing instructions and
procedures of the Clearing Agency and its participants. The Property Trustee
shall make appropriate endorsements to reflect increases or decreases in the
amount of such Preferred Securities in global form to reflect any such
transfers.
Except as provided below, beneficial owners of a Preferred Security 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
Preferred Security in global form.
Any transfer of a beneficial interest in a Preferred Security in global
form which cannot be effected through book-entry settlement must be effected by
the delivery to the transferee (or its nominee) of a Definitive Preferred
Security Certificate or Definitive Preferred Security Certificates registered in
the name of
40
the transferee (or its nominee) on the books maintained by the Property Trustee.
With respect to any such transfer, the Property Trustee will cause, in
accordance with the standing instructions and procedures of the Clearing Agency,
the aggregate principal amount at maturity of the Preferred Security in global
form to be reduced and, following such reduction, the Sponsor will execute and
the Property Trustee will authenticate and make available for delivery to the
transferee (or such transferee's nominee, as the case may be), a Preferred
Security or Securities in the appropriate aggregate principal amount at maturity
in the name of such transferee (or its nominee) and bearing such restrictive
legends as may be required by this Declaration of Trust.
(c) So long as the Preferred Securities are eligible for book-entry
settlement and to the extent Preferred Securities held by QIBs or Non-U.S.
Persons, as the case may be, are held in a global form, or unless otherwise
required by law, upon any transfer of a Definitive Preferred Security 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 Preferred Security Certificate 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 Property Trustee on behalf of the Trust), the Property
Trustee on behalf of the Trust shall make an endorsement on any 144A Global
Security or any Regulation S Global Security, as the case may be, to reflect an
increase in the number of Preferred Securities represented by such Global
Certificate, and the Property Trustee on behalf of the Trust shall cancel such
Definitive Preferred Security in accordance with the standing instructions and
procedures of the Clearing Agency, the number of Preferred Securities
represented by such Preferred Security in global form to be increased
accordingly; provided that no Definitive Preferred Security, or portion thereof,
in respect of which the Trust or an Affiliate of the Trust held any beneficial
interest shall be included in such Preferred Security in global form until such
Definitive Preferred Security is freely tradable in accordance with Rule 144(k);
provided further that the Trust shall issue Preferred Securities in definitive
form upon any transfer of a beneficial interest in the Preferred Security in
global form to the Sponsor or any Affiliate of the Sponsor.
(d) Any Global Certificate may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Declaration as may be required by the Clearing Agency, by any
national securities exchange or by the National Association of Securities
Dealers, Inc. in order for the Preferred Securities to be tradeable on the
PORTAL Market or as may be required for the Preferred Securities 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
41
regulations of any securities exchange upon which the Preferred Securities 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
Preferred Securities are subject. Unless and until definitive, fully registered
Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.07:
(i) the provisions of this Section 9.04 shall be in full force and
effect;
(ii) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and, except
as set forth herein or in Rule 3a-7 with respect to the Property
Trustee, shall have no obligation to the Preferred Security Beneficial
Owners; provided, that solely for the purposes of determining whether
the Holders of the requisite amount of Preferred Securities have voted
on any matter provided for in this Declaration, so long as definitive
Preferred Security Certificates have not been issued (pursuant to
Section 9.07 hereof), the Trustees may conclusively rely on, and shall
be protected in relying on, any written instrument (including a proxy)
delivered to the Trustees by the Clearing Agency setting forth the
Preferred Security Beneficial Owners' votes or assigning the right to
vote on any matter to any other Persons either in whole or in part;
(iii) to the extent that the provisions of this Section 9.04
conflict with any other provisions of this Declaration, the provisions
of this Section 9.04 shall control; and
(iv) the rights of the Preferred Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants and receive and transmit payments of Distributions
on the Global Certificates to such Clearing Agency Participants.
SECTION 9.05. Notices to Holders of Certificates. Whenever a notice or
other communication to the Holders is required to be given under this
Declaration, unless and until Definitive Preferred Security Certificates shall
have been issued pursuant to Section 9.07, the relevant Trustees shall give all
such notices and
42
communications, specified herein to be given to Preferred Securities Holders, to
the Clearing Agency and, with respect to any Preferred Security Certificate
registered in the name of a Clearing Agency or the nominee of a Clearing Agency,
the Trustees shall, except as set forth herein or in Rule 3a-7 with respect to
the Property Trustee, have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 9.06. Appointment of Successor Clearing Agency. If any Clearing
Agency elects to discontinue its services as securities depository with respect
to the Preferred Securities, the Regular Trustees may, in their sole discretion,
appoint a successor Clearing Agency with respect to the Preferred Securities.
SECTION 9.07. Definitive Preferred Securities Certificates. (a) If (i)
a Clearing Agency elects to discontinue its services as securities depository
with respect to the Preferred Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant to Section 9.06 or
(ii) the Regular Trustees elect after consultation with the Sponsor to terminate
the book entry system through the Clearing Agency with respect to the Preferred
Securities, then (x) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to such
Preferred Securities and (y) upon surrender of the Global Certificates by the
Clearing Agency, accompanied by registration instructions, the Regular Trustees
shall cause definitive Preferred Security Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust shall be liable for any
delay indelivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, such instructions.
(b) Restricted Securities that upon initial issuance are beneficially
owned by, or are subsequently transferred to, Institutional Accredited Investors
that are neither QIBs nor Non-U.S. Persons will be issued as Definitive
Preferred Security Certificates and may not be represented by a Global
Certificate. Preferred Securities that upon initial issuance are beneficially
owned by Persons that are Non-U.S. Persons may, at the option of the Trust, be
issued as Definitive Preferred Security Certificates. Definitive Preferred
Security Certificates issued in exchange for all or a part of a Preferred
Security in global form shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Property Trustee. Upon
execution and authentication, the Property Trustee shall make available for
delivery such Definitive Preferred Security Certificates to the person in whose
name such Definitive Preferred Security Certificates are so registered. In the
case of transfers to Institutional
43
Accredited Investors, the Property Trustee shall make appropriate endorsements
to reflect decreases in the amount of the applicable Global Certificate.
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificates should be surrendered to the Regular Trustees, or if
the Regular Trustees shall receive evidence to their satisfaction of the
destruction, loss or theft of any Certificate; and (b) there shall be delivered
to the Regular Trustees such security or indemnity as may be required by them to
keep each of them harmless, then in the absence of notice that such Certificate
shall have been acquired by a bona fide purchaser, any two Regular Trustees on
behalf of the Trust shall execute and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 9.08, the Regular Trustees may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Certificate issued pursuant to this section shall
constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
ARTICLE 10
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.01. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (but, in the case of the Property Trustee, subject to the Trust
Indenture Act) or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the
44
existence and amount of assets from which Distributions to Holders of Securities
might properly be paid.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders of
Securities, in their capacities as Holders, shall be entitled to the same
limitation of liability that is extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.02. Indemnification. (a) To the fullest extent permitted by
applicable law, the Sponsor shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such Indemnified
Person by reason of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Declaration, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of gross negligence (but, in the case of
the Property Trustee, subject to the Trust Indenture Act) or willful misconduct
with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Sponsor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Sponsor of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
10.02(a).
(c) The provisions of this Section 10.02 shall survive the termination
of this Declaration or the resignation or removal of any Trustee.
SECTION 10.03. Outside Business. The Sponsor and any Trustee may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. Neither the Sponsor nor any Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and the Sponsor or any Trustee shall have the right to take for its own account
45
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor or may act as depository for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE 11
ACCOUNTING
SECTION 11.01. Fiscal Year. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the Code.
SECTION 11.02. Certain Accounting Matters. (a) At all times during the
existence of the Trust, the Regular Trustees shall keep, or cause to be kept,
full books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be
maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied. The Trust shall use the
accrual method of accounting for United States federal income tax purposes. The
books and records of the Trust, together with a copy of this Declaration and a
certified copy of the Certificate of Trust, or any amendment thereto, shall at
all times be maintained at the principal office of the Trust and shall be open
for inspection for any examination by any Holder or its duly authorized
representative for any purpose reasonably related to its interest in the Trust
during normal business hours.
(b) The Regular Trustees shall cause to be prepared and mailed to each
Holder of Securities, an annual United States federal income tax information
statement, on such form as is required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Regular Trustees shall endeavor to
deliver all such statements within 30 days after the end of each Fiscal Year of
the Trust.
(c) The Regular Trustees shall cause to be prepared and filed with the
appropriate taxing authority, an annual United States federal income tax return,
on such form as is required by the Code, and any other annual income tax returns
required to be filed by the Regular Trustees on behalf of the Trust with any
state or local taxing authority, such returns to be filed as soon as practicable
after the end of each Fiscal Year of the Trust.
46
SECTION 11.03. Banking. The Trust shall maintain one or more bank
accounts in the name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by the Property
Trustee shall be made directly to the Property Account and no other funds from
the Trust shall be deposited in the Property Account. The sole signatories for
such accounts shall be designated by the Regular Trustees; provided, however,
that the Property Trustee shall designate the sole signatories for the Property
Account.
SECTION 11.04. Withholding. The Trust and the Trustees shall comply
with all withholding requirements under United States federal, state and local
law. The Trust shall request, and the Holders shall provide to the Trust, such
forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Trust shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld shall
be deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount to be withheld was not
withheld from a Distribution, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE 12
AMENDMENTS AND MEETINGS
SECTION 12.01. Amendments. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration may
be amended by, and only by, a written instrument executed by a majority of the
Regular Trustees; provided, however, that (i) no amendment to this Declaration
shall be made unless the Regular Trustees shall have obtained (A) either a
ruling from the Internal Revenue Service or a written unqualified opinion of
nationally recognized independent tax counsel experienced in such matters
47
to the effect that such amendment will not cause the Trust to be classified for
United States federal income tax purposes as an association taxable as a
corporation or a partnership and to the effect that the Trust will continue to
be treated as a grantor trust for purposes of United States federal income
taxation and (B) a written unqualified opinion of nationally recognized
independent counsel experienced in such matters to the effect that such
amendment will not cause the Trust to be an Investment Company which is required
to be registered under the Investment Company Act, (ii) at such time after the
Trust has issued any Securities which remain outstanding, any amendment which
would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set
forth in the terms of such Securities, (iii) Section 4.02, Section 9.01(c) and
this Section 12.01 shall not be amended without the consent of all of the
Holders of the Securities, (iv) no amendment which adversely affects the rights,
powers and privileges of the Property Trustee shall be made without the consent
of the Property Trustee, (v) Article 4 shall not be amended without the consent
of the Sponsor, and (vi) the rights of Holders of Common Securities under
Article 5 to increase or decrease the number of, and to appoint, replace or
remove, Trustees shall not be amended without the consent of each Holder of
Common Securities.
(b) Notwithstanding Section 12.02(a)(ii), this Declaration may be
amended without the consent of the Holders of the Securities to (i) cure any
ambiguity, (ii) correct or supplement any provision in this Declaration that may
be defective or inconsistent with any other provision of this Declaration, (iii)
to add to the covenants, restrictions or obligations of the Sponsor, and (iv) to
conform to any changes in Rule 3a-7 or any change in interpretation or
application of Rule 3a-7 by the Commission, which amendment does not adversely
affect the rights, preferences or privileges of the Holders.
SECTION 12.02. Meetings of the Holders of Securities; Action by Written
Consent. (a) Meetings of the Holders of Preferred Securities and/or Common
Securities may be called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter on which Holders
of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading. The Regular
Trustees shall call a meeting of Holders of Preferred Securities or Common
Securities, if directed to do so by Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given by delivering
to the Regular Trustees one or more calls in a writing stating that the signing
Holders of Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of Securities exercising the right to call a meeting and only those
specified Certificates shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
48
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provision shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given by mail to all the
Holders of Securities having a right to vote thereat not less than 7
days nor more than 60 days prior to the date of such meeting. Whenever
a vote, consent or approval of the Holders of Securities is permitted
or required under this Declaration or the rules of any stock exchange
on which the Preferred Securities are listed or admitted for trading,
such vote, consent or approval may be given at a meeting of the Holders
of Securities. Any action that may be taken at a meeting of the Holders
of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by Holders of Securities
owning not less than the minimum aggregate liquidation amount of
Securities that would be necessary to authorize or take such action at
a meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of Securities entitled
to vote who have not consented in writing. The Regular Trustees may
specify that any written ballot submitted to the Holders of Securities
for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees.
(ii) Each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of a Security is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of the Security executing it. Except as otherwise provided
herein or in the terms of the Securities, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate.
(iv) Unless otherwise provided in the Business Trust Act, this
Declaration or the rules of any stock exchange on which the Preferred
49
Securities are then listed or admitted for trading, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any matter
is to be voted on by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE 13
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.01. Representations and Warranties of Property Trustee. (a)
The Trustee which acts as initial Property Trustee represents and warrants to
the Trust and to the Sponsor at the date of this Declaration, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(i) The Property Trustee is a national banking association or a
banking corporation with trust powers, duly organized, validly existing
and in good standing under the laws of the United States or the laws of
the state of its incorporation, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, this Declaration.
(ii) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration
has been duly executed and delivered by the Property Trustee, and
constitutes a legal, valid and binding obligation of the Property
Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding
in equity or at law).
(iii) The execution, delivery and performance of this Declaration
by the Property Trustee does not conflict with or constitute a breach
of the Charter or By-laws of the Property Trustee.
50
(iv) No consent, approval or authorization of, or registration
with or notice to, any banking authority which supervises or regulates
the Property Trustee is required for the execution, delivery or
performance by the Property Trustee, of this Declaration.
(v) The Property Trustee satisfies the qualifications set forth in
Section 5.01(c).
(b) The Trustee which acts as initial Delaware Trustee represents and
warrants to the Trust and the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee, that it satisfies the qualifications set forth in Section
5.01(a)(3).
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. Notices. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Regular
Trustees on behalf of the Trust may give notice of to the Holders of the
Securities):
AES Trust II
c/o The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Attention: General Counsel
Facsimile No: (703) 528-4510
(b) if given to the Property Trustee, at the mailing address of the
Property Trustee set forth below (or such other address as the Property Trustee
may give notice of to the Holders of the Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Administrator
Telecopy: (312) 407-1708
51
(c) if given to the Delaware Trustee, at the mailing address of the
Delaware Trustee set forth below (or such other address as the Delaware Trustee
may give notice of to the Holders of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Telecopy: (312) 407-1708
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Attention: Corporate Secretary
Facsimile No: (703) 528-4510
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
A copy of any notice to the Property Trustee or the Delaware Trustee
shall also be sent to the Trust. All notices shall be deemed to have been given,
when received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.02. Undertaking for Costs. All parties to this Declaration
agree, and each Holder of any Securities by his or her acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Declaration, or in
any suit against the Property Trustee for any action taken or omitted by it as
Property Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 14.02 shall not apply to any suit instituted by the
Property Trustee, to any suit instituted by any Holder of Preferred Securities,
or group of Holders of Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities, or to any suit
52
instituted by any Holder of Preferred Securities for the enforcement of the
payment of the principal of (or premium, if any) or interest on the Debentures,
on or after the respective due dates expressed in such Debentures.
SECTION 14.03. Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
SECTION 14.04. Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 14.05. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 14.06. Counterparts. This Declaration may contain more than one
counterpart of the signature pages and this Declaration may be executed by the
affixing of the signature of the Sponsor and each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
SECTION 14.07. Intention of the Parties. It is the intention of the
parties hereto that the Trust not be classified for United States federal income
tax purposes as an association taxable as a corporation or partnership but that
the Trust be treated as a grantor trust for United States federal income tax
purposes. The provisions of this Declaration shall be interpreted to further
this intention of the parties.
SECTION 14.08. Successors and Assigns. Whenever in this Declaration any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
THE AES Corporation
53
as Sponsor
By: /s/ Dennis W. Bakke
-----------------------------------------
Name: Dennis W. Bakke
Title: President and Chief Executive Officer
/s/ William R. Luraschi
--------------------------------------------
William R. Luraschi
as Trustee
/s/ Willard Hoagland
--------------------------------------------
Willard Hoagland
as Trustee
/s/ Barry J. Sharp
--------------------------------------------
Barry J. Sharp
as Trustee
The First National Bank of Chicago
as Property Trustee
By: /s/ Richard Manella
-------------------------------------------
Name: Richard Manella
Title: Vice President
First Chicago Delaware Inc.
as Delaware Trustee
By: /s/ Richard Manella
-------------------------------------------
Name: Richard Manella
Title: Vice President
54
EXHIBIT A
RESTATED CERTIFICATE OF TRUST
OF
AES TRUST II
THIS Restated Certificate of Trust of AES Capital Trust II (the
"Trust"), dated March 27, 1997, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. Code ss. 3801 et seq.).
WHEREAS, the Trustees entered into a Certificate of Trust dated as of
November 1, 1996 (the "Original Certificate") in order to form a business trust
under the Delaware Business Trust Act (12 Del. Code ss. 3801 et seq.).
NOW, THERETOFORE, it is the intention of the parties hereto that the
Original Certificate of Trust be amended and restated in its entirety as
provided herein.
1. Name. The name of the business trust being formed hereby is AES
Trust II.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware is First
Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective as of
its filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
First Chicago Delaware Inc.
as Delaware Trustee
/s/ Steven M. Wagner
----------------------------------------
Name: Steven M. Wagner
Title: Vice President
The First National Bank of Chicago
as Property Trustee
/s/ Richard D. Manella
----------------------------------------
Name: Richard D. Manella
Title: Vice President
/s/ William R. Luraschi
----------------------------------------
William R. Luraschi
as Trustee
/s/ Willard Hoagland
----------------------------------------
Willard Hoagland
as Trustee
/s/ Barry J. Sharp
----------------------------------------
Barry J. Sharp
as Trustee
2
EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust of AES Trust II dated as of October 29, 1997 (as amended from time to
time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER. Preferred Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of Three Hundred Million
Dollars ($300,000,000) (plus up to an additional Forty-Five Million Dollars
($45,000,000) issuable upon exercise of the overallotment option set forth in
the Purchase Agreement) and a liquidation amount in the assets of the Trust of
$50 per Preferred Security, are hereby designated as "$2.75 Term Convertible
Securities, Series B". The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form attached hereto as Annex
I, with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the rules of any
stock exchange on which the Preferred Securities are listed. In connection with
the issuance and sale of the Preferred Securities and the Common Securities, the
Trust will purchase as trust assets Debentures of AES having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities so issued and bearing interest at an annual
rate equal to the annual Distribution rate on the Preferred Securities and
Common Securities and having payment and redemption provisions which correspond
to the payment and redemption provisions of the Preferred Securities and Common
Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Preferred Security
will be fixed at a rate per annum of $2.75 (the "Coupon Rate") subject to
increase in certain limited circumstances pursuant to the Registration Rights
Agreement per Preferred Security. Distributions in arrears for more than one
calendar quarter will bear interest at the rate per annum of 5.50% thereof (to
the extent permitted by law), compounded quarterly. The term "Distributions" as
used herein means such periodic cash distributions and any such interest payable
unless otherwise stated. A Distribution will be made by the Property Trustee
only to the extent that interest payments are made in respect of the Debentures
held by the Property Trustee. The amount of Distributions payable for any period
will be computed for any quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months.
(b) Distributions on the Preferred Securities will be cumulative, will
accrue from October 29, 1997 and will be payable quarterly in arrears, on the
last day of each quarter commencing on December 31, 1997, except as otherwise
described below, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarterly interest periods (each, an
"Extension Period") and, as a consequence, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the rate of 5.50% per annum, compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension Period, AES may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods; and provided that no Extension Period shall last
beyond the date of maturity or any redemption date of the Debentures.. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements. Payments
of accrued Distributions will be payable to Holders of Preferred Securities as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period.
(c) Distributions on the Preferred Securities will be payable promptly
by the Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and records
of the Trust on the relevant record dates. While the Preferred Securities remain
in book-entry only form, the relevant record dates shall be one business day
prior to the relevant Distribution date, and if the Preferred Securities are no
longer in book-entry only form, the Regular Trustees shall have the right to
select relevant record dates which shall be more than one business day prior to
the relevant payment dates. Distributions payable on any Preferred Securities
that are not punctually paid on any Distribution payment date as a result of AES
having failed to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the person in whose name such Preferred
Security is registered on the relevant record date, and such defaulted
Distribution will instead be payable to the person in whose name such Preferred
Security is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that Distributions shall not be considered payable on any Distribution payment
date falling within an Extension Period unless AES has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any applicable laws and regulations and the provisions
of the Declaration, each payment in respect of the Preferred Securities will be
made as described in paragraph 10
2
hereof. If any date on which Distributions are payable on the Preferred
Securities is not a Business Day, then payment of the Distribution 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 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.
(d) All Distributions paid with respect to the Preferred Securities and
the Common Securities will be paid Pro Rata to the Holders thereof entitled
thereto. If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with respect to
Distributions.
(e) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as set forth in this Exhibit B to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that if a 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 date, then, notwithstanding such
conversion, the Distribution payable on such Distribution date will be paid in
cash to the person in whose name the Security is registered at the close of
business on such record date, and (other than a Security or a portion of a
Security called for redemption on a redemption date occurring after such record
date and on or prior to such Distribution date) when so surrendered for
conversion, the Security must be accompanied by payment of an amount equal to
the Distribution payable on such Distribution date.
(f) In the event that there is any money or other property held by or
for the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and Common Securities at the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive Pro Rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common Securities after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $50 per Preferred Security and Common Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, and after
3
satisfaction of liabilities to creditors, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Preferred
Securities and Common Securities and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Preferred
Securities and Common Securities, shall be distributed Pro Rata to the Holders
of the Preferred Securities and Common Securities in exchange for such
Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and Common Securities shall be paid, subject
to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred Securities
and Common Securities may only be redeemed if Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether
at maturity, upon redemption at any time or from time to time on or after
September 30, 2000, or at any time in certain circumstances upon the occurrence
of a Tax Event, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 30 nor more than 60 days' notice, at a
redemption price per Preferred and Common Security equal to the redemption price
of the Debentures, together with accrued and unpaid Distributions thereon
through the date of redemption, payable in cash (the "Redemption Price"). The
date of any such repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the repayment or redemption
date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed
will be redeemed as described in paragraph 4(f)(ii) below. If a partial
redemption 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, AES pursuant
4
to the Indenture will only redeem Debentures in whole and, as a result, the
Trust may only redeem the Preferred Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as hereinafter defined, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment as the Preferred Securities and
Common Securities, to be distributed to the Holders of the Preferred Securities
and Common Securities on a Pro Rata basis in liquidation of such Holders'
interests in the Trust, within 90 days following the occurrence of such Special
Event (the "90 Day Period"), provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), 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 the dissolution of the Trust and
distribution of Debentures; and provided, further, that, if and as long as at
the time there is available to the Trust the opportunity to eliminate, within
the 90 Day Period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, AES or the Holders of the
Preferred Securities ("Ministerial Action"), the Trust will pursue such measure
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of 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 AES 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 the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, AES 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 the Redemption Price within 90 days
following the occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
basis; provided,
5
however, that, if at the time there is available to AES or the Regular Trustees
on behalf of the Trust the opportunity to eliminate, within such 90 day period,
the Tax Event by taking some Ministerial Action, AES or the Regular Trustees on
behalf of the Trust will pursue such measure in lieu of redemption and;
provided, further, that AES shall have no right to redeem the Debentures while
the Regular Trustees on behalf of the Trust are pursuing such Ministerial
Action. The Common Securities will be redeemed Pro Rata with the Preferred
Securities, except that if an Event of Default under the Indenture has occurred
and is continuing, the Preferred Securities will have a priority over the Common
Securities with respect to payment of the Redemption Price.
"Tax Event" means that 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 (including any announced
prospective 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
announced 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) the Trust 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) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
other taxes, duties or other governmental charges or (iii) interest payable by
AES to the Trust on the Debentures is not, or within 90 days of the date thereof
will not be, deductible by AES for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment Company
which is required to be registered under the Investment Company Act, which
Change in 1940 Act Law becomes effective on or after October 23, 1997.
6
On the date fixed for any distribution of Debentures, upon dissolution
of the Trust, (i) the Preferred Securities will no longer be deemed to be
outstanding and (ii) certificates representing Preferred Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such Preferred
Securities until such certificates are presented to AES or its agent for
transfer or reissuance.
(d) The Trust may not redeem any outstanding Preferred Securities
unless all accrued and unpaid Distributions have been paid on all Preferred
Securities for all quarterly Distribution periods terminating on or prior to the
date of redemption.
(e) If Debentures are distributed to Holders of the Preferred
Securities, AES, pursuant to the terms of the Indenture, will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) (i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (f)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities and Common
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Preferred
Securities are to be redeemed, the Preferred Securities to be redeemed will be
redeemed Pro Rata from each Holder of Preferred Securities, it being understood
that, in respect of Preferred Securities registered in the name of and held of
record by DTC (or successor Clearing Agency) or any other nominee, the Preferred
Securities will be redeemed from, and the distribution of the proceeds of such
redemption will be made to, each Clearing Agency Participant (or person on whose
behalf such nominee holds such securities) in accordance with the procedures
applied by such agency or nominee.
7
(iii) Subject to paragraph 10 hereof, if the Trust gives a Redemption/
Distribution Notice in respect of a redemption of Preferred Securities as
provided in this paragraph 4 (which notice will be irrevocable) then (A) while
the Preferred Securities are in book-entry only form, with respect to the
Preferred Securities, by 12:00 noon, New York City time, on the redemption date,
provided that AES has paid the Property Trustee, in immediately available funds,
a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will deposit irrevocably with
DTC (or successor Clearing Agency) funds sufficient to pay the applicable
Redemption Price with respect to the Preferred Securities and will give DTC (or
successor Clearing Agency) irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities and (B) if the
Preferred Securities are issued in definitive form, with respect to the
Preferred Securities and provided that AES has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such Preferred Securities by
check mailed to the address of the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the date of such deposit,
Distributions will cease to accrue on the Preferred Securities called for
redemption, such Preferred Securities will no longer be deemed to be outstanding
and all rights of Holders of such Preferred Securities so called for redemption
will cease, except the right of the Holders of such Preferred Securities to
receive the Redemption Price, but without interest on such Redemption Price.
Neither the Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Preferred Securities which have been so called
for redemption. If any date fixed for redemption of Preferred Securities 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 calendar 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. If AES fails to repay Debentures
on maturity or on the date fixed for this redemption or if payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by the Property Trustee or by AES pursuant to the
Preferred Securities Guarantee, Distributions on such Preferred Securities will
continue to accrue, from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to DTC or its nominee (or any successor Clearing
Agency or its
8
nominee) if the Global Certificates have been issued or, if Definitive Preferred
Security Certificates have been issued, to the Holders of the Preferred
Securities.
(v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Preferred Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Preferred Securities will no longer be deemed
outstanding and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so distributed.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), AES or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. CONVERSION RIGHTS. The Holders of Securities shall have the right at
any time prior to the close of business on September 30, 2012 (or, in the case
of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
The Securities will be convertible at the office of the Conversion
Agent into fully paid and nonassessable shares of Common Stock pursuant to the
Holder's direction to the Conversion Agent to exchange such Securities for a
portion of the Debentures theretofore held by the Trust on the basis of one
Security per $50 principal amount of Debentures, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Common Stock at
an initial rate of 0.8914 shares of Common Stock per $50 principal amount of
Debentures (which is equivalent to a conversion price of $56.09 per share of
Common Stock, subject to certain adjustments set forth in Sections 5.03 and 5.04
of the Supplemental Indenture (as so adjusted, the "Conversion Price")).
(a) In order to convert Securities into Common Stock the Holder shall
submit to the Conversion Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder (the "Conversion
Request"), together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of
9
such Holder, into Common Stock (at the conversion rate specified in the
preceding paragraph). The Conversion Agent shall notify the Property Trustee of
the Holder's election to exchange Securities for a portion of the Debentures
held by the Trust and the Property Trustee shall, upon receipt of such notice,
deliver to the Conversion Agent the appropriate principal amount of Debentures
for exchange in accordance with this Section. The Conversion Agent shall
thereupon notify the Property Trustee of the Holder's election to convert such
Debentures into shares of Common Stock. If a 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 Security is registered at the close of business on
such record date, and (other than a Security or a portion of a Security 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
Security must be accompanied by payment of an amount equal to the Distribution
payable on such Distribution payment date. Except as provided above, neither the
Trust nor the Sponsor will make, or be required to make, any payment, allowance
or adjustment upon any conversion on account of any accumulated and unpaid
Distributions accumulated on the Securities surrendered for conversion, or on
account of any accumulated and unpaid dividends on the shares of Common Stock
issued upon such conversion. Securities shall be deemed to have been converted
immediately prior to the close of business on the day on which the Conversion
Request relating to such Securities is received by the Trust in accordance with
the foregoing provision (the "Conversion Date"). The Person or Persons entitled
to receive Common Stock issuable upon conversion of the Debentures shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the Conversion Date, the
Sponsor shall issue and deliver at the office of the Conversion Agent 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, unless otherwise directed by the Holder in the Conversion Request and the
Conversion Agent shall distribute such certificate or certificates, together
with the applicable cash payment, if any, to such Person or Persons.
(b) Each Holder of a Security by his acceptance thereof appoints The
First National Bank of Chicago "Conversion Agent" for the purpose of effecting
the conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Securities in accordance with this
section and (ii) to convert all or a portion of the
10
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this section and to deliver to the
Trust a new Debenture or Debentures for any resulting unconverted principal
amount.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Sponsor to the Conversion Agent, which in turn will make such payment to
the Holder or Holders of Securities so converted.
(d) The Sponsor shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, the Sponsor shall be entitled to deliver upon conversion of
Debentures, shares of Common Stock reacquired and held in the treasury of the
Sponsor (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any shares of Common Stock issued
upon conversion of the Debentures shall be duly authorized, validly issued and
fully paid and nonassessable. The Trust shall deliver the shares of Common Stock
received upon conversion of the Debentures to the converting Holder free and
clear of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. Each of the Sponsor and the Trust shall prepare
and shall use its best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
Common Stock (and all requirements to list Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable the Sponsor
to lawfully issue Common Stock to the Trust upon conversion of the Debentures
and the Trust to lawfully deliver Common Stock to each Holder upon conversion of
the Securities.
(e) The Sponsor will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Trust the
amount of any such tax, or has established to the satisfaction of the Trust that
such tax has been paid.
11
(f) Nothing in the preceding Paragraph (e) shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Securities as set
forth in this Exhibit B to the Declaration or to the Declaration itself or
otherwise require the Property Trustee or the Trust to pay any amounts on
account of such withholdings.
6. VOTING RIGHTS. (a) Except as provided under paragraph 6(b) below and
as otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Preferred
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing a Majority in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities and (B) amendments to the Declaration shall
be subject to such further requirements as are set forth in Sections 12.01 and
12.02 of the Declaration.
In the event the consent of the Property Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, the
Property Trustee may only vote with respect to that amendment, modification or
termination as directed by, in the case of clause (1) above, the vote of Holders
of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of
12
Securities unless the Property Trustee shall have received, at the expense of
the Sponsor, an opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that the Trust will not be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership on account of such action and will be
treated as a grantor trust for United States federal income tax purposes
following such action.
Subject to Section 2.06 of the Declaration, and the provisions of this
and the next succeeding paragraph, the Holders of a Majority in liquidation
amount of the Preferred Securities, voting separately as a class shall have the
right to (A) on behalf of all Holders of Preferred Securities, waive any past
default that is waivable under the Declaration (subject to, and in accordance
with the Declaration) and (B) direct the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as the holder of the
Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only take such action if directed by, in the case of
clause (1) above, the vote of Holders of Preferred Securities representing such
specified percentage of the aggregate liquidation amount of the Preferred
Securities, or, in the case of clause (2) above, each Holder of Preferred
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee or the Debenture
Trustee as set forth above, the Property Trustee shall be under no obligation to
take any of the foregoing actions at the direction of the Holders of Preferred
Securities unless the Property Trustee shall have received, at the expense of
the Sponsor, an opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that the Trust will not be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership on account of such action and will be
treated as a grantor trust for United States federal income tax purposes
following such action. If the Property Trustee fails to enforce its rights under
the Declaration (including, without limitation, its rights, powers and
privileges as a holder of the Debentures under the Indenture), any Holder of
Preferred Securities may, to the extent permitted by law, after a period of 30
days has elapsed from such Holder's written request to the Property Trustee to
enforce such rights, institute a
13
legal proceeding directly against AES to enforce the Property Trustee's rights
under the Declaration, without first instituting a legal proceeding against the
Property Trustee or any other Person. Notwithstanding the foregoing, if an Event
of Default has occurred and is continuing and such event is attributable to the
failure of the Sponsor to pay interest or principal on the Debentures on the
date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then the registered holder of the Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such Holder (a "Holder Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Holder Direct Action, the
Sponsor will be subrogated to the rights of such Holder of Preferred Securities
under the Declaration to the extent of any payment made by the Sponsor to such
Holder of Preferred Securities in such Holder Direct Action. Except as provided
in the preceding sentences, the holders of Preferred Securities will not be able
to exercise any other remedy available to the holders of the Debentures.
A waiver of an Indenture Event of Default by the Property Trustee at
the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect of
the Securities.
Any required approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities of the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or distribute
Debentures in accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities at such time that are owned by AES or by any entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with AES shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
14
Except as provided in this paragraph 6, Holders of the Preferred
Securities will have no rights to increase or decrease the number of Trustees or
to appoint, remove or replace a Trustee, which voting rights are vested solely
in the Holders of the Common Securities.
7. PRO RATA TREATMENT. A reference in these terms of the Preferred
Securities to any payment, distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. RANKING. The Preferred Securities rank pari passu and payment
thereon will be made Pro Rata with the Common Securities except that where an
Event of Default occurs and is continuing, the rights of Holders of Preferred
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise rank in priority to the rights of Holders of the Common
Securities.
9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other entity.
10. TRANSFER, EXCHANGE, METHOD OF PAYMENTS. Payment of Distributions
and payments on redemption of the Preferred Securities will be payable, the
transfer of the Preferred Securities will be registrable, and Preferred
Securities will be exchangeable for Preferred Securities of other denominations
of a like aggregate liquidation amount, at the principal corporate trust office
of the Property Trustee in The City of New York; provided that payment of
Distributions may be made at the option of the Regular Trustees on behalf of the
Trust by check mailed to the address of the persons entitled thereto and that
the payment on redemption of any Preferred Security will be made only upon
surrender of such Preferred Security to the Property Trustee.
11. ACCEPTANCE OF INDENTURE AND PREFERRED GUARANTEE. Each Holder of
Preferred Securities, by the acceptance thereof, agrees to the provisions of (i)
the Preferred Guarantee, including the subordination provisions therein and (ii)
the
15
Indenture and the Debentures, including the subordination provisions of the
Indenture.
12. NO PREEMPTIVE RIGHTS. The Holders of Preferred Securities shall
have no preemptive rights to subscribe to any additional Preferred Securities or
Common Securities.
13. MISCELLANEOUS. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
16
Annex I
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company ("DTC") or a nominee of DTC. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than DTC or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York) to
the Trust or its agent for registration of transfer, exchange or payment, and
any Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by 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 PREFERRED SECURITY IS TO BE A DEFINITIVE CERTIFICATE ISSUED TO
AN INSTITUTIONAL ACCREDITED INVESTOR, ATTACH "ACCREDITED INVESTOR LETTER" IN THE
FORM ATTACHED HERETO]
Number ___________ Preferred Securities
-----------
CUSIP NO. ____________
Certificate Evidencing Preferred Securities
of
AES Trust II
$2.75 Term Convertible Securities, Series B
(liquidation amount $50 per security)
[If prior to the Transfer Restriction Termination Date or sale pursuant
to an effective registration statement or Rule 144, add legend from Section
9.01(d) of the Declaration.]
AES Trust II, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that _________ (the "Holder")
is the registered owner of ___________ (______) preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated the $2.75 Term Convertible Securities, Series B (liquidation amount
$50 per security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions of,
the Amended and Restated Declaration of Trust of the Trust dated as of October
29, 1997, as the same may be amended from time to time (the "Declaration")
including the designation of the terms of Preferred Securities as set forth in
Exhibit B thereto. The Preferred Securities and the Common Securities issued by
the Trust pursuant to the Declaration represent undivided beneficial interests
in the assets of the Trust, including the Debentures (as defined in the
Declaration) issued by The AES Corporation, a Delaware corporation ("AES"), to
the Trust pursuant to the Indenture referred to in the Declaration. The Holder
is entitled to the benefits of the Guarantee Agreement of AES dated as of
October 29, 1997 (the "Guarantee") to the extent provided therein. The Trust
will furnish a copy of the Declaration, the Guarantee and the Indenture to the
Holder without charge upon written request to the Trust at its principal place
of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior and Subordinated Debt (as defined in the Indenture) as and to the
extent provided in the Indenture and (ii) agreed to the terms of the Guarantee,
including that the Guarantee is subordinate and junior in right of payment to
all other liabilities of AES, including the Debentures, and ranks pari passu in
right payment with the most senior preferred stock issued, from time to time, by
AES.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
Unless the Property Trustee's Certificate of Authentication hereon has
been properly executed, these Trust Preferred Securities shall not be entitled
to any benefit under the Declaration or be valid or obligatory for any purpose.
2
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
certificate this twenty-ninth day of October, 1997.
AES TRUST II
By:_________________________, as Trustee
Name:
Title: Trustee
By:_________________________, as Trustee
Name:
Title: Trustee
3
[FORM OF CERTIFICATE OF AUTHENTICATION]
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the
Preferred Securities referred to in the within-mentioned Declaration.
Dated: _______ __, 199
THE FIRST NATIONAL BANK
OF CHICAGO,
as Property Trustee or as Authenticating Agent
By: By:
---------------------------- ----------------------------
Authorized Signatory Authorized Signatory
4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a
rate per annum of $2.75 per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of 5.50% thereof (to the extent permitted by law) compounded
quarterly. The term "Distributions" as used herein means such cash distributions
and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the Preferred
Securities will be cumulative, will accrue from October 29, 1997 and will be
payable quarterly in arrears, on the last day of each quarter, commencing on
December 31, 1997, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of 5.50% per
annum, compounded quarterly during such Extension period; provided that no
Extension Period shall last beyond the date of maturity or any redemption date
of the Debentures. Prior to the termination of any such Extension Period, AES
may commence a new Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarterly interest periods. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
The Preferred Securities shall be convertible into shares of Common
Stock, through (i) the exchange of Preferred Securities for a portion of the
Debentures and (ii) the immediate conversion of such Debentures into Common
Stock, in the manner and according to the terms set forth in the Declaration.
5
CONVERSION REQUEST
To: The First National Bank of Chicago as Property Trustee of AES Trust
II
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into common stock of The AES Corporation (the "Common Stock") in
accordance with the terms of the Amended and Restated Declaration of Trust,
dated as of October 29, 1997 (as amended from time to time, the "Declaration"),
by William R. Luraschi, Barry J. Sharp and Willard Hoagland as Regular Trustees,
First Chicago Delaware Inc., as Delaware Trustee, The First National Bank of
Chicago, as Property Trustee, The AES Corporation, as Sponsor, and by the
Holders, from time to time, of undivided beneficial interests in the assets of
the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned exercise of the option to convert these Preferred Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Preferred Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Preferred Securities set
forth as Exhibit B to the Declaration) and (ii) immediately convert such
Debentures on behalf of the undersigned, into Common Stock (at the conversion
rate specified in the terms of the Trust Preferred Securities set forth as
Exhibit B to the Declaration).
The undersigned does also hereby direct the Conversion Agent 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.
6
Date: _______________, _____
in whole ___ in part ___
Number of Preferred Securities to be
converted:
-----------------------
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Common Stock are
to be issued, along with the address
or addresses of such person or
persons
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
7
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including
Zip Code, and Social Security or Other Identifying
Number
----------------------------------
----------------------------------
----------------------------------
Signature Guarantee:* _________
- -------------------
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 or
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 Exchange Act of 1934, as amended.)
8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: _________________________
Signature: ____________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
9
[FORM OF ASSIGNMENT FOR PREFERRED SECURITY]
For value received ___________________ hereby sell(s), assign(s)
and transfer(s) unto__________________________________
(Please insert social security or other
taxpayer identification number of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
security is being transferred:
[ ] To The AES Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
10
[ ] The transferee is an Affiliate of the Company.
Dated: __________________________
Number of Securities
to be Assigned: ___________________
----------------------------
----------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or
a member firm of a major stock
exchange.
---------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
11
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH (I) TRANSFERS OF INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL SECURITY 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 Administrator
Re: The AES Trust II (the "Trust")
Preferred Securities
------------------------------
Dear Sirs or Mesdames:
In connection with our proposed sale of the number of Preferred
Securities 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 Trust Preferred Securities 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.
12
You and the Trust 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 Trust Preferred Securities
to be sold:
------------------------------------
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number:
------------------------------------
------------------------------------
------------------------------------
13
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 purchase of the Preferred Securities
described below (the "Preferred Securities") of AES Trust II (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 Preferred
Securities and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Preferred Securities
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 Preferred
Securities is subject to certain restrictions and conditions set
forth in the Amended and Restated Declaration of Trust dated as of
October 29, 1997 (the "Declaration") relating to the Preferred
Securities and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Preferred Securities
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 Preferred
Securities has not been registered under the Securities Act, and
that the Preferred Securities 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 Preferred
Securities or, if applicable, the Junior Subordinated Debentures
or Common Stock (together, the "Securities") within two years
after the original issuance of the Preferred Securities, 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 "qualified
institutional buyer" (as defined therein), (C) inside the
14
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
Preferred Securities (the form of which letter can be obtained
from the Trustee) and, if such transfer is in respect of Preferred
Securities 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 Preferred Securities from us a notice
advising such purchaser that resales of the Preferred Securities
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 Preferred Securities 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.
15
You. 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.
Very truly yours,
By:
---------------------------------
Name:
Title:
16
EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.01 of the Amended and Restated Declaration of
Trust of AES Capital Trust II dated as of October 29, 1997 (as amended from time
to time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER. Common Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of Nine Million Two
Hundred Seventy-Eight Thousand Three Hundred Fifty Dollars ($9,278,400 (plus up
to an additional One Million Three Hundred Ninety-One Thousand Seven Hundred
Fifty Dollars ($1,391,800) issuable upon exercise of the overallotment option
set forth in the Purchase Agreement) and a liquidation amount in the assets of
the Trust of $50 per Common Security, are hereby designated as "$2.75 Common
Trust Securities". The Common Security Certificates evidencing the Common
Securities shall be substantially in the form attached hereto as Annex I, with
such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice. The Common Securities are to be issued and
sold to The AES Corporation ("AES") in consideration of $9,278,400 in cash. In
connection with the issuance and sale of the Preferred Securities and the Common
Securities, the Trust will purchase as trust assets Debentures of AES having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities so issued, and bearing interest at an
annual rate equal to the annual Distribution rate on the Preferred Securities
and Common Securities and having payment and redemption provisions which
correspond to the payment and redemption provisions of the Preferred Securities
and Common Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Common Security
will be fixed at a rate per annum of $2.75 (the "Coupon Rate") per Common
Security. Distributions in arrears for more than one calendar quarter will bear
interest at the rate per annum of 5.50% thereof (to the extent permitted by
applicable law), compounded quarterly. The term "Distributions" as used in these
terms means such periodic cash distributions and any such interest payable
unless otherwise stated. A Distribution will be made by the Property Trustee
only to the extent that interest payments are made in respect of the Debentures
held by the Property Trustee. The amount of
Distributions payable for any period will be computed for any monthly
Distribution period on the basis of a 360-day year of twelve 30 day months.
(b) Distributions on the Common Securities will be cumulative, will
accrue from October 29, 1997 and will be payable quarterly in arrears, on the
last day of each month commencing on December 31, 1997, except as otherwise
described below, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarterly interest periods (each, an
"Extension Period") and, as a consequence, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the rate of 5.50% per annum, compounded quarterly during any such Extension
Period; provided that no Extension Period shall last beyond the date of maturity
or any redemption date of the Debentures. Prior to the termination of any such
Extension Period, AES may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly interest periods. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements. Payments
of accrued Distributions will be payable to Holders of Common Securities as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period.
(c) Distributions on the Common Securities will be payable promptly by
the Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and records
of the Trust on the relevant record dates which will be one business day prior
to the relevant Distribution date unless the Preferred Securities are no longer
in book-entry only form in which event the Regular Trustees shall have the right
to select relevant record dates which shall be more than one business day prior
to the relevant payment dates. Distributions payable on any Common Securities
that are not punctually paid on any Distribution date as a result of AES having
failed to make the corresponding interest payment on the Debentures will
forthwith cease to be payable to the person in whose name such Common Security
is registered on the relevant record date, and such defaulted Distribution will
instead be payable to the person in whose name such Common Security is
registered on the special record date established by the Regular Trustees, which
record date shall correspond to the special record date or other specified date
determined in accordance with the Indenture; provided, however, that
Distributions shall not be considered payable on any Distribution payment date
falling within an Extension Period unless AES has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any
2
applicable laws and regulations and the provisions of the Declaration, each
payment in respect of the Common Securities will be made as described in
paragraph 10 hereof. If any date on which Distributions are payable on the
Common Securities is not a Business Day, then payment of the Distribution
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 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.
(d) All Distributions paid with respect to the Common Securities and
the Preferred Securities will be paid Pro Rata to the Holders thereof entitled
thereto. If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities with respect to
Distributions.
(e) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as set forth in this Exhibit C to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that if a Security is surrendered for conversion after the close of business on
any regular record date for payment of a Distribution date will be paid in cash
to the person in whose name the Security is registered at the close of business
on such record date, and (other than a Security or a portion of a Security
called for redemption on a redemption date occurring after such record date and
on or prior to such Distribution date) when so surrendered for conversion, the
Security must be accompanied by payment of an amount equal to the Distribution
payable on such Distribution date.
(f) In the event that there is any money or other property held by or
for the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and Common Securities at the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive Pro Rata solely out of the assets of the Trust available for
distribution to Holders of Preferred Securities and Common Securities, after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $50 per Preferred Security and Common Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, and after
3
satisfaction of liabilities to creditors, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Preferred
Securities and Common Securities bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Preferred
Securities and Common Securities, shall be distributed Pro Rata to the Holders
of the Preferred Securities and Common Securities in exchange for such
Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and Common Securities shall be paid, subject
to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
4. REDEMPTION AND DISTRIBUTION OF DEBENTURES. The Preferred Securities
and Common Securities may only be redeemed if Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or distributed as set
forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether
at maturity, upon redemption at any time or from time to time on or after
September 30, 2000, or at any time in certain circumstances upon the occurrence
of a Tax Event, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 30 nor more than 60 days' notice, at a
redemption price per Preferred and Common Security equal to the redemption price
of the Debentures, together with accrued and unpaid Distributions thereon
through the date of redemption, payable in cash (the "Redemption Price"). The
date of any such repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the repayment or redemption
date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Common Securities to be redeemed
will be redeemed as described in paragraph 4(e)(ii) below. If a partial
redemption 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, AES pursuant
4
to the Indenture will only redeem Debentures in whole and, as a result, the
Trust may only redeem the Common Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as hereinafter defined, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment as the Preferred Securities and
Common Securities, to be distributed to the Holders of the Preferred Securities
and Common Securities on a Pro Rata basis in liquidation of such Holders'
interests in the Trust, within 90 days following the occurrence of such Special
Event (the "90 Day Period"); provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on any then applicable published revenue
rulings 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 the dissolution of the Trust and
distribution of Debentures; and provided, further, that, if and as long as at
the time there is available to the Trust the opportunity to eliminate, within
such 90 Day Period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, AES or the Holders of the
Preferred Securities ("Ministerial Action") the Trust will pursue such measure
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of 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 AES 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 the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, AES 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 the Redemption Price within 90 days
following the occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
basis: provided,
5
however, that, if at the time there is available to AES or the Regular Trustees
on behalf of the Trust the opportunity to eliminate, within such 90 day period,
the Tax Event by taking some Ministerial Action, AES or the Holders of the
Preferred Securities, AES or the Regular Trustees on behalf of the Trust will
pursue such measure in lieu of redemption; and provided, further, that AES shall
have no right to redeem the Debentures while the Regular Trustees on behalf of
the Trust are pursuing such Ministerial Action. The Common Securities will be
redeemed Pro Rata with the Preferred Securities, except that if an Event of
Default under the Indenture has occurred and is continuing, the Preferred
Securities will have a priority over the Common Securities with respect to
payment of the Redemption Price.
"Tax Event" means that 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 (including any announced
prospective 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
announced 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) the Trust 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) the Trust 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 AES to
the Trust on the Debentures is not, or within 90 days of the date thereof will
not be, deductible by AES for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence of
a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment Company
which is required to be registered under the Investment Company Act, which
Change in 1940 Act Law becomes effective on or after October 23, 1997.
6
On the date fixed for any distribution of Debentures, upon dissolution
of the Trust, (i) the Common Securities will no longer be deemed to be
outstanding and (ii) any certificates representing Common Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such Common
Securities until such certificates are presented to AES or its agent for
transfer or reissuance.
(d) The Trust may not redeem any outstanding Common Securities unless
all accrued and unpaid Distributions have been paid on all Common Securities for
all quarterly Distribution periods terminating on or prior to the date of
redemption.
(e)(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (e)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities and Common
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Common Securities
are to be redeemed, the Common Securities to be redeemed will be redeemed Pro
Rata from each Holder of Common Securities (subject to adjustment to eliminate
fractional Common Securities).
(iii) If the Trust gives a Redemption/Distribution Notice in respect of
a redemption of Common Securities as provided in this paragraph 4 (which notice
will be irrevocable) then immediately prior to the close of business on the
redemption date, provided that AES has paid to the Property Trustee in
immediately available funds a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, Distributions will cease to
accrue on the Common Securities called for redemption, such Common Securities
will no longer be deemed to be outstanding and all rights of Holders of such
Common Securities so called for redemption will cease, except the right of the
Holders of such Common Securities to receive the Redemption Price, but without
interest on such Redemption Price.
7
Neither the Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Common Securities which have been so called for
redemption. If any date fixed for redemption of Common Securities 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 calendar 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. If payment of the Redemption Price in respect
of Common Securities is improperly withheld or refused and not paid by the
Property Trustee, Distributions on such Common Securities will continue to
accrue, from the original redemption date to the date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to the Holders of the Common Securities.
(v) Upon the date of dissolution of the Trust and distribution of
Debentures as a result of the occurrence of a Special Event, Common Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Common Securities will no longer be deemed outstanding
and may be canceled by the Regular Trustees. The Debentures so distributed shall
have an aggregate principal amount equal to the aggregate liquidation amount of
the Common Securities so distributed.
5. CONVERSION RIGHTS. The Holders of Securities shall have the right at
any time prior to the close of business on September 30, 2012 (or, in the case
of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
The Securities will be convertible at the office of the Conversion
Agent into fully paid and nonassessable shares of Common Stock pursuant to the
Holder's direction to the Conversion Agent to exchange such Securities for a
portion of the Debentures theretofore held by the Trust on the basis of one
Security per $50 principal amount of Debentures, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Common Stock at
an initial rate of 0.8914 shares of Common Stock per $50 principal amount of
Debentures (which is equivalent to a conversion price of $56.09 per share of
Common Stock, subject to certain adjustments set forth in Sections 5.03 and 5.04
of the Supplemental Indenture (as so adjusted, "Conversion Price")).
8
(a) In order to convert Securities into Common Stock the Holder shall
submit to the Conversion Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder (the "Conversion
Request"), together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall notify the Property Trustee of the Holder's election to
exchange Securities for a portion of the Debentures held by the Trust and the
Property Trustee shall, upon receipt of such notice, deliver to the Conversion
Agent the appropriate principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon notify the Property
Trustee of the Holder's election to convert such Debentures into shares of
Common Stock. If a 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 Security is
registered at the close of business on such record date, and (other than a
Security or a portion of a Security 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 Security must be accompanied by
payment of an amount equal to the Distribution payable on such Distribution
payment date. Except as provided above, neither the Trust nor the Sponsor will
make, or be required to make, any payment, allowance or adjustment upon any
conversion on account of any accumulated and unpaid Distributions accumulated on
the Securities surrendered for conversion, or on account of any accumulated and
unpaid dividends on the shares of Common Stock issued upon such conversion.
Securities shall be deemed to have been converted immediately prior to the close
of business on the day on which a Conversion Request relating to such Securities
is received by the Trust in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to receive Common Stock
issuable upon conversion of the Debentures shall be treated for all purposes as
the record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the Conversion Date, the Sponsor shall issue and deliver
at the office of the Conversion Agent 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, unless otherwise directed by the
Holder in the Conversion Request and the Conversion Agent shall distribute such
certificate or certificates, together with the applicable cash payment, if any,
to such Person or Persons.
9
(b) Each Holder of a Security by his acceptance thereof appoints The
First National Bank of Chicago "Conversion Agent" for the purpose of effecting
the conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to effect
such conversion transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the Trust in
connection with the conversion of such Securities in accordance with this
section and (ii) to convert all or a portion of the Debentures into Common Stock
and thereupon to deliver such shares of Common Stock in accordance with the
provisions of this section and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
by the Company to the Conversion Agent, which in turn will make such payment to
the Holder or Holders of Securities so converted.
(d) The Sponsor shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, shall be entitled to deliver upon conversion of Debentures, shares of
Common Stock reacquired and held in the treasury of the Sponsor (in lieu of the
issuance of authorized and unissued shares of Common Stock), so long as any such
treasury shares are free and clear of all liens, charges, security interests or
encumbrances. Any shares of Common Stock issued upon conversion of the
Debentures shall be duly authorized, validly issued and fully paid and
nonassessable. The Trust shall deliver the shares of Common Stock received upon
conversion of the Debentures to the converting Holder free and clear of all
liens, charges, security interests and encumbrances, except for United States
withholding taxes. Each of the Sponsor and the Trust shall prepare and shall use
its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of Common Stock
(and all requirements to list Common Stock issuable upon conversion of
Debentures that are at the time applicable), in order to enable the company to
lawfully issue Common Stock to the Trust upon conversion of the Debentures and
the Trust to lawfully deliver Common Stock to each Holder upon conversion of the
Securities.
(e) The Sponsor will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax which may be
10
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that in which the Securities so converted
were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Trust the amount of any such
tax, or has established to the satisfaction of the Trust that such tax has been
paid.
(f) Nothing in the preceding Paragraph (e) shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Securities or set
forth in this Exhibit C to the Declaration or to the Declaration itself or
otherwise require the Property Trustee or the Trust to pay any amounts on
account of such withholdings.
6. VOTING RIGHTS. (a) Except as provided under paragraph 5(b) below and
as otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under the
Declaration to increase or decrease the number of Trustees, and to appoint,
remove or replace a Trustee, any such increase, decrease, appointment, removal
or replacement to be approved by Holders of Common Securities representing a
Majority in liquidation amount of the Common Securities.
If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Common
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing a Majority in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities, (B) the rights of Holders of Common
Securities under Article 4.02 of the Declaration to increase or decrease the
number of, and to appoint, replace or remove, Trustees shall not be amended
without the consent of each Holder of Common Securities, and (C) amendments to
the Declaration shall be subject to such further requirements as are set forth
in Sections 12.01 and 12.02 of the Declaration.
11
In the event the consent of the Property Trustee as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination. The Property
Trustee shall vote with respect to such amendment, modification or termination
as directed by a Majority in liquidation amount of the Securities voting
together as a single class; provided that where such amendment, modification or
termination of the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, the
Property Trustee may only vote with respect to that amendment, modification or
termination as directed by, in the case of clause (1) above, the vote of Holders
of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of the Securities unless the Property Trustee shall have received, at
the expense of the Sponsor, an opinion of nationally recognized independent tax
counsel recognized as an expert in such matters to the effect that the Trust
will not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States federal income tax
purposes following such action.
Subject to Section 2.06 of the Declaration, and the provisions of this
and the next succeeding paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class shall have the
right to (A) on behalf of all Holders of Common Securities, waive any past
default that is waivable under the Declaration (subject to, and in accordance
with the Declaration) and (B) direct the time, method, and place of conducting
any proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as holder of the Debentures,
to (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable under Section 6.06 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (e) each holder of Debentures,
the Property Trustee may only take such action if directed by, in the case of
clause (1) above, the vote of Holders of Common Securities representing such
specified percentage of the aggregate liquidation amount of the Common
Securities, or, in the case of clause (2) above, each Holder of Common
12
Securities. Pursuant to this paragraph, the Property Trustee shall not revoke,
or take any action inconsistent with, any action previously authorized or
approved by a vote of the Holders of the Preferred Securities, and shall not
take any action in accordance with the direction of the Holders of the Common
Securities under this paragraph if the action is prejudicial to the Holders of
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee or the Debenture Trustee as set forth above, the Property Trustee shall
be under no obligation to take any of the foregoing actions at the direction of
the Holders of Common Securities unless the Properties Trustee shall have
received, at the expense of the Sponsor, an opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
the Trust will not be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership on account of such
action and will be treated as a grantor trust for United States income tax
purposes following such action.
Notwithstanding any other provision of these terms, each Holder of
Common Securities will be deemed to have waived any Event of Default with
respect to the Common Securities and its consequences until all Events of
Default with respect to the Preferred Securities have been cured, waived by the
Holders of Preferred Securities as provided in the Declaration or otherwise
eliminated, and until all Events of Default with respect to the Preferred
Securities have been so cured, waived by the Holders of Preferred Securities or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Declaration or of the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in the Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under the Declaration without any further act, vote or consent of the Holders of
the Common Securities.
A waiver of an Indenture Event of Default by the Property Trustee at
the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect of
the Securities.
Any required approval of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities of the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Common Securities. Each such notice will include a statement
setting forth (i) the date of such
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meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of Common Securities will be required
for the Trust to redeem and cancel Common Securities in accordance with the
Declaration.
7. PRO RATA TREATMENT. A reference in these terms of the Common
Securities to any payment, distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. RANKING. The Common Securities rank pari passu and payment thereon
will be made Pro Rata with the Preferred Securities except that where an Event
of Default occurs and is continuing, the rights of Holders of Common Securities
to payment in respect of Distributions and payments upon liquidation, redemption
or otherwise are subordinate to the rights of Holders of the Preferred
Securities.
9. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other body.
10. TRANSFERS, EXCHANGES, METHOD OF PAYMENTS. Payment of Distributions
and payments on redemption of the Common Securities will be payable, the
transfer of the Common Securities will be registrable, and Common Securities
will be exchangeable for Common Securities of other denominations of a like
aggregate liquidation amount, at the principal corporate trust office of the
Property Trustee in The City of New York; provided that payment of Distributions
may be made at the option of the Regular Trustees on behalf of the Trust by
check mailed to the address of the persons entitled thereto and that the payment
on redemption of any Common Security will be made only upon surrender of such
Common Security to the Property Trustee. Notwithstanding the foregoing,
transfers of Common Securities are subject to conditions set forth in Section
9.01(c) of the Declaration.
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11. ACCEPTANCE OF INDENTURE. Each Holder of Common Securities, by the
acceptance thereof, agrees to the provisions of the Indenture and the
Debentures, including the subordination provisions thereof.
12. NO PREEMPTIVE RIGHTS. The Holders of Common Securities shall have
no preemptive rights to subscribe to any additional Common Securities or
Preferred Securities.
13. MISCELLANEOUS. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
15
Annex I
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
------ ----------
Certificate Evidencing Common Securities
of
AES Trust II
$2.75 Common Trust Securities
(liquidation amount $50 per Common Security)
THE SECURITY EVIDENCED HEREBY 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 UNLESS SUCH OFFER
AND SALE ARE REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT. THE TRANSFER OF THE SECURITY EVIDENCED
HEREBY IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW.
AES Trust II, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that The AES Corporation (the
"Holder") is the registered owner of ____________________________ (_________)
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the "$2.75 Common Trust Securities"
(liquidation amount $50 per security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and
satisfaction of the other conditions set forth in the Declaration (as defined
below) including, without limitation Section 9.01(c) thereof. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Declaration of Trust of
the Trust dated as of October 29, 1997, as the same may be amended from time to
time (the "Declaration") including the designation of the terms of Common
Securities as set forth in Exhibit C thereto. The Common Securities and the
Preferred Securities issued by the Trust pursuant to the Declaration represent
undivided beneficial interests in the assets of the Trust, including the
Debentures (as defined in the Declaration) issued by The AES Corporation, a
Delaware corporation, to the Trust pursuant to the Indenture referred to in the
Declaration. The Trust will furnish a copy of the Declaration and the Indenture
to the Holder without charge upon written request to the Trust at its principal
place of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is
deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Debt (as defined in the Indenture) as and to the extent provided in
the Indenture.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
2
IN WITNESS WHEREOF, the Trustees of the Trust have executed this
certificate this twenty-ninth day of October, 1997.
AES TRUST II
By________________________, as Trustee
Name:
Title: Trustee
By_________________________, as Trustee
Name:
Title: Trustee
Dated:
Countersigned and Registered:
Transfer Agent and Registrar
By:___________________________
Authorized Signature
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of $2.75 per Common Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarter will bear interest thereon at the rate per
annum of 5.50% thereof (to the extent permitted by law) compounded monthly. The
term "Distributions" as used herein means such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from October 29, 1997 and will be
payable quarterly in arrears, on the last day of each quarter, commencing on
December 31, 1997, but only if and to the extent that interest payments are made
in respect of the Debentures held by the Property Trustee. So long as AES shall
not be in default in the payment of interest on the Debentures, AES has the
right under the Indenture for the Debentures to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of 5.50% per
annum, compounded quarterly during such Extension period; provided that no
Extension Period shall last beyond the date of maturity or any redemption date
of the Debentures. Prior to the termination of any such Extension Period, AES
may commence a new Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarterly interest periods. Payments of accrued Distributions will
be payable to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, AES
may commence a new Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Common Securities for a portion of the Debentures
and (ii) the immediate conversion of such Debentures into Common Stock, in the
manner and according to the terms set forth in the Declaration.
4
CONVERSION REQUEST
To: The First National Bank of Chicago
as Property Trustee of AES Trust II
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Common Stock of The AES Corporation (the "Common Stock") in
accordance with the terms of the Amended and Restated Declaration of Trust dated
as of October 29, 1997 (as amended from time to time, the "Declaration"), by
William R. Luraschi, Barry J. Sharp and Willard Hoagland, as Regular Trustees,
First Chicago Delaware Inc., as Delaware Trustee, The First National Bank of
Chicago, as Property Trustee, The AES Corporation, as Sponsor, and by the
Holders, from time to time, of undivided beneficial interests in the assets of
the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned exercise of the option to convert these Common Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Common Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Common Securities set forth
as Exhibit C to the Declaration) and (ii) immediately convert such Debentures on
behalf of the undersigned, into Common Stock (at the conversion rate specified
in the terms of the Common Securities set forth as Exhibit C to the
Declaration).
The undersigned does also hereby direct the Conversion Agent 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.
5
Date: _____________, _____
in whole ___in part ___
Number of Common Securities to be
converted: _______________
If a name or names other than the
undersigned, please indicate in
the spaces below the name or
names in which the shares of
Common Stock are to be issued,
along with the address or
addresses of such person or
persons
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Signature (for conversion only)
Please Print or Typewrite Name
and Address, Including Zip Code,
and Social Security or Other
Identifying Number
- -----------------------------------
- -----------------------------------
- -----------------------------------
Signature Guarantee:*____________
- -------------------
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 or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_____________________________________________________ agent to transfer this
Common Security Certificate 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 Common Security
Certificate)
- -------------------
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 Exchange Act of 1934, as amended.)
7
Signature Guarantee*:__________________________________________
[FORM OF ASSIGNMENT FOR SECURITY OR
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF]
For value received ___________________ hereby sell(s), assign(s)
and transfer(s) unto__________________________________
(Please insert social security or other
taxpayer identification number of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
Security is being transferred:
[ ] To The AES Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended;
- -------------------
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 Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
8
and unless the box below is checked, the undersigned confirms
that such security is not being transferred to an "affiliate"
of the Company as defined in Rule 144 under the Securities Act
of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Dated:
--------------------------
--------------------------
--------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or
a member firm of a major stock
exchange.
---------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
9