CONFORMED COPY
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THE AES CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
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FIRST SUPPLEMENTAL INDENTURE
Dated as of March 31, 1997
TO
JUNIOR SUBORDINATED INDENTURE
Dated as of March 1, 1997
-------------------
5.375% Junior Subordinated Convertible Debentures
Due 2027
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The First Supplemental INDENTURE, dated as of the thirty first day of
March, 1997 (the "First Supplemental Indenture"), between THE AES CORPORATION, a
corporation duly organized and existing under the laws of the State of Delaware
(hereinafter sometimes referred to as the "Company") and The First National Bank
of Chicago, a national banking association, as trustee (hereinafter sometimes
referred to as the "Trustee") under the Junior Subordinated Indenture dated as
of March 1, 1997 between the Company and the Trustee (the "Indenture") (except
as otherwise set forth herein, all terms used and not defined herein are used as
defined in the Indenture or in the Declaration of Trust);
WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of its junior subordinated securities (the
"Debentures"), said Debentures to be issued from time to time in series as might
be determined by the Company under the Indenture, in an unlimited aggregate
principal amount which may be authenticated and delivered thereunder as in the
Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Debentures to be known as
its 5.375% Junior Subordinated Convertible Debentures due 2027 (said series
being hereinafter referred to as the "Series 5.375% Debentures"), the form and
substance of such Series 5.375% Debentures and the terms, provisions and
conditions thereof to be set forth as provided in the Indenture and this First
Supplemental Indenture; and
WHEREAS, the Company has caused to be formed AES Trust I ("AES Trust I" or
the "Trust") as a statutory business trust under the Business Trust Act of the
State of Delaware (12 Del. Code ss. 3801 et seq.) pursuant to a declaration of
trust dated November 1, 1996 (the "Original Declaration") and the filing of a
restated certificate of trust with the Secretary of State of the State of
Delaware on March 27, 1997; and
WHEREAS, the Original Declaration is to be amended and restated in its
entirety pursuant to an Amended and Restated Declaration of Trust dated as of
March 31, 1997 (such Amended and Restated Declaration of Trust, as amended from
time to time, the "Declaration of Trust"); and
WHEREAS, AES Trust I desires to issue its $2.6875 Term Convertible
Securities, Series A (the "Preferred Securities" or "TECONS") and sell such
Preferred Securities to initial purchasers; and
WHEREAS, in connection with such purchases of Preferred Securities and the
related purchase by the Company of the Common Securities (as defined in the
Declaration of Trust) of AES Trust I, AES Trust I will purchase as trust assets
Series 5.375% Debentures; and
WHEREAS, pursuant to the Declaration of Trust, the legal title to the
Series 5.375% Debentures shall be owned and held of record in the name of The
First National
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Bank of Chicago or its successor under the Declaration of Trust, as Property
Trustee (the "Property Trustee"), in trust for the benefit of holders of the
Preferred Securities and the Common Securities; and
WHEREAS, upon the occurrence of a Special Event (as defined in the
Declaration of Trust) the Regular Trustees (as defined in the Declaration of
Trust) of AES Trust I shall, unless the Series 5.375% Debentures are redeemed as
described herein, dissolve AES Trust I and cause to be distributed to the
holders of Preferred Securities and Common Securities, on a Pro Rata basis
(determined as provided in the terms of the Preferred Securities and Common
Securities attached as Exhibits B and C to the Declaration of Trust), Series
5.375% Debentures and, in connection with a Liquidation Distribution (as defined
in the Declaration of Trust), the Regular Trustees may cause to be distributed
to holders of Preferred Securities and Common Securities, on such a Pro Rata
basis, Series 5.375% Debentures (each a "Dissolution Event"); and
WHEREAS, the Company desires and has requested the Trustee to join with it
in the execution and delivery of this First Supplemental Indenture, and all
requirements necessary to make this First Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Series 5.375%
Debentures when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company, have been performed and
fulfilled, and the execution and delivery hereof have been in all respects duly
authorized;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Series 5.375% Debentures by the holders thereof, and for the purpose of setting
forth, as provided in the Indenture, the form and substance of the Series 5.375%
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agrees with the Trustee as follows:
ARTICLE ONE
GENERAL TERMS AND CONDITIONS OF
THE SERIES 5.375% DEBENTURES
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "5.375% Junior Subordinated Convertible Debentures Due
2027", limited in aggregate principal amount to $257,732,000 (except as provided
in this Section 1.01 and 7.01). Upon exercise of the overallotment option set
forth in the Underwriting Agreement (as defined in the Declaration of Trust),
additional Series 5.375% Debentures in the aggregate principal amount of up to
$25,773,200 may be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Series 5.375% Debentures to or upon the written order of the Company, which
order shall be accompanied by evidence satisfactory to the Trustee that the
overallotment option has been exercised. The Series 5.375% Debentures shall
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mature and the principal shall be due and payable together with all accrued and
unpaid interest thereon, including Compounded Interest (as hereinafter defined)
on March 31, 2027 (the "Maturity Date").
SECTION 1.02. (a) Except as provided in Section 1.02(b), the Series 5.375%
Debentures shall be issued in fully registered certificated form without
interest coupons in denominations of $50 or integral multiples thereof.
Principal and interest on the Series 5.375% Debentures issued in certificated
form will be payable, the transfer of such Series 5.375% Debentures will be
registrable and such Series 5.375% Debentures will be exchangeable for Series
5.375% Debentures bearing identical terms and provisions at the office or agency
of the Company in the Borough of Manhattan, The City and State of New York;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall appear
in the Debenture register and that the payment of principal with respect to the
Series 5.375% Debentures will only be made upon surrender of the Series 5.375%
Debentures to the Trustee. Notwithstanding the foregoing, so long as the
Property Trustee is the legal owner and record holder of the Series 5.375%
Debentures, the payment of the principal of and interest (including Compounded
Interest, if any) on the Series 5.375% Debentures held by the Property Trustee
will be made by the Company in immediately available funds on the payment date
therefor at such place and to the Property Account (as defined in the
Declaration of Trust) established and maintained by the Property Trustee
pursuant to the Declaration of Trust.
(b) In connection with a Dissolution Event:
(i) Series 5.375% Debentures in certificated form may be presented to
the Trustee by the Property Trustee in exchange for a Global
Debenture representing the Series 5.375% Debentures in an
aggregate principal amount equal to all Outstanding Series 5.375%
Debentures, to be registered in the name of the Depositary, or
its nominee, and delivered by the Trustee to the Depositary for
crediting to the accounts of its participants pursuant to the
instructions of the Regular Trustees (as defined in the
Declaration of Trust). The Company upon any such presentation
shall execute a Global Debenture representing the Series 5.375%
Debentures in such aggregate principal amount and deliver the
same to the Trustee for authentication and delivery in accordance
with the Indenture and this First Supplemental Indenture.
Payments on the Series 5.375% Debentures issued as a Global
Debenture will be made to the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, Series 5.375% Debentures in certificated form
may be presented to the Trustee by the Property Trustee and any
Preferred Security Certificate (as defined in
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the Declaration of Trust) which represents Preferred Securities
other than Preferred Securities held by the Clearing Agency (as
defined in the Declaration of Trust) or its nominee ("Non
Book-Entry Preferred Securities") will be deemed to represent
beneficial interests in Series 5.375% Debentures presented to the
Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non
Book-Entry Preferred Securities until such Preferred Security
Certificate are presented to the Debenture Registrar for transfer
or reissuance at which time such Preferred Security Certificate
will be canceled and a Series 5.375% Debenture, registered in the
name of the holder of the Preferred Security Certificate or the
transferee of the holder of such Preferred Security Certificate,
as the case may be, with an aggregate principal amount equal to
the aggregate liquidation amount of the Preferred Security
Certificate canceled will be executed by the Company and
delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this First Supplemental
Indenture. On issue of such Series 5.375% Debentures, Series
5.375% Debentures with an equivalent aggregate amount that were
presented by the Property Trustee to the Trustee will be deemed
to have been canceled.
SECTION 1.03. Each Series 5.375% Debenture will bear interest at the rate
of 5.375% per annum from March 31, 1997 until the principal thereof becomes due
and payable, and on any overdue principal and (to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum, compounded quarterly, payable (subject to
the provisions of Article Three) quarterly in arrears on the last day of each
calendar quarter (each an "Interest Payment Date", commencing on June 30, 1997),
to the person in whose name such Series 5.375% Debenture or any predecessor
Series 5.375% Debenture is registered, at the close of business on the regular
record date for such interest installment, which, except as set forth below,
shall be, in respect of any Series 5.375% Debentures of which the Property
Trustee is the registered holder of or a Global Debenture, the close of business
on the business day next preceding that Interest Payment Date. Notwithstanding
the foregoing sentence, if the Preferred Securities are no longer in book-entry
only form or if pursuant to the provisions of Section 2.11(c) of the Indenture
the Series 5.375% Debentures are not represented by a Global Debenture, the
regular record dates for such interest installment shall be the close of
business on the fifteenth day of the month in which that Interest Payment Date
occurs. Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the registered holders on such regular
record date, and may be paid to the person in whose name the Series 5.375%
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of the Series 5.375% Debentures not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Series 5.375% Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.
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The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Series 5.375% Debentures is not a business day, then
payment of interest payable on such date will be made on the next succeeding day
which is a business day (and without any interest or other payment in respect of
any such delay), except that, if such business day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding business
day, in each case with the same force and effect as if made on such date.
If at any time AES Trust I shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the U.S., or any other taxing authority, then, in any such
case, the Company will pay as additional interest ("Additional Interest") on the
Series 5.375% Debentures such additional amounts as shall be required so that
the net amounts received and retained by AES Trust I after paying any such
taxes, duties, assessments or other governmental charges will be equal to the
amounts AES Trust I would have received had no such taxes, duties, assessments,
or other governmental charges been imposed.
ARTICLE TWO
OPTIONAL REDEMPTION
OF THE SERIES 5.375% DEBENTURES
SECTION 2.01. Except as provided in Section 2.02 and subject to the
provisions below, Series 5.375% Debentures may not be redeemed by the Company
prior to March 31, 2000. Subject to the terms of Article Three of the Indenture,
the Company shall have the right to redeem the Series 5.375% Debentures, in
whole or in part, from time to time, on or after March 31, 2000, upon not less
than 30 nor more than 60 days notice to the Holder of the Series 5.375%
Debentures, at the following prices (expressed as percentages of the principal
amount of the Series 5.375% Debentures) (the "Optional Redemption Price"),
together with any accrued and unpaid interest thereon, including Compounded
Interest (as defined herein), if any, to, but excluding, the date of such
redemption, if redeemed during the 12-month period beginning March 31:
Year Redemption Price
---- ----------------
2000 103.359%
2001 102.688%
2002 102.016%
2003 101.344%
2004 100.672%
and 100% if redeemed on or after March 31, 2005.
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If the Series 5.375% Debentures are redeemed on any Interest Payment Date,
accrued and unpaid interest shall be payable to Holders of record on the
relevant record date.
The Company may not redeem any Series 5.375% Debentures unless all accrued
and unpaid interest thereon, including Compounded Interest, if any, has been
paid for all quarterly periods terminating on or prior to the date of notice of
redemption. So long as the corresponding Trust Securities are outstanding, the
proceeds from the redemption of the Series 5.375% Debentures will be used to
redeem the Trust Securities.
If the Company gives a notice of redemption in respect of Junior
Subordinated Debentures (which notice will be irrevocable), then, by 12:00 noon,
New York City time, on the redemption date, the Company will deposit irrevocably
with the Indenture Trustee funds sufficient to pay the applicable Redemption
Price and will give irrevocable instructions and authority to pay such
Redemption Price to the holders of the Junior Subordinated Debentures.
If any date fixed for redemption of Junior Subordinated Debentures is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calender year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption.
In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange any Junior Subordinated
Debentures during a period beginning at the opening of business 15 days before
any selection for redemption of Junior Subordinated Debentures and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Junior Subordinated
Debentures to be redeemed and (ii) register the transfer of or exchange any
Junior Subordinated Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any Junior Subordinated Debentures being
redeemed in part.
SECTION 2.02. If, at any time, a Tax Event (as defined below) shall occur
or be continuing and (i) the Regular Trustees and the Company shall have
received an opinion (a "Redemption Tax Opinion") of a nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that the Company would be
precluded from deducting the interest on the Series 5.375% Debentures for United
States federal income tax purposes even if the Series 5.375% Debentures were
distributed to the holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in AES Trust I as set forth in the
Declaration of Trust or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion (as defined below) cannot be
delivered to AES Trust I, the Company shall have the right at any time, upon not
less than 30 nor more than
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60 days' notice, to redeem the Series 5.375% Debentures in whole or in part for
cash at a price equal to 100% of the principal amount thereof, together with any
accrued and unpaid interest thereon, including Compounded Interest, if any, to,
but excluding the date of redemption, within 90 days following the occurrence of
such Tax Event; provided, however, that, if at the time there is available to
the Company or the Regular Trustees on behalf of AES Trust I the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some ministerial
action ("Ministerial Action"), such as filing a form or making an election, or
pursuing some other similar reasonable measure, which has no adverse effect on
AES Trust I, the Company or the holders of the Preferred Securities, the Company
or the Regular Trustees on behalf of AES Trust I will pursue such measure in
lieu of redemption and provided further that the Company shall have no right to
redeem the Series 5.375% Debentures while the Regular Trustees on behalf of AES
Trust I are pursuing any such Ministerial Action.
"Tax Event" means that the Company and the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "Dissolution Tax Opinion") to the effect that on or after
March 24, 1997 as a result of (a) any amendment to, or change in, the laws (or
any regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority (including the
enactment of any legislation and the publication of any judicial decision or
regulatory determination), (c) any interpretation or pronouncement that provides
for a position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after March 24, 1997 there is more than an insubstantial risk that (i) AES
Trust I is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to income accrued or received on the
Series 5.375% Debentures, (ii) AES Trust I is, or will be within 90 days of the
date thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by the Company to AES Trust I on
the Series 5.375% Debentures is not, or within 90 days of the date thereof will
not be, deductible by the Company for United States federal income tax purposes.
"No Recognition Opinion" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
any then applicable published revenue ruling of the Internal Revenue Service, to
the effect that the holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of a
dissolution of AES Trust I and distribution of the Series 5.375% Debentures as
provided in the Declaration of Trust.
SECTION 2.03. If the Series 5.375% Debentures are only partially redeemed
pursuant to this Article Two, the Series 5.375% Debentures will be redeemed pro
rata or
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by lot or by any other method utilized by the Trustee, provided that if at the
time of redemption, the Series 5.375% Debentures are registered as a Global
Debenture, the Depository shall determine by lot the principal amount of such
Series 5.375% Debentures held by each Debenture Holder to be redeemed in
accordance with its customary procedures. Notwithstanding the foregoing, if a
partial redemption of the Series 5.375% Debentures would result in the delisting
of the Preferred Securities by any national securities exchange or other
organization on which the Preferred Securities are then listed, the Company
shall not be permitted to effect such partial redemption and will only redeem
the Series 5.375% Debentures in whole.
ARTICLE THREE
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.01. So long as the Company is not in default in the payment of
interest on the Series 5.375% Debentures, the Company shall have the right, at
any time during the term of the Series 5.375% Debentures, from time to time to
extend the interest payment period of such Series 5.375% Debentures for up to 20
consecutive quarterly interest periods (the "Extended Interest Payment Period"),
at the end of which period the Company shall pay all interest accrued and unpaid
thereon (together with interest thereon at the rate of 5.375% per annum to the
extent permitted by applicable law, compounded quarterly ("Compounded
Interest")); provided that no Extended Interest Payment Period may extend beyond
the Maturity Date or redemption date of the Series 5.375% Debentures. During
such Extended Interest Payment Period the Company shall not declare or pay any
dividend on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its common stock or preferred stock or make any
guarantee payments with respect thereto; provided that the foregoing will not
apply to any stock dividends paid by the Company in Common Stock. Prior to the
termination of any such Extended Interest Payment Period, the Company may pay
all or any portion of the interest accrued on the Series 5.375% Debentures on
any Interest Payment Date to holders of record on the regular record date for
such Interest Payment Date or from time to time further extend such Period;
provided that such Period together with all such further extensions thereof
shall not exceed 20 consecutive quarterly interest periods. Upon the termination
of any Extended Interest Payment Period and upon the payment of all accrued and
unpaid interest then due, together with Compounded Interest, the Company may
select a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof. At the end of the Extended Interest
Payment Period the Company shall pay all interest accrued and unpaid on the
Series 5.375% Debentures including any Compounded Interest which shall be
payable to the holders of the Series 5.375% Debentures in whose names the Series
5.375% Debentures are registered in the Debenture register on the first record
date after the end of the Extended Interest Payment Period.
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SECTION 3.02. (a) So long as the Property Trustee is the legal owner and
holder of record of the Series 5.375% Debentures, at the time the Company
selects an Extended Interest Payment Period, the Company shall give both the
Property Trustee and the Trustee written notice of its selection of such
Extended Interest Payment Period one business day prior to the earlier of (i)
the next succeeding date on which distributions on the Preferred Securities are
payable or (ii) the date AES Trust I is required to give notice of the record
date or the date such distributions are payable to the New York Stock Exchange
or other applicable self-regulatory organization or to holders of the Preferred
Securities, but in any event not less than one business day prior to such record
date. The Company shall cause AES Trust I to give notice of the Company's
selection of such Extended Interest Payment Period to the holders of the
Preferred Securities.
(b) If as a result of a Dissolution Event Series 5.375% Debentures have
been distributed to holders of Preferred Securities and Common Securities, at
the time the Company selects an Extended Interest Payment Period, the Company
shall give the holders of the Series 5.375% Debentures and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
business days prior to the earlier of (i) the next succeeding Interest Payment
Date or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Series 5.375%
Debentures.
SECTION 3.03. The quarter in which any notice is given pursuant to Section
3.02 shall be counted as one of the quarters permitted in the maximum Extended
Interest Payment Period permitted under this Article Three.
ARTICLE FOUR
COVENANTS APPLICABLE TO SERIES 5.375% DEBENTURES
SECTION 4.01. So long as any Preferred Securities remain outstanding, the
Company will not declare or pay any dividends on, or redeem, purchase, acquire
or make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock or make any guarantee payments with respect thereto if
at such time (i) the Company shall be in default with respect to its Guarantee
Payments (as defined in the Guarantee Agreement) or other payment obligations
under the Guarantee Agreement, (ii) there shall have occurred any Event of
Default under the Indenture with respect to the Series 5.375%
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Debentures or (iii) the Company shall have given notice of its election of an
Extended Interest Payment Period and such Period, or any extension thereof, is
continuing; provided that the foregoing will not apply to any stock dividends
paid by the Company in Common Stock.
SECTION 4.02. In connection with the distribution of the Series 5.375%
Debentures to the holders of the Preferred Securities upon a Dissolution Event,
the Company will use its best efforts to list such Series 5.375% Debentures on
the New York Stock Exchange or on such other exchange as the Preferred
Securities are then listed and traded.
SECTION 4.03. The Company covenants and agrees for the benefit of the
holders of the Preferred Securities to comply fully with all of its obligations
and agreements under the Declaration of Trust, including, without limitation,
its obligations under Article 4 thereof.
SECTION 4.04. Prior to the distribution of Series 5.375% Debentures to the
holders of Preferred Securities upon a Dissolution Event, the Company covenants
and agrees for the benefit of the holders of the Preferred Securities (i) not to
cause or permit the Common Securities to be transferred except as permitted by
the Declaration of Trust and (ii) that it will use reasonable efforts to cause
the Trust to continue to be treated as a grantor trust for United States federal
income tax purposes, except in connection with a distribution of the Series
5.375% Debentures as provided in the Declaration of Trust.
ARTICLE FIVE
CONVERSION OF DEBENTURES
SECTION 5.01. Subject to and upon compliance with the provisions of this
Article Five, the Series 5.375% Debentures are convertible at the option of the
Holder, at any time through the close of business on March 31, 2027 (or, in the
case of Series 5.375% Debentures called for redemption, prior to the close of
business on the Business Day prior to the corresponding redemption date) into
fully paid and nonassessable shares of
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Common Stock of the Company at an initial conversion rate of 0.6906 shares of
Common Stock for each $50 in aggregate principal amount of Series 5.375%
Debentures (equal to a conversion price (as adjusted from time to time, the
"Conversion Price") of $72.40 per share of Common Stock), subject to adjustment
as described in this Article Five. A Holder of Series 5.375% Debentures may
convert any portion of the principal amount of the Series 5.375% Debentures into
that number of fully paid and nonassessable shares of Common Stock obtained by
dividing the principal amount of the Series 5.375% Debentures to be converted by
such conversion price. All calculations under this Article Five shall be made to
the nearest cent or to the nearest 1/100th of a share, as the case may be.
SECTION 5.02. (a) In order to convert all or a portion of the Series 5.375%
Debentures, the Holder thereof shall deliver to the Conversion Agent an
irrevocable Notice of Conversion setting forth the principal amount of Series
5.375% Debentures to be converted, together with the name or names, if other
than the Holder, in which the shares of Common Stock should be issued upon
conversion and, if such Series 5.375% Debentures are definitive Series 5.375%
Debentures, surrender to the Conversion Agent the Series 5.375% Debentures to be
converted, duly endorsed or assigned to the Company or in blank. In addition, a
holder of Trust Securities may exercise its right under the Declaration of Trust
to convert such Trust Securities into Common Stock by delivering to the
Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
Agent to (i) exchange such Trust Security for a portion of the Series 5.375%
Debentures held by the Trust (at an exchange rate of $50 principal amount of
Series 5.375% Debentures for each Trust Security) and (ii) immediately convert
such Series 5.375% Debentures, on behalf of such holder, into Common Stock of
the Company pursuant to this Article Five and, if such Trust Securities are in
definitive form, surrendering such Trust Securities, duly endorsed or assigned
to the Company or in blank. So long as any Trust Securities are outstanding, the
Trust shall not convert any Series 5.375% Debentures except pursuant to a Notice
of Conversion delivered to the Conversion Agent by a holder of Trust Securities.
Any reference herein to a "holder" of Trust Securities shall mean a "Holder" of
such securities as defined in the Declaration of Trust.
If a Preferred Security is surrendered for conversion after the close of
business on any regular record date for payment of a Distribution and before the
opening of business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such Distribution
payment date will be paid in cash to the person in whose name the Series 5.375%
Debenture is registered at the close of business on such record date, and (other
than a Series 5.375% Debenture or a portion of a Series 5.375% Debenture called
for redemption on a redemption date occurring after such record date and on or
prior to such Distribution payment date) when so surrendered for conversion, the
Series 5.375% Debenture must be accompanied by payment of an amount equal to the
Distribution payable on such Distribution payment date. Except as otherwise
provided in the immediately preceding sentence, in the case of any Series 5.375%
Debenture which is converted, interest whose Maturity Date is after the date of
conversion
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of such Series 5.375% Debenture shall not be payable, and the Company shall not
make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest on the Series 5.375% Debenture being
converted, which shall be deemed to be paid in full. Each conversion shall be
deemed to have been effected immediately prior to the close of business on the
day on which the Notice of Conversion was received (the "Conversion Date") by
the Conversion Agent from the Holder or from a holder of the Preferred
Securities effecting a conversion thereof pursuant to its conversion rights
under the Declaration, as the case may be. The Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of the
Conversion Date. As promptly as practicable on or after the Conversion Date, the
Company shall issue and deliver at the office of the Conversion Agent, unless
otherwise directed by the Holder in the Notice of Conversion, a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conversion, together with the cash payment, if any, in lieu of any fraction of
any share to the Person or Persons entitled to receive the same. The Conversion
Agent shall deliver such certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of shares of
Common Stock into which the Series 5.375% Debentures are convertible (together
with the cash payment, if any, in lieu of fractional shares) shall be deemed to
satisfy the Company's obligation to pay the principal amount at maturity of the
portion of Series 5.375% Debentures so converted and any unpaid interest
(including Compounded Interest) accrued on such Series 5.375% Debentures at the
time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a
cash adjustment in an amount equal to the same fraction of the Closing Price of
such fractional interest on the date on which the Series 5.375% Debentures were
duly surrendered to the Conversion Agent for conversion, or, if such day is not
a day on which any securities are traded on the national securities exchange or
quotation system used to determine the Closing Price (a "Trading Day"), on the
next Trading Day, and the Conversion Agent in turn will make such payment, if
any, to the Holder of the Series 5.375% Debentures or the holder of the
Preferred Securities so converted.
(d) In the event of the conversion of any Series 5.375% Debenture in part
only, a new Series 5.375% Debenture or Series 5.375% Debentures for the
unconverted portion thereof will be issued in the name of the Holder thereof
upon the cancellation thereof in accordance with Section 2.05 of the Indenture.
(e) In effecting the conversion transactions described in this Section
5.02, the Conversion Agent is acting as agent of the holders of Preferred
Securities (in the exchange of Preferred Securities for Series 5.375%
Debentures) and as agent of the Holders of Series 5.375% Debentures (in the
conversion of Series 5.375% Debentures into Common Stock), as the case may be.
The Conversion Agent is hereby authorized (i) to exchange Series 5.375%
Debentures held by the Trust from time to time for Preferred Securities in
13
connection with the conversion of such Preferred Securities in accordance with
this Article Five and (ii) to convert all or a portion of the Series 5.375%
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Article Five and to deliver to
the Trust a new Series 5.375% Debenture or Series 5.375% Debentures for any
resulting unconverted principal amount.
SECTION 5.03. (a) The Conversion Price shall be adjusted from time to time
as follows:
(i) In case the Company shall pay or make a dividend or other
distribution on Common Stock in shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction the
numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such
dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this
subparagraph (i), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Company (except to the extent such dividend or distribution is being
made with respect to such shares) but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Common Stock.
(ii) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller amount of
shares of Common Stock, then the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iii) In case the Company shall issue rights or warrants to all
holders of Common Stock entitling them (for a period expiring
14
within 45 days after the record date fixed for a distribution of such
rights or warrants) to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price (as
hereinafter defined) per share (determined as provided in subparagraph
(vii) below) of Common Stock on the date fixed for the determination
of shareholders entitled to receive such rights or warrants (other
than pursuant to a dividend reinvestment plan), then the Conversion
Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or
purchase would purchase at such Current Market Price and the
denominator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination plus
the number of shares of Common Stock so offered for subscription or
purchase, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (iii), the number
of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock. The Company agrees not to issue any rights
or warrants in respect of shares of Common Stock held in the treasury
of the Company. To the extent that shares of Common Stock are not
delivered after the expiration of such rights or warrants, the
Conversion Price shall be readjusted to the Conversion Price which
would then be in effect had the adjustments made in respect of the
issuance of such rights or warrants been made on the basis of delivery
of only the number of shares of Common Stock actually delivered.
(iv) Subject to the second paragraph of this subparagraph (iv), in
case the Company shall, by dividend or otherwise, distribute to all
holders of Common Stock (A) shares of capital stock of the Company
(other than Common Stock), (B) evidence of indebtedness of the Company
and/or (C) other assets (including securities, but excluding (1) any
rights or warrants referred to in subparagraph (iii) above, (2) any
rights or warrants to obtain capital stock of a company other than the
Company or any subsidiary of the Company (including any rights
offerings of the Company with respect to capital stock of companies in
which the Company has an
15
investment (a "Rights Offering")), (3) dividends or distributions in
connection with the liquidation, dissolution or winding-up of the
Company, (4) dividends payable solely in cash that may from time to
time be fixed by the Board of Directors of the Company and (5)
dividends or distributions referred to in subparagraph (i) above),
then in each case (unless the Company makes the election referred to
in the next sentence) the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business
on such record date by a fraction the numerator of which shall be the
Current Market Price per share (determined as provided in subparagraph
(vii) below) of the Common Stock on such record date (the "Reference
Date") less the then fair market value on the Reference Date (as
determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive and shall be described in a
statement filed with the Depositary and the Trustee) of the portion of
the shares of capital stock of the Company, evidences of indebtedness
or other assets so distributed (and for which an adjustment to the
Conversion Price has not been made previously pursuant to the terms of
this Article Five) applicable to one share of Common Stock and the
denominator shall be such Current Market Price per share of the Common
Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the Reference Date. However,
the Company may elect, in its sole discretion, in lieu of the
foregoing adjustment, to make adequate provision so that each holder
of Securities shall have the right to receive upon conversion thereof
the amount and kind of shares of capital stock, evidences of
indebtedness or other assets such holder would have received had such
holder converted such shares on such record date. If the Board of
Directors of the Company determines the fair market value of any
distribution for purposes of this subparagraph (iv) by reference to
the actual or when issued trading market for any securities (including
shares of capital stock or evidence of indebtedness of the Company)
comprising a distribution of securities, it must in doing so consider
the price in such market over the period used in computing the Current
Market Price of the Common Stock.
For purposes of this subparagraph (iv), any dividend or distribution
that includes both (x) any of the items described in clauses (A), (B)
or (C) of the first paragraph of this subparagraph (iv) and (y) Common
Stock or rights or warrants to subscribe for or purchase Common Stock
of the type referred to in subparagraph (iii) shall be deemed to be
(1) a dividend or distribution of shares of capital stock of the
Company (other than Common Stock), evidences of
16
indebtedness of the Company or other assets of the type referred to in
clause (C) of the first paragraph of this subparagraph (iv) (making
any Conversion Price reduction required by this subparagraph (iv))
immediately followed by (2) a dividend or distribution of such Common
Stock or rights or warrants to purchase Common Stock of the type
referred to in subparagraph (iii) (making any further Conversion Price
reduction required by subparagraph (i) or (iii) of this Section
5.03(a)), except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted
as "the date fixed for the determination of shareholders entitled to
receive such rights or warrants" and "the date fixed for such
determination" within the meaning of subparagraphs (i) and (iii) of
this Section 5.03(a) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination" within the
meaning of subparagraph (i) of this Section 5.03(a).
The occurrence of a distribution or the occurrence of any other event
as a result of which holders of Series 5.375% Debentures converting
such notes into Common Stock hereunder will not be entitled to receive
rights issued pursuant to any shareholder protective rights agreement
now or hereafter in effect (the "Other Rights") in the same amount and
manner as if such holders had converted such shares immediately prior
to the occurrence of such distribution or other event shall be deemed
a distribution of Other Rights for the purposes of conversion
adjustments pursuant to this subparagraph (iv). In lieu of making any
adjustment to the Conversion Price under this subparagraph (iv) as a
result of such a distribution of Other Rights, the Company may elect,
in its sole discretion, to provide that Other Rights shall be issuable
in the same amount and manner upon conversion of the Series 5.375%
Debentures without regard to whether the shares of Common Stock
issuable upon conversion of the Series 5.375% Debentures were issued
before or after such distribution or other event.
(v) In case the Company shall, by dividend or otherwise, at any time
distribute cash to all holders of Common Stock, excluding (A) any cash
dividends on Common Stock to the extent that the aggregate cash
dividends per share of Common Stock in any consecutive 12-month period
do not exceed the greater of (x) the amount per share of Common Stock
of the cash dividends paid on the Common Stock in the immediately
preceding 12-month period, to the extent that such dividends for the
immediately preceding 12- month period did not require an adjustment
to the Conversion Price
17
pursuant to this subparagraph (v) (as adjusted to reflect subdivisions
or combinations of the Common Stock) and (y) 15% of the average of the
daily Closing Prices (as hereinafter defined) of the Common Stock for
the ten consecutive Trading Days immediately prior to the date of
declaration of such dividend and (B) any dividend or distribution in
connection with the liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary; or any redemption of any
Other Rights; provided, however, that no adjustment shall be made
pursuant to this subparagraph (v) if such distribution would otherwise
constitute a Fundamental Change (as hereinafter defined) and be
reflected in a resulting adjustment to the Conversion Price as
provided in this Article Five) then, in each case (unless the Company
makes the election referred to in the proviso following this clause),
the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect at the
close of business on such record date by a fraction the numerator of
which shall be the Closing Price of a share of Common Stock on such
record date less the amount of cash so distributed (to the extent not
excluded as provided above) applicable to one share of Common Stock,
and the denominator shall be the Closing Price of a share of Common
Stock, such reduction to become effective immediately prior to the
opening of business on the day following such record date; provided,
however, that the Company may elect, in its sole discretion, in lieu
of the foregoing adjustment, to make adequate provision so that each
holder of Securities shall thereafter have the right to receive upon
conversion the amount of cash such holder would have received had such
holder converted each Security on such record date. If any adjustment
is required to be made as set forth in this subparagraph (v) as a
result of a distribution which is a dividend described in clause (A)
of this subparagraph (v), such adjustment will be based upon the
amount by which such distribution exceeds the amount of the dividend
permitted to be excluded pursuant to such clause (A) of this
subparagraph (v). If an adjustment is required to be made pursuant to
this subparagraph (v) as a result of a distribution which is not such
a dividend, such adjustment would be based upon the full amount of
such distribution.
(vi) In case of the consummation of a tender or exchange offer (other
than an odd-lot tender offer) made by the Company or any subsidiary of
the Company for all or any portion of the outstanding shares of Common
Stock to the extent that the cash and fair market value (as determined
in good faith by the Board of Directors of the Company, whose
determination shall be conclusive and shall be described in a
resolution of such Board) of any other consideration
18
included in such payment per share of Common Stock at the last time
(the "Expiration Time") tenders or exchanges may be made pursuant to
such tender or exchange offer (as amended) exceed by more than 10%,
with any smaller excess being disregarded in computing the adjustment
to the Conversion Price provided in this subparagraph (vi), the first
reported sale price per share of Common Stock on the Trading Day next
succeeding the Expiration Time, then the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
Expiration Time by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding (including any tendered
or exchanged shares) on the Expiration Time multiplied by the first
reported sale price of the Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of
all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any
Purchased Shares) on the Expiration Time and the first reported sale
price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time.
(vii) For the purpose of any computation under this Article Five, the
"Current Market Price per share" of Common Stock on any day shall be
deemed to be the average of the daily Closing Prices (as hereinafter
defined) per share of Common Stock for the ten consecutive Trading
Days prior to and including the date in question; provided, however,
that (1) if the "ex" date (as hereinafter defined) for any event
(other than the issuance, distribution or Fundamental Change requiring
such computation) that requires an adjustment to the Conversion Price
pursuant to this Article Five (the "Other Event") occurs during such
ten consecutive Trading Days and prior to the "ex" date for the
issuance, distribution or Fundamental Change requiring such
computation (the "Current Event"), the Closing Price for each Trading
Day prior to the "ex" date for such Other Event shall be adjusted by
multiplying such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such
Other Event, (2) if the "ex" date for any Other Event occurs on or
after the "ex" date for the
19
Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such Other
Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such Other Event (provided that
in the event that such fraction is required to be determined at a date
subsequent to the date in question and with reference to events taking
place subsequent to the date in question, the Board of Directors of
the Company or, to the extent permitted by applicable law, a duly
authorized committee thereof, whose determination shall be conclusive
and described in a resolution of the Board of Directors of the Company
or such duly authorized committee thereof, as the case may be, shall
in good faith estimate such fraction based on assumptions it deems
reasonable regarding such events taking place subsequent to the date
in question, and such estimated fraction shall be used for purposes of
such adjustment until such time as the actual fraction by which the
Conversion Price is so required to be adjusted as a result of such
Other Event is determined), and (3) if the "ex" date for the Current
Event is on or prior to the date in question, after taking into
account any adjustment required pursuant to clause (1) or (2) of this
proviso, the Closing Price for each Trading Day on or after such "ex"
date shall be adjusted by adding thereto the amount of any cash and
the fair market value (as determined in good faith by the Board of
Directors of the Company or, to the extent permitted by applicable
law, a duly authorized committee thereof in a manner consistent with
any determination of such value for purposes of this Article Five,
whose determination shall be conclusive and described in a resolution
of the Board of Directors of the Company or such duly authorized
committee thereof, as the case may be) of the shares of capital stock,
evidences of indebtedness or other assets being distributed applicable
to one share of Common Stock as of the close of business on the day
before such "ex" date. For purposes of this subparagraph (vii), the
term "ex" date, (1) when used with respect to any issuance,
distribution or Fundamental Change, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the
right to receive such issuance, such distribution or the cash,
securities, property or other assets distributable in such Fundamental
Change to holders of the Common Stock, (2) when used with respect to
any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective and (3) when used with respect to
20
any tender or exchange offer means the first date on which the Common
Stock trades regular way on such exchange or in such market after the
Expiration Time of such offer.
(viii) No adjustment in the Conversion Price shall be required
pursuant to this Section 5.03(a) unless the adjustment would require a
change of at least 1% of such price; provided, however, that any
adjustments which by reason of this subparagraph (viii) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the
nearest cent (with .005 being rounded upward) or to the nearest
1/100th of a share (with .005 of a share being rounded upward), as the
case may be. Notwithstanding anything to the contrary in this Article
Five, the Company from time to time may, to the extent permitted by
law, reduce the Conversion Price by any amount for any period of at
least 20 Business Days, in which case the Company shall give at least
15 days' notice of such reduction to the holders of Series 5.375%
Debentures and the Trustee. In addition, the Company may, at its
option, make such reductions in the Conversion Price in addition to
those set forth in this Article Five, as it considers to be advisable
in order to avoid or diminish any income tax to any holders of shares
of Common Stock resulting from any dividend or distribution of stock
or issuance of rights or warrants to purchase or subscribe for stock
or from any event treated as such for income tax purposes or for any
other reasons.
(ix) In any case in which this Article Five provides that an
adjustment shall become effective immediately after a record date for
an event, the Company may defer until the occurrence of such event (A)
issuing to the holder of any Series 5.375% Debentures converted after
such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the
Common Stock issuable upon such conversion before giving effect to
such adjustment and (B) paying to such holder any amount in cash in
lieu of any fractional shares pursuant to this Article Five.
(x) For purposes of this Article Five, "Common Stock" includes any
stock of any class of the Company which has no preference in respect
of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and
which is not subject to redemption by the Company. However, subject to
the provisions of this Article Five, shares issuable on conversion of
Series 5.375% Debentures shall
21
include only shares of the class designated as the Company Common
Stock on the date of the initial issuance of Series 5.375% Debentures
by the Company or shares of any class or classes resulting from any
reclassification or reclassification thereof and which have no
preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding-up
of the Company and which are not subject to redemption by the Company;
provided, however, that if at any time there shall be more than one
such resulting class, the shares of each such class then so issuable
shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all
such reclassifications.
(b) Whenever the Conversion Price is adjusted as herein provided:
(i) the Company shall compute the adjusted Conversion Price and shall
prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted Conversion Price
and showing in reasonable detail the facts upon which such adjustment
is based, and such certificate shall forthwith be filed with the
Trustee and the transfer agent for the Preferred Securities and the
Series 5.375% Debentures; and
(ii) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of
Preferred Securities and the Series 5.375% Debentures at their last
addresses as they appear upon the stock transfer books of the Company
and the Trust.
SECTION 5.04. (a) In the event that the Company shall be a party to any
transaction or series of transactions constituting a Fundamental Change,
including, without limitation, (i) any recapitalization or reclassification of
shares of Common Stock (other than a change in the par value or as a result of a
subdivision or combination of the Common Stock), (ii) any consolidation of the
Company with, or merger of the Company into, any other corporation or any merger
of another corporation into the Company as a result of which holders of Common
Stock shall be entitled to receive securities or other property or assets
(including cash) with respect to or in exchange for Common Stock (other than a
merger which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), (iii) any sale or transfer
of all or substantially all of the assets of the Company, or (iv) any compulsory
share exchange, pursuant to any of which the holders of Common Stock shall be
entitled to receive other securities, cash or other property, then appropriate
provision shall be made as part of the terms of such transaction or series of
transactions so that the holder of each Series 5.375%
22
Debenture then outstanding shall have the right thereafter to convert such
Series 5.375% Debenture only into (A) if any such transaction does not
constitute a Common Stock Fundamental Change (as hereinafter defined), the kind
and amount of the securities, cash or other property that would have been
receivable upon such recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of Common
Stock into which such Series 5.375% Debenture might have been converted
immediately prior to such recapitalization, reclassification, consolidation,
merger, sale, transfer or share exchange, after, in the case of a Non-Stock
Fundamental Change (as hereinafter defined), giving effect to any adjustment in
the Conversion Price required by the provisions which follow in subparagraph (i)
of Section 5.04(c), and (B) in the case of a Common Stock Fundamental Change (as
hereinafter defined), common stock of the kind received by holders of Common
Stock as a result of such Common Stock Fundamental Change in an amount
determined pursuant to the provisions which follow in subparagraph (ii) of
Section 5.04(c). The company formed by such consolidation or resulting from such
merger or which acquires such assets or which acquires the Common Stock, as the
case may be, shall enter into a supplemental indenture with the Trustee,
satisfactory in form to the Trustee, the provisions of which provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article Five. The above provisions shall
similarly apply to successive recapitalization, reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(b) Notwithstanding any other provisions in this Article Five to the
contrary, if any Fundamental Change (as hereinafter defined) occurs, then the
Conversion Price in effect will be adjusted immediately following such
Fundamental Change as described below in Section 5.04(c). In addition, in the
event of a Common Stock Fundamental Change, each Series 5.375% Debenture shall
be convertible solely into common stock of the kind received by holders of
Common Stock as the result of such Common Stock Fundamental Change as more
specifically provided below in Section 5.04(c).
(c) For purposes of calculating any adjustment to be made pursuant to this
Article Five in the event of a Fundamental Change, immediately following such
Fundamental Change (and for such purposes a Fundamental Change shall be deemed
to occur on the earlier of (a) the occurrence of such Fundamental Change and (b)
the date, if any, fixed for determination of shareholders entitled to receive
the cash, securities, property or other assets distributable in such Fundamental
Change to holders of the Common Stock):
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price per share of Common Stock shall be the lower of (A) the
Conversion Price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other adjustments
effected pursuant to this Article Five, and (B) the product of (1) the
greater of the Applicable Price (as hereinafter defined) or the then
applicable Reference Market Price (as hereinafter defined) and (2) a
fraction the numerator of which shall be $100
23
and the denominator of which shall be the amount set forth below
(based on the date on which such Non-Stock Fundamental Change occurs).
For the twelve month period beginning March 31:
Year Denominator
---- -----------
1997 105.375%
1998 104.703%
1999 104.031%
2000 103.359%
2001 102.687%
2002 102.015%
2003 101.343%
2004 100.671%
and thereafter, 100.00;
(ii) in the case of a Common Stock Fundamental Change, the Conversion
Price per share of Common Stock shall be the Conversion Price in effect
immediately prior to such Common Stock Fundamental Change, but after giving
effect to any other adjustments effected pursuant to this Article Five,
multiplied by a fraction, the numerator of which is the Purchaser Stock
Price (as hereinafter defined) and the denominator of which is the
Applicable Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% of the value of the consideration
received by a holder of Common Stock is common stock of the successor,
acquiror or other third party (and cash, if any, paid with respect to any
fractional interests in such common stock resulting from such Common Stock
Fundamental Change) and (B) all of the Common Stock shall have been
exchanged for, converted into or acquired for common stock (and cash, if
any, with respect to fractional interests) of the successor, acquiror or
other third party, the Conversion Price per share of Common Stock
immediately following such Common Stock Fundamental Change shall be the
Conversion Price in effect immediately prior to such Common Stock
Fundamental Change divided by the number of shares of common stock of the
successor, acquiror, or other third party received by a holder of one share
of Common Stock as a result of such Common Stock Fundamental Change.
(d) The following definitions shall apply to terms used in this Article
Five:
(i) "Applicable Price" shall mean (A) in the event of a Non-Stock
Fundamental Change in which the holders of Common Stock receive only cash,
the amount of cash receivable by a holder of one share of Common Stock and
(B) in the event of any other Fundamental Change, the average of the
Closing Prices for one share of Common Stock during the ten Trading Days
immediately prior to the
24
record date for the determination of the holders of Common Stock entitled
to receive cash, securities, property or other assets in connection with
such Fundamental Change or, if there is no such record date, prior to the
date upon which the holders of Common Stock shall have the right to receive
such cash, securities, property or other assets.
(ii) "Closing Price" with respect to any securities on any day shall
mean the closing sale price, regular way, on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and
asked prices, regular way, in each case on the New York Stock Exchange or,
if such security is not listed or admitted to trading on such Exchange, on
the principal national securities exchange or quotation system on which
such security is quoted or listed or admitted to trading or, if not quoted
or listed or admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the date in question as reported
by the National Quotation Bureau Incorporated, or a similarly generally
accepted reporting service or, if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors of the Company for that purpose or a price
determined in good faith by the Board of Directors of the Company.
(iii) "Common Stock Fundamental Change" shall mean any Fundamental
Change in which more than 50% of the value (as determined in good faith by
the Board of Directors of the Company) of the consideration received by the
holders of Common Stock pursuant to such transactions consists of shares of
common stock that, for the ten consecutive Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (A) the
Company continues to exist after the occurrence of such Fundamental Change
and the outstanding Preferred Securities continue to exist as outstanding
Preferred Securities, or (B) the outstanding Preferred Securities continue
to exist as Preferred Securities and are convertible into common stock of
the successor to the Company.
(iv) "Fundamental Change" shall mean the occurrence of any transaction
or event or series of transactions or events pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted
into, acquired for or constitutes solely the right to receive cash,
securities, property or other assets (whether by means of an exchange
offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided, however, in the
case of a plan involving more than one such transaction or event, for
purposes of adjustment of the Conversion Price, such Fundamental Change
shall be deemed to have occurred when substantially all of the Common Stock
has been exchanged for, converted into, or acquired for or constitutes
solely the right to
25
receive cash, securities, property or other assets, but the adjustment
shall be based upon the consideration which the holders of Common Stock
received in such transaction or event as a result of which more than 50% of
the Common Stock shall have been exchanged for, converted into, or acquired
for or shall constitute solely the right to receive cash, securities,
property or other assets.
(v) "Non-Stock Fundamental Change" shall mean any Fundamental Change
other than a Common Stock Fundamental Change.
(vi) "Purchaser Stock Price" shall mean, with respect to any Common
Stock Fundamental Change, the average of the Closing Prices for one share
of the common stock received by holders of Common Stock in such Common
Stock Fundamental Change during the ten Trading Days immediately prior to
the record date for the determination of the holders of Common Stock
entitled to receive such common stock or, if there is no such record date,
prior to the date upon which the holders of Common Stock shall have the
right to receive such common stock.
(vii) "Reference Market Price" shall initially mean $39.08 (which is
an amount equal to 66-2/3% of the last reported sale price for the Common
Stock on the New York Stock Exchange on March 24, 1997) and, in the event
of any adjustment to the Conversion Price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so
that the ratio of the Reference Market Price to the Conversion Price after
giving effect to any such adjustment shall always be the same as the ratio
of the initial Reference Market Price to the initial Conversion Price set
forth in this Article Five.
(e) In determining the amount and type of consideration received by a
holder of Common Stock in the event of a Fundamental Change, consideration
received by a holder of Common Stock pursuant to a statutory right of appraisal
will be disregarded.
SECTION 5.05. In case:
(i) the Company shall declare a dividend (or any other distribution)
on Common Stock that would cause an adjustment to the Conversion Price of
the Series 5.375% Debentures pursuant to the terms of any of the
subparagraphs above (including such an adjustment that would occur but for
the terms of the first sentence of Section 5.03(a)(viii) above); or
(ii) the outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock or combined into a smaller number
of shares of Common Stock; or
(iii) the Company shall authorize the granting to the holders of
Common Stock generally of rights or warrants (for a period expiring within
45 days after the record date fixed for a distribution of such rights and
warrants) to subscribe for or
26
purchase any shares of the Company's capital stock or other capital stock
of any class or of any other rights (including any Rights Offerings); or
(iv) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding shares of Common Stock), or of any
consolidation, merger or share exchange to which the Company is a party and
for which approval of any shareholders of the Company is required, or of
the sale or transfer of all or substantially all of the assets of the
Company or a compulsory share exchange; or
(v) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then the Company shall (i) if any Preferred Securities are outstanding, cause to
be filed with the transfer agent for the Preferred Securities, and shall cause
to be mailed to the holders of record of the Preferred Securities, at their last
addresses as they shall appear upon the stock transfer books of the Trust or
(ii) shall cause to be mailed to all Holders at their last addresses as they
shall appear in the books and records of the Trust, at least 15 days prior to
the applicable record or effective date hereinafter specified, a notice stating
(A) the date on which a record (if any) is to be taken for the purpose of such
dividend, distribution, rights or warrants or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights or warrants are to be determined or (B) the
date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
SECTION 5.06. The Company shall reserve, free from pre-emptive rights, out
of its authorized but unissued shares, sufficient shares to provide for the
conversion of the Series 5.375% Debentures from time to time as such Series
5.375% Debentures are presented for conversion, provided, that nothing contained
herein shall be construed to preclude the Company from satisfying its
obligations in respect of the conversion of Series 5.375% Debentures by delivery
of repurchased shares of Common Stock which are held in the treasury of the
Company.
If any shares of Common Stock to be reserved for the purpose of conversion
of Series 5.375% Debentures hereunder require registration with or approval of
any governmental authority under any Federal or State law before such shares may
be validly issued or delivered upon conversion, then the Company covenants that
it will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be, provided, however, that nothing in
this Section 5.06 shall be deemed to affect
27
in any way the obligations of the Company to convert Series 5.375% Debentures
into Common Stock as provided in this Article Five.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Series 5.375% Debentures will upon issue be fully paid and
non-assessable by the Company and free of pre-emptive rights.
SECTION 5.07. Notwithstanding the foregoing provisions, the issuance of any
shares of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan, and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of March 31, 1997, shall not be deemed to
constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above applies. There shall also be no adjustment of the Conversion
Price in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article Five.
SECTION 5.08. In case the Company shall, by dividend or otherwise, declare
or make a distribution on the Common Stock referred to in Section 5.03(a)(iv) or
5.03(a)(v) (including, without limitation, dividends or distributions referred
to in the last sentence of Section 5.03(a)(vi)), the Holder of the Series 5.375%
Debentures, upon the conversion thereof subsequent to the close of business on
the date fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Price adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which the Series 5.375% Debentures are converted, the
portion of the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock; provided, however, that, at the election of the
Company (whose election shall be evidenced by a resolution of the Board of
Directors) with respect to all Holders so converting, the Company may, in lieu
of distributing to such Holder any portion of such distribution not consisting
of cash or securities of the Company, pay such Holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors). If any conversion of Series 5.375% Debentures
described in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which the Holder of Series 5.375%
Debentures
28
so converted is entitled to receive in accordance with the immediately preceding
sentence, the Company may elect (such election to be evidenced by a resolution
of the Board of Directors) to distribute to such Holder a due bill for the
shares of Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash or assets to which such Holder is so entitled, provided,
that such due bill (a) meets any applicable requirements of the principal
national securities exchange or other market on which the Common Stock is then
traded and (b) requires payment or delivery of such shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.
ARTICLE SIX
FORM OF SERIES 5.375% DEBENTURES
SECTION 6.01. The Series 5.375% Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:
(FORM OF FACE OF DEBENTURE)
[IF THE NOTE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture is a
Global Debenture within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depositary or a nominee of a Depositary. This
Debenture is exchangeable for Debentures registered in the name of a person
other than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized representative to The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by 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.]
29
No. $
CUSIP NO. ____________
THE AES CORPORATION
____% JUNIOR SUBORDINATED DEBENTURE
DUE 2027
The AES Corporation, a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to , or registered assigns, the
principal sum of _________ Dollars on March 31, 2027, and to pay interest on
said principal sum from March 31, 1997 or from the most recent interest payment
date (each such date, an "Interest Payment Date") to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears commencing March 31, 1997 at the rate of 5.375% per annum plus
Compounded Interest, if any, until the principal hereof shall have become due
and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year twelve 30-day months. In the event that
any date on which interest is payable on this Debenture is not a business day,
then payment of interest payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding business day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the person in whose name this Debenture (or one or more Predecessor
Debentures, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment, [which shall be the
close of business on the day next preceding such Interest Payment Date, provided
if the Preferred Securities of AES Trust I are no longer in book-entry only
form, the regular record dates shall be the close of business on the fifteenth
(15th) day of the month in which such Interest Payment Date occurs] [IF PURSUANT
TO THE PROVISIONS OF SECTION 2.11(c) OF THE INDENTURE THE Series 5.375%
DEBENTURES ARE NOT REPRESENTED BY A GLOBAL DEBENTURE -- which shall be the close
of business on the fifteenth (15th) day of the month in which such Interest
Payment Date occurs.] Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered holders on
such regular record date, and may be paid to the person in whose name this
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of this series of Debentures not less than 10 days prior to
30
such special record date, or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City and State of New York, in any coin or currency of the United
States of America which at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered holder at
such address as shall appear in the Debenture register and that the payment of
principal will only be made upon the surrender of this Debenture to the Trustee.
Notwithstanding the foregoing, so long as the owner and record holder of this
Debenture is the Property Trustee (as defined in the Indenture referred to on
the reverse hereof), the payment of the principal of (and premium, if any) and
interest (including Compounded Interest, if any) on this Debenture will be made
at such place and to such account of the Property Trustee as may be designated
by the Property Trustee.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior and Subordinated Debt, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior and Subordinated Debt,
whether now outstanding or hereafter incurred, and waives reliance by each such
Holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
31
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
Dated:
The AES Corporation
By
-----------------------------------
Attest:
By
-----------------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in
the within-mentioned Indenture.
The First Bank of Chicago --------------------------------
as Trustee or as Authentication Agent
By By
----------------------------------- ------------------------------
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of March 1, 1997 duly executed and delivered between
the Company and The First National Bank of Chicago, a national banking
association, as Trustee (herein referred to as the "Trustee"), as supplemented
by the First Supplemental Indenture dated as of March 31, 1997 between the
Company and the Trustee (said Indenture as so supplemented being hereinafter
referred to as the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Debentures, and, to the extent
specifically set forth in the Indenture, the holders of Senior and Subordinated
Debt and Preferred Securities. By the terms of the Indenture, the Debentures are
issuable in series which may vary as to amount, date of maturity, rate of
interest and in other respects as in the Indenture provided. This series of
Debentures is designated the 5.375% Junior Subordinated Debentures due 2027 and
is limited in aggregate principal amount as specified in said First Supplemental
Indenture.
Except as provided in the next paragraph, the Debentures may not be
redeemed by the Company prior to March 31, 2000. The Company shall have the
right to redeem this Debenture at the option of the Company, without premium or
penalty, in whole or in part at any time on or after March 31, 2000 (an
"Optional Redemption"), upon not less than 30 nor move than 60 days notice to
the Holder of the Series 5.375% Debentures, at the following prices (as
expressed as percentages of the principal amount of the Debentures) (the
"Optional Redemption Price"), together with any accrued but unpaid interest,
including any Compounded Interest, if any, to, but including, the date of such
redemption, if redeemed during the 12-month period beginning March 31:
Year Redemption Price
---- ----------------
2000 103.359%
2001 102.688%
2002 102.016%
2003 101.344%
2004 100.672%
and 100% if redeemed on or after March 31, 2005.
If the Series 5.375% Debentures are redeemed on any Interest Payment Date,
accrued and unpaid interest shall be payable to Holders of record on the
relevant record date.
The Company may not redeem any Series 5.375% Debentures unless all accrued
and unpaid interest thereon, including Compounded Interest, if any, has been
paid for all quarterly periods terminating on or prior to the date of notice of
redemption. So long as
34
the corresponding Trust Securities are outstanding, the proceeds from the
redemption of the Series 5.375% Debentures will be used to redeem the Trust
Securities.
If the Debentures are only partially redeemed by the Company pursuant to an
Optional Redemption, the Debentures will be redeemed pro rata or by lot or by
any other method utilized by the Trustee; provided if, at the time of
redemption, the Debentures are registered as a Global Debenture, the Depository
shall determine the principal amount of such Debentures held by each holder of
Debentures to be redeemed in accordance with its customary procedures.
If, at any time, a Tax Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and (i)
the Regular Trustees and the Company shall have received an opinion (a
"Redemption Tax Opinion") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Series 5.375% Debentures for United States federal income tax
purposes even if the Series 5.375% Debentures were distributed to the holders of
Preferred Securities and Common Securities in liquidation of such holder's
interest in AES Trust I as set forth in the Declaration of Trust or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion (as defined below) cannot be delivered to AES Trust I, the
Company shall have the right at any time, upon not less than 30 nor more than 60
days' notice, to redeem the Series 5.375% Debentures in whole or in part for
cash at a price equal to 100% of the principal amount thereof, together with any
accrued and unpaid interest thereon, including Compounded Interest if any, to,
but excluding the date of redemption, within 90 days following the occurrence of
such Tax Event; provided, however, that, if at the time there is available to
the Company or the Regular Trustees on behalf of AES Trust I the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some ministerial
action ("Ministerial Action"), such as filing a form or making an election, or
pursuing some other similar reasonable measure, which has no adverse effect on
AES Trust I, the Company or the holders of the Preferred Securities, the Company
or the Regular Trustees on behalf of AES Trust I will pursue such measure in
lieu of redemption and provided further that the Company shall have no right to
redeem the Series 5.375% Debentures while the Regular Trustees on behalf of AES
Trust I are pursuing any such Ministerial Action.
"Tax Event" means that the Company and the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "Dissolution Tax Opinion") to the effect that on or after
March 24, 1997, as a result of (a) any amendment to, or change in, the laws (or
any regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority (including the
enactment of any legislation and the publication of any judicial decision or
regulatory determination), (c) any interpretation or pronouncement that provides
for a position with respect to such laws or regulations that differs from the
theretofore generally
35
accepted position or (d) any action taken by any governmental agency or
regulatory authority, which amendment or change is enacted, promulgated, issued
or effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after March 24, 1997, there is more
than an insubstantial risk that (i) AES Trust I is, or will be within 90 days of
the date thereof, subject to United States federal income tax with respect to
income accrued or received on the Series 5.375% Debentures, (ii) AES Trust I is,
or will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest payable
by the Company to AES Trust I on the Series 5.375% Debentures is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes.
"No Recognition Opinion" means an opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely on
any then applicable published revenue ruling of the Internal Revenue Service, to
the effect that the holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of a
dissolution of AES Trust I and distribution of the Series 5.375% Debentures as
provided in the Declaration of Trust.
If the Debentures are only partially redeemed by the Company pursuant to an
Optional Redemption or as a result of a Tax Event as described above, the
Debentures will be redeemed pro rata or by lot or in some other equitable manner
determined by the Trustee. Notwithstanding the foregoing, if a partial
redemption of the Series 5.375% Debentures would result in the delisting of the
Preferred Securities by any national securities exchange or other organization
on which the Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and will only redeem the Series
5.375% Debentures in whole.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures of this series for unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Debenture upon compliance by the Company with certain
conditions set forth therein.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture (and, in the case of any series of
Debentures held as trust assets of an AES Trust and with
36
respect to which a Security Exchange has not theretofore occurred, such consent
of holders of the Preferred Securities and the Common Securities of such AES
Trust) as may be required under the Declaration of Trust of such AES Trust to
execute supplemental indentures for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
Holders of the Debentures; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of any Debentures of any series,
or reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the redemption
thereof, without the consent of the holder of each Debenture so affected or (ii)
reduce the aforesaid percentage of Debentures, the holders of which are required
to consent to any such supplemental indenture, without the consent of the
holders of each Debenture (and, in the case of any series of Debentures held as
trust assets of an AES Trust and with respect to which a Security Exchange has
not theretofore occurred, such consent of the holders of the Preferred
Securities and the Common Securities of such AES Trust as may be required under
the Declaration of Trust of such AES Trust) then outstanding and affected
thereby. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Debentures of a series at the time
outstanding affected thereby (subject, in the case of any series of Debentures
held as trust assets of an AES Trust and with respect to which a Securities
Exchange has not theretofore occurred, to such consent of holders of Preferred
Securities and Common Securities of such AES Trust as may be required under the
Declaration of Trust of such AES Trust), on behalf of the Holders of the
Debentures of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default in
the payment of the principal of or premium, if any, or interest on any of the
Debentures of such series. Any such consent or waiver by the registered Holder
of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Debenture and of any Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
Subject to Section 13.12 of the Indenture, no reference herein to the
Indenture (other than such Section) and no provision of this Debenture or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and interest on
this Debenture at the time and place at the rate and in the money herein
prescribed.
So long as the Company is not in default in the payment of interest on the
Debentures, the Company shall have the right, at any time during the term of the
Debentures, from time to time to extend the interest payment period of such
Debentures for up to 20 consecutive quarterly interest periods (the "Extended
Interest Payment Period"), at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate of
5.375% per annum to the extent permitted by applicable law, compounded quarterly
("Compounded Interest")); provided
37
that no Extended Interest Payment Period may extend beyond the date of maturity
or any redemption date of the Debentures. During such Extended Interest Payment
Period the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect to,
any of its common stock or preferred stock, or make any guarantee payments with
respect thereto, provided that the foregoing will not apply to any stock
dividends, paid by the Company in Common Stock. Prior to the termination of any
such Extended Interest Payment Period, the Company may pay all or any portion of
the interest accrued on the Debentures on any Interest Payment Date to holders
of record on the regular record date for such Interest Payment Date or from time
to time further extend such Extended Interest Payment Period, provided that such
Period together with all such further extensions thereof shall not exceed 20
consecutive quarterly interest periods. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid interest
then due, together with Compounded Interest, the Company may select a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest on this Debenture shall be due and payable during an Extended Interest
Payment Period, except at the end thereof. At the end of the Extended Interest
Payment Period the Company shall pay all interest accrued and unpaid on the
Series 5.375% Debentures including any Compounded Interest which shall be
payable to the holders of the Series 5.375% Debentures in whose names the Series
5.375% Debentures are registered in the Debenture register on the first record
date after the end of the Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered holder hereof on the
Debenture register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City and State of New York accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company or the Trustee
duly executed by the registered holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Debenture,
the Company, the Trustee, any paying agent and any Debenture Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Debenture Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any Debenture Registrar
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in
38
respect of the Indenture, against any incorporator, stockholder, officer or
director, past, present or future, as such, of the Company or of any predecessor
or successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issuance hereof, expressly waived and released.
The Holder of any Debenture has the right, exercisable at any time through
the close of business (New York time) on March 31, 2027 (or, in the case of a
Debenture called for redemption, prior to the close of business on the Business
Day prior to the corresponding redemption date), to convert the principal amount
thereof (or any portion thereof that is an integral multiple of $50) into shares
of Common Stock at the initial conversion rate of 0.6906 shares of Common Stock
for each Debenture (equivalent to a Conversion Price of $72.40 per share of
Common Stock), subject to adjustment under certain circumstances.
To convert a Debenture, a Holder must (a) complete and sign a conversion
notice substantially in the form attached hereto, (b) surrender the Debenture to
a Conversion Agent, (c) furnish appropriate endorsements or transfer documents
if required by the Conversion Agent and (d) pay any transfer or similar tax, if
required. If a Debenture is surrendered for conversion after the close of
business on any regular record date for payment of a Distribution and before the
opening of business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such Distribution
payment date will be paid in cash to the person in whose name the Debenture is
registered at the close of business on such record date, and (other than a
Debenture or a portion of a Debenture called for redemption on a redemption date
occurring after such record date and on or prior to such Distribution payment
date) when so surrendered for conversion, the Debenture must be accompanied by
payment of an amount equal to the Distribution payable on such Distribution
payment date. The number of shares issuable upon conversion of a Debenture is
determined by dividing the principal amount of the Debenture converted by the
Conversion Price in effect on the Conversion Date. No fractional shares will be
issued upon conversion but a cash adjustment will be made for any fractional
interest. The outstanding principal amount of any Debenture shall be reduced by
the portion of the principal amount thereof converted into shares of Common
Stock.
[If certificated Debentures -- The Debentures of this series are issuable
only in registered form without coupons in denominations of $50 and any integral
multiple thereto.] [If Global Debenture -- This Global Debenture is exchangeable
for Debentures in definitive form under certain limited circumstances set forth
in the Indenture. Debentures of this series so issued are issuable only in
registered form without coupons in denominations of $50 or any integral multiple
thereof.] As provided in the Indenture and subject to certain limitations [If
Global Debenture -- herein and] therein set forth, Debentures of this series [If
Global Debenture -- so issued] are exchangeable for a like aggregate principal
amount of Debentures of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
39
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
40
[FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: The AES Corporation
The undersigned owner of this Convertible Debenture hereby irrevocably
exercises the option to convert this Debenture, or the portion below designated,
into Common Stock of THE AES CORPORATION, in accordance with the terms of the
Indenture referred to in this Debenture, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Date: ________, ____
in whole Portions of Debenture to be converted ($50 or integral
multiples thereof):
$
-------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip
Code, and Social Security or Other Identifying Number
-------------------------------
-------------------------------
-------------------------------
Signature Guarantee:*_______
- --------
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include
membership of participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Conversion Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities and Exchange Act of 1934, as
amended.
41
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Debenture to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints _________________ ____________________________________
________________________________________________________________________________
___________________________________________________ agent to transfer this
Debenture on the books of the Trust. The agent may substitute another to act for
him or her.
Date:_______________________________________
Signature:__________________________________
(Sign exactly as your name appears on the other side of this Debenture)
Signature Guarantee*:_________________________________________________
- --------
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include
membership of participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Conversion Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities and Exchange Act of 1934, as
amended.
42
ARTICLE SEVEN
ORIGINAL ISSUE OF SERIES 5.375% DEBENTURES
SECTION 7.01. Except as provided in Section 1.01 and this Section 7.01,
Series 5.375% Debentures in the aggregate principal amount equal to $257,732,000
may, upon execution of this First Supplemental Indenture, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and make available for delivery said Debentures to or
upon the written order of the Company, signed by its Chairman, its President, or
any Vice President and its Treasurer or an Assistant Treasurer, without any
further action by the Company. Upon exercise of the overallotment option set
forth in the Underwriting Agreement, additional Series 5.375% Debentures in the
aggregate principal amount of up to $25,773,200 may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and make available for delivery said Series 5.375% Debentures
executed as aforesaid by the Company, to or upon the written order of the
Company, which order shall be accompanied by evidence satisfactory to the
Trustee that the overallotment option has been exercised.
ARTICLE EIGHT
MISCELLANEOUS PROVISIONS
SECTION 8.01. Except as otherwise expressly provided in this First
Supplemental Indenture or in the form of Series 5.375% Debenture or otherwise
clearly required by the context hereof or thereof, all terms used herein or in
said form of Series 5.375% Debenture that are defined in the Indenture shall
have the several meanings respectively assigned to them thereby.
SECTION 8.02. The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed. This First Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided.
SECTION 8.03. The recitals herein contained are made by the Company and not
by the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this First Supplemental Indenture.
SECTION 8.04. This First Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
43
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
THE AES CORPORATION
By /s/ BARRY J. SHARP
------------------------------------------------
Name: Barry J. Sharp
Title:Vice President and Chief Financial Officer
Attest:
By /s/ WILLIAM R. LURASCHI
------------------------------------------------
Name: William R. Luraschi
Title:General Counsel and SEcretary
THE FIRST NATIONAL BANK OF CHICAGO, AS TRUSTEE
By /s/ MARY FONTI
------------------------------------------------
Name: Mary Fonti
Title: Assistant Vice President
Attest:
By /s/ MELISSA WEISMAN
------------------------------------------------
Name:Melissa Weisman
Title: Vice President
44