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THE AES CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
--------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 10, 1998
TO
JUNIOR SUBORDINATED INDENTURE
Dated as of August 10, 1998
--------------------
4.50% Convertible Junior Subordinated Debentures
due 2005
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The First Supplemental INDENTURE, dated as of this 10th day of August, 1998
(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 August 10,
1998 between the Company and the Trustee (the "Indenture");
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 4.50% Convertible Junior Subordinated Debentures due 2005 (said series being
hereinafter referred to as the "Series A Convertible Debentures"), the form and
substance of such Series A Convertible 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 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 A Convertible
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 A Convertible Debentures by the holders thereof, and for the purpose of
setting forth, as provided in the Indenture, the form and substance of the
Series A Convertible Debentures and the terms, provisions and conditions
thereof, the Company covenants and agrees with the Trustee as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. TERMS DEFINED IN THE INDENTURE.
Each capitalized term used not but defined in this First Supplemental
Indenture shall have the meaning assigned to such term in the Indenture.
SECTION 1.2. CERTAIN DEFINITIONS.
The following definitions are hereby added to the definitions contained in
Section 1.1 of the Indenture, but only with respect to the Series A Convertible
Debentures issued in accordance with the provisions hereof:
"Common Stock" means the Common Stock, $.01 par value, of the Company.
"Repurchase Event" means the occurrence of a Change in Control or a
Termination of Trading.
"Senior Subordinated Debt" means Debt which is subordinated in right of
payment only to Debt which is not subordinated and includes, without limitation,
the Company's 8.375% Senior Subordinated Debentures due 2027, 8.50% Senior
Subordinated Notes due 2007, 8.375% Senior Subordinated Notes due 2007 and
10.25% Senior Subordinated Notes due 2006.
"Termination of Trading" occurs if the Common Stock (or if the Debentures
are not then convertible into Common Stock, any other common stock into which
the Debentures are then convertible) is neither listed for trading on a U.S.
national securities exchange nor approved for trading on an established
automated over-the-counter trading market in the United States.
"Trading Date" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
The following terms are defined in the places indicated:
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Term Defined in Section
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Closing Price 5.4
conversion price 5.1
Current Market Price 5.4
Purchased Shares 5.4
ARTICLE TWO
THE SERIES A CONVERTIBLE DEBENTURES
SECTION 2.1. FORM.
The Series A Convertible Debentures shall be substantially in the form of
Exhibit A hereto, which is a part of this First Supplemental Indenture, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by the Indenture and this First
Supplemental Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers of the Company executing
such Series A Convertible Debentures, as evidenced by their execution of the
Series A Convertible Debentures.
The Series A Convertible Debentures will initially be issued as Registered
Global Securities.
The Company initially appoints The Depository Trust Company and the Trustee
to act as Depositary and Securities Custodian, respectively, with respect to the
Series A Convertible Debentures.
The Company initially appoints the Trustee to act as Paying Agent and
Registrar with respect to the Series A Convertible Debentures.
SECTION 2.2. DESIGNATION AND AMOUNT.
(a) The Series A Convertible Debentures shall be entitled the "4.50%
Convertible Junior Subordinated Debentures due 2005" of the Company.
(b) The Trustee shall authenticate and deliver Series A Convertible
Debentures for original issue in an aggregate principal amount of $150,000,000;
provided, however, that in the event the Company sells any Series A Convertible
Deben-
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tures pursuant to the over-allotment option (the "Over-Allotment Option")
granted pursuant to the Underwriting Agreement dated August 4, 1998 between the
Company, Smith Barney Inc., J.P. Morgan Securities, Inc., Donaldson, Lufkin &
Jenrette Securities Corporation, Morgan Stanley & Co. Incorporated, PaineWebber
Incorporated and C.E. Unterberg, Towbin, then the Trustee shall authenticate and
deliver Series A Convertible Debentures for original issue in an aggregate
principal amount of $150,000,000 plus up to $22,500,000 aggregate principal
amount of Series A Convertible Debentures sold pursuant to the Over-Allotment
Option. The aggregate principal amount of Series A Convertible Debentures that
may be authenticated and delivered under the Indenture may not exceed the amount
set forth in the foregoing sentence, subject to the proviso therein, except for
Series A Convertible Debentures that may be authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Series A
Convertible Debentures pursuant to Sections 2.7, 2.8, 2.10, 3.3 or 9.4 of the
Indenture and Section 4.1 of this First Supplemental Indenture.
(c) The Company may not issue new Debentures to replace Debentures that it
has paid or delivered to the Trustee for cancellation or that any Holder has
converted pursuant to Article Five.
SECTION 2.3. INTEREST.
Interest on the Series A Convertible Debentures shall be payable on the
dates and in the manner provided for in the form of the Series A Convertible
Debenture attached hereto as Exhibit A.
SECTION 2.4. DENOMINATIONS.
The Debentures shall be Registered Securities in denominations of $1,000 or
any integral multiple thereof.
SECTION 2.5. PLACE OF PAYMENT.
The place of payment for the Series A Convertible Debentures shall be the
Borough of Manhattan, The City of New York. So long as the Series A Convertible
Debentures are in the form of Registered Global Securities, the Company agrees
that payments of interest on, and any portion of the principal of, the Holder's
Series A Convertible Debenture shall be made by the Paying Agent, upon receipt
from the Company of immediately available funds, directly to the Depositary (by
Federal funds wire transfer).
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ARTICLE THREE
OPTIONAL REDEMPTION OF THE SERIES A CONVERTIBLE DEBENTURES
SECTION 3.1. OPTIONAL REDEMPTION.
The Series A Convertible Debentures may be redeemed at the election of the
Company as provided by the terms of the Series A Convertible Debentures, as a
whole or from time to time in part, at the times and at the Redemption Prices
specified in the form of the Series A Convertible Debentures attached hereto as
Exhibit A, together with any applicable accrued interest to the Redemption Date.
ARTICLE FOUR
ADDITIONAL COVENANTS APPLICABLE TO
SERIES A CONVERTIBLE DEBENTURES
SECTION 4.1. REPURCHASE EVENT.
(a) In the event of a Repurchase Event, each Holder of the Series A
Convertible Debentures shall have, subject to Article 11 of the Indenture, the
right, at such Holder's option, to require that the Company repurchase all or
any part of such Holder's Series A Convertible Debentures at a repurchase price
in cash equal to 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase in accordance with this Section 4.1.
(b) Within 30 days following any Repurchase Event, the Company shall mail a
notice to each Holder of the Series A Convertible Debentures at its last
registered address with a copy to the Trustee stating:
(1) that a Repurchase Event has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Series A
Convertible Debentures at a repurchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
date of repurchase (the "Repurchase Offer");
(2) the circumstances and relevant facts regarding such Repurchase
Event (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Repurchase Event);
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(3) the repurchase date (which shall be not earlier than 30 days or
later than 60 days from the date such notice is mailed) (the "Repurchase
Date");
(4) that any Series A Convertible Debenture not tendered will continue
to accrue interest;
(5) that any Series A Convertible Debenture accepted for payment
pursuant to the Repurchase Offer shall cease to accrue interest after the
Repurchase Date;
(6) that Holders electing to have a Series A Convertible Debenture
purchased pursuant to a Repurchase Offer will be required to surrender the
Series A Convertible Debenture, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Series A Convertible Debenture
completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the Repurchase Date;
(7) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day (or such shorter period as may be required by applicable law)
preceding the Repurchase Date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Series A Convertible
Debentures the Holder delivered for purchase, and a statement that such
Holder is withdrawing his election to have such Series A Convertible
Debentures purchased; and
(8) that Holders which elect to have their Series A Convertible
Debentures purchased only in part will be issued new Series A Convertible
Debentures in a principal amount equal to the unpurchased portion of the
Series A Convertible Debenture surrendered.
(c) On the Repurchase Date, the Company shall:
(i) accept for payment Series A Convertible Debentures or
portions thereof tendered pursuant to the Repurchase Offer;
(ii) deposit by 10:00 a.m., New York City time, with the Trustee
money sufficient to pay the purchase price of all Series A Convertible
Debentures or portions thereof so tendered; and
(iii) deliver or cause to be delivered to the Trustee Series A
Convertible Debentures so accepted
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together with an Officers' Certificate identifying the Series A
Convertible Debentures or portions thereof tendered to the Company.
The Trustee shall promptly mail to the Holders of the Series A Convertible
Debentures so accepted payment in an amount equal to the purchase price, and
promptly authenticate and make available for delivery to such Holders a new
Series A Convertible Debenture in a principal amount equal to any unpurchased
portion of the Series A Convertible Debenture surrendered. The Company will
publicly announce the results of the Repurchase Offer on or as soon as
practicable after the Repurchase Date.
The Company shall comply with all applicable tender offer rules under the
Exchange Act, including, without limitation, Rules 13e-4 and 14e-1 under the
Exchange Act, as then in effect with respect to any such Repurchase Offer.
SECTION 4.2. LIMITATION ON ADDITIONAL TIERS OF JUNIOR SUBORDINATED DEBT.
The Company will not incur or suffer to exist any Debt, other than Debt
evidenced by the Series A Convertible Debentures, that is subordinated in right
of payment to any Senior Subordinated Debt unless such Debt, by its terms or the
terms of the instrument creating or evidencing it, is pari passu with, or
subordinated in right of payment to, Series A Convertible Debentures.
ARTICLE FIVE
CONVERSION OF DEBENTURES
The Series A Convertible Debentures shall be convertible into shares of
Common Stock upon the following terms and conditions:
SECTION 5.1. CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this Article Five, at
the option of the Holder thereof, any Series A Convertible Debentures or any
portion of the principal amount thereof which is $1,000 or an integral multiple
of $1,000 may be converted at the principal amount thereof, or of such portion
thereof, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a
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share) of Common Stock at the conversion price, determined as hereinafter
provided, in effect at the time of conversion. Such conversion right shall
expire at the close of business on August 15, 2005. In case Series A Convertible
Debentures or a portion thereof is called for redemption at the election of the
Company, such conversion right in respect of the Series A Convertible Debentures
shall expire at the close of business on the second business day preceding the
Redemption Date.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $54.00 per
share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in this Article Five.
SECTION 5.2. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any Series A
Convertible Debenture to be converted shall surrender such Series A Convertible
Debenture, duly endorsed or assigned to the Company or in blank, at any office
or agency of the Company maintained for that purpose pursuant to Section 4.2 of
the Indenture, accompanied by written notice of conversion in the form provided
on the Series A Convertible Debenture (or such other notice as is acceptable to
the Company) at such office or agency that the Holder elects to convert such
Series A Convertible Debenture or, if less than the entire principal amount
thereof is to be converted, the portion thereof to be converted. Series A
Convertible Debentures issued as Registered Global Securities will be converted
in accordance with the standing instructions and procedures of the Depositary
and its participants. Series A Convertible Debentures surrendered for conversion
during the period from the close of business on any Regular Record Date through
and including the next Interest Payment Date shall (except in the case of Series
A Convertible Debentures or portions thereof which have been called for
redemption on a Redemption Date occurring on or before such Interest Payment
Date) be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Series A Convertible Debentures
being surrendered for conversion. Subject to the provisions of Section 2.13 of
the Indenture relating to the payment of defaulted interest by the Company, the
interest payment with respect to a Series A Convertible Debenture called for
redemption on a Redemption Date during the period from the close of business on
any Regular Record Date through and including the next Interest Payment Date
shall be payable on such Interest Payment Date to the Holder of such Series A
Convertible Debenture at the close of business on such
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Regular Record Date notwithstanding the conversion of such Series A Convertible
Debenture after such Regular Record Date and on or prior to such Interest
Payment Date, and the Holder converting such Series A Convertible Debenture need
not include a payment of such interest payment amount upon surrender of such
Series A Convertible Debenture for conversion. Except as provided in the
preceding sentence, no payment or adjustment shall be made upon any conversion
on account of any interest accrued on the Series A Convertible Debentures
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.
Series A Convertible Debentures shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of such
Series A Convertible Debentures for conversion in accordance with the foregoing
provisions, and at such time the rights of the Holders of such Series A
Convertible Debentures as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 5.3.
In the case of any Series A Convertible Debenture which is converted in
part only, upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new Series A Convertible Debenture or Series A Convertible Debentures of
authorized denominations in aggregate principal amount equal to the unconverted
portion of the principal amount of such Series A Convertible Debenture.
SECTION 5.3. FRACTIONS OF SHARES.
No fractional shares of Common Stock shall be issued upon conversion of
Series A Convertible Debentures. If more than one Series A Convertible Debenture
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Series A Convertible
Debentures (or specified portions thereof) so surrendered. Instead of any
fractional share of Common Stock which would otherwise be issuable upon
conversion of any Series A Convertible Debenture or Series A Convertible
Debentures (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction
9
in an amount equal to such fraction multiplied by the Closing Price per share of
Common Stock (consistent with Section 5.4(h) below) at the close of business on
the day of conversion (or, if such day is not a Trading Day, on the Trading Day
immediately preceding such day).
SECTION 5.4. ADJUSTMENT OF CONVERSION PRICE.
(a) In case the Company shall pay or make a dividend or other distribution
in Common Stock on any class of capital stock of the Company, the conversion
price in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator 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 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 paragraph (a),
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 will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.
(b) In case the Company shall issue rights or warrants to all holders of
its Common Stock (not being available on an equivalent basis to Holders of the
Series A Convertible Debentures upon conversion) entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe for
or purchase shares of Common Stock at a price per share less than the Current
Market Price on the date fixed for the determination of stockholders entitled to
receive such rights or warrants, 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 of which the
numerator 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 re-
10
duction to become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of this
paragraph (b), 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 will not issue any rights, options or
warrants in respect of shares of Common Stock held in the treasury of the
Company. If at the end of the period during which such rights or warrants are
exercisable not all such rights or warrants shall have been exercised, the
conversion price shall be immediately readjusted to what it would have been
based upon the number of additional shares of Common Stock actually issued.
(c) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, 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
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, 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.
(d) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any class
of its capital stock or other assets (including securities, but excluding any
cash, rights or warrants referred to in paragraph (b) of this Section 5.4, any
dividend or distribution paid exclusively in cash referred to in paragraph (e)
of this Section 5.4, any dividend or distribution referred to in paragraph (a)
of this Section 5.4 and any merger or consolidation to which Section 5.11
applies), 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 the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of which the
numerator shall be the Current Market Price on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Trustee) of the portion of the assets, shares or
evidences of indebtedness so distributed applicable to one share of Common Stock
and the denominator shall be such Current Market Price, such adjustment
11
to become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution.
(e) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed upon a
merger or consolidation to which Section 5.11 applies or as part of a
distribution referred to in paragraph (d) of this Section 5.4) in an aggregate
amount that, combined together with (1) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (e) has been made excluding
cash distributed as part of a distribution referred to in paragraph (d) of this
Section 5.4, and (2) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) of consideration payable in respect of any
tender offer by the Company or any of its Subsidiaries for all or any portion of
the Common Stock concluded within the 12 months preceding the date of payment of
such distribution and in respect of which no adjustment pursuant to paragraph
(f) of this Section 5.4 has been made, exceeds 15% of the product of the Current
Market Price on the date for the determination of holders of shares of Common
Stock entitled to receive such distribution times the number of shares of Common
Stock outstanding on such date, then, and in each such case, immediately after
the close of business on such date for determination, 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 close of business on the
date fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the
Current Market Price on the date fixed for such determination less an amount
equal to the quotient of (x) the excess of such combined amount over such 15%
and (y) the number of shares of Common Stock outstanding on such date for
determination and (ii) the denominator of which shall be equal to the Current
Market Price on such date for determination.
(f) In case a tender offer made by the Company or any Subsidiary for all or
any portion of the Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall require the payment to stockholders (based on
the acceptance (up to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall
be conclu-
12
sive and described in a Board Resolution) that combined together with (1) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender offer, of consideration payable
in respect of any other tender offer, by the Company or any Subsidiary for all
or any portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this paragraph (f) has been made and (2) the aggregate amount of any
distributions to all holders of the Company's Common Stock made exclusively in
cash within 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to paragraph (e) of this Section 5.4 has
been made, exceeds 15% of the product of the Current Market Price as of the last
time (the "Expiration Time") tenders could have been made pursuant to such
tender offer (as it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time, then, and in
each such case, immediately prior to the opening of business on the day after
the date of the Expiration Time, 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 close of business on the date of the Expiration Time
by a fraction (i) the numerator of which shall be equal to (A) the product of
(I) the current market price per share of the Common Stock (determined as
provided in paragraph (h) of this Section 5.4) on the date of the Expiration
Time and (II) the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time less (B) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the tender offer) of Purchased Shares, and (ii) the denominator of
which shall be equal to the product of (A) the current market price per share of
the Common Stock (determined as provided in paragraph (h) of this Section 5.4)
as of the Expiration Time and (B) the number of shares of Common Stock
outstanding (including any tendered shares) as of the Expiration Time less the
number of all shares validly tendered 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").
(g) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 5.11 applies) shall be deemed to
involve (i) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassifi-
13
cation shall be deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution" and the "date fixed for such
determination" within the meaning of paragraph (d) of this Section 5.4), and
(ii) a subdivision or combination, as the case may be, of the number of shares
of Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of paragraph
(c) of this Section 5.4).
(h) For the purpose of any computation under paragraphs (b), (d), (e) and
(f) of this Section 5.4, the current market price per share of Common Stock (the
"Current Market Price") on any date shall be deemed to be the average of the
daily Closing Prices for the 5 consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation. The "Closing Price" for
each Trading Day shall be the reported last sale price regular way or, in case
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on The Nasdaq National Market, or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or The Nasdaq National Market, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected from time to time by the Company for that purpose.
For purposes of this paragraph, the term "'ex' date", when used with respect to
any issuance or distribution, shall mean the first date on which the Common
Stock trades regular way on such exchange or in such market without the right to
receive such issuance or distribution.
(i) No adjustment in the conversion price shall be required to be made
until cumulative adjustments (plus any adjustments not previously made by reason
of this paragraph (i)) amount to at least 1% of the conversion price, as last
adjusted; provided, however, that any adjustments which by reason of this
paragraph (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjust-
14
ment. All calculations under this paragraph (i) shall be made to the nearest
cent.
(j) In addition to those required by paragraphs (a), (b), (c), (d), (e) and
(f) of this Section 5.4, the Company from time to time may make such reductions
in the conversion price by any amount, (i) to the extent permitted by law for
any period of at least 20 days, in which case the Company shall give 15 days
notice of such decrease and (ii) to such extent as it considers to be advisable
in order that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the holders of shares of Common
Stock or, if that is not possible, to diminish any income taxes that are
otherwise payable because of such event. The Company shall have the power to
resolve any ambiguity or correct any error in this paragraph (j) and its actions
in so doing shall be final and conclusive.
SECTION 5.5. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 5.4 and shall prepare an Officer's Certificate
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 at each office or agency maintained for the
purpose of conversion of Series A Convertible Debentures pursuant to
Section 4.2 of the Indenture; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be required,
and as soon as practicable after it is required, such notice shall be
mailed by the Company to all Holders of Series A Convertible Debentures at
their last addresses as they shall appear in the Security Register.
SECTION 5.6. NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable otherwise than in cash out of its earned
surplus; or
15
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its 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 stockholders of the
Company is required, or of the sale or transfer of all or substantially all
of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer for
all or a portion of the Company's outstanding Common Stock (or shall amend
any such tender offer);
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Series A Convertible Debentures pursuant to Section
4.2 of the Indenture, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Security Register, at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record 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 (y) the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation, winding up or tender offer is expected to become
effective, and the date or dates 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, share exchange, sale, transfer,
dissolution, liquidation, winding up or tender offer. Neither the failure to
give such notice nor any defect therein shall affect the legality or validity of
the proceedings described in paragraphs (a) through (d) of this Section 5.6. If
at the time the Trustee shall not be the conversion agent, a copy of such notice
shall also forthwith be filed by the Company with the Trustee.
16
SECTION 5.7. COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of Series A Convertible Debentures, the full number of shares of
Common Stock then issuable upon the conversion of all outstanding Series A
Convertible Debentures.
SECTION 5.8. TAXES ON CONVERSIONS.
The Company will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of Common Stock on conversion of Series A
Convertible Debentures pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that of
the Holder of the Series A Convertible Debenture or Series A Convertible
Debentures to be converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Company the amount of
any such tax, or has established to the satisfaction of the Company that such
tax has been paid.
SECTION 5.9. COVENANT AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Series A Convertible Debentures will upon issue be fully paid
and nonassessable and, except as provided in Section 5.8, the Company will pay
all taxes, liens and charges with respect to the issue thereof.
SECTION 5.10. CANCELLATION OF CONVERTED SERIES A CONVERTIBLE DEBENTURES.
All Series A Convertible Debentures delivered for conversion shall be
delivered to the Trustee to be canceled by or at the direction of the Trustee,
which shall dispose of the same as provided in Section 2.11 of the Indenture.
SECTION 5.11. PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS.
In case of any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any sale or transfer of all or substantially all of the assets of the
Company, the Person formed by such consolida-
17
tion or resulting from such merger or which acquires such assets, as the case
may be, shall execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Series A Convertible Debenture then
outstanding shall have the right thereafter, during the period such Series A
Convertible Debenture shall be convertible as specified in Section 5.1, to
convert such Series A Convertible Debenture only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock of the
Company into which such Series A Convertible Debenture might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming such
holder of Common Stock of the Company is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be ("Constituent
Person"), or an Affiliate of a Constituent Person, and failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer
(provided that if the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer is not the same for
each share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by others than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then for the purpose of this Article
Five the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares. Such supplemental indenture shall 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 of this
Article Five shall similarly apply to successive consolidations, mergers, sales
or transfers.
SECTION 5.12. TRUSTEE'S DISCLAIMER.
The Trustee has no duty to determine when an adjustment under this Article
Five should be made, how it should be made or what it should be. The Trustee
makes no representation as to the validity or value of any securities or assets
issued upon conversion of Series A Convertible Debentures. The Trustee shall not
be responsible for the Company's failure to comply with this Article Five.
18
ARTICLE SIX
MISCELLANEOUS PROVISIONS
SECTION 6.1. RATIFICATION.
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 6.2. COUNTERPARTS.
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.
19
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:
-------------------------------
Name:
Title:
Attest:
By:
-------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:
-------------------------------
Name:
Title:
Attest:
By:
-------------------------------
Name:
Title:
20
EXHIBIT A
(FORM OF FACE OF SERIES A CONVERTIBLE DEBENTURE)
[IF THE DEBENTURE IS TO BE A REGISTERED GLOBAL SECURITY, INSERT - This
Series A Convertible Debenture is a Registered Global Security 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 Series A Convertible
Debenture is exchangeable for Series A Convertible 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 Series A
Convertible Debenture (other than a transfer of this Series A Convertible
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 Series A Convertible Debenture is presented by an authorized
representative of 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 Series A Convertible 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.]
No. $ CUSIP NO.: 00130 HAN 5
4.50% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE DUE 2005
THE AES CORPORATION promises to pay
to or registered assigns the
principal sum of Dollars on
August 15, 2005.
Interest Payment Dates: February 15, August 15 and at maturity, commencing
February 15, 1999.
A-1
Record Dates: February 1 or August 1, as the case may be, next preceding such
Interest Payment Date
By:____________________________
Authorized Signature
By:____________________________
Authorized Signature
Dated:
Certificate of Authentication
This is one of the 4.50% Convertible Junior Subordinated Debentures due
2005 referred to in the within-mentioned Indenture.
The First National Bank of
Chicago, as Trustee
By:____________________________
Authorized Signatory
A-2
[FORM OF REVERSE OF SERIES A CONVERTIBLE DEBENTURE]
THE AES CORPORATION
4.50% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE DUE 2005
1. Interest. THE AES CORPORATION, a Delaware corporation (the "Company,"
which definition shall include any successor thereto in accordance with the
Indenture (as defined below)), promises to pay, until the principal hereof is
paid or made available for payment, interest on the principal amount set forth
on the reverse side hereof at a rate of 4.50% per annum. Interest on the Series
A Convertible Debentures will accrue from and including the most recent date to
which interest has been paid or, if no interest has been paid, from August 10,
1998 through but excluding the date on which interest is paid. Interest shall be
payable in arrears on February 15, August 15 and at the stated maturity (each an
"Interest Payment Date"), commencing February 15, 1999. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Series A
Convertible Debentures (except defaulted interest) to the Persons who are
registered Holders of Series A Convertible Debentures at the close of business
on February 1 and August 1 next preceding the Interest Payment Date. Holders
must surrender Series A Convertible Debentures to a Paying Agent to collect
principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. At the Company's option,
interest may be paid by check mailed to the registered address of the Holder of
this Series A Convertible Debenture.
3. Paying Agent and Registrar. Initially, The First National Bank of
Chicago (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice.
4. Indenture. The Company issued the Series A Convertible Debentures under
an Indenture dated as of August 10, 1998 between the Company and the Trustee as
supplemented by the first Supplemental Indenture dated as of August 10, 1998
between the Company and the Trustee (said Indenture, as so supplemented, the
"Indenture"). This Series A Convertible Deben-
A-3
ture is one of an issue of Securities of the Company issued under the Indenture.
The terms of the Series A Convertible Debentures include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as amended from time to
time. The Series A Convertible Debentures are subject to all such terms, and
Series A Convertible Debentureholders are referred to the Indenture and such Act
for a statement of them. Capitalized terms used herein and not otherwise defined
have the meanings set forth in the Indenture. The Series A Convertible
Debentures are general unsecured obligations of the Company subordinated in
right of payment to all Senior and Subordinated Debt of the Company, limited in
aggregate principal amount to $150,000,000; provided, however, that in the event
the Company sells any Series A Convertible Debentures pursuant to the
over-allotment option (the "Over-Allotment Option") granted pursuant to the
Underwriting Agreement dated August 4, 1998 between the Company, Smith Barney
Inc., J.P. Morgan Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, PaineWebber Incorporated and
C.E. Unterberg, Towbin, then the Trustee shall authenticate and deliver Series A
Convertible Debentures for original issue in an aggregate principal amount of
$150,000,000 plus up to $22,500,000 aggregate principal amount of Series A
Convertible Debentures sold pursuant to the Over-Allotment Option. The Indenture
limits the ability of the Company and its Subsidiaries to incur additional tiers
of junior subordinated Debt.
5. Optional Redemption. The Series A Convertible Debentures are subject to
redemption, at the Company's option, in whole or from time to time in part, at
any time on or after August 20, 2001, upon not less than 30 nor more than 60
days' notice mailed to each holder of Series A Convertible Debentures to be
redeemed at its address appearing in the Security Register and prior to maturity
at the following Redemption Prices (expressed as percentages of the principal
amount) plus accrued interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due or
on Interest Payment Date that is on or prior to the Redemption Date).
If redeemed during the 12-month period beginning August 15 in the year
indicated, the Redemption Price shall be:
A-4
Redemption
Year Price
---- -----
2001................................................ 102.57%
2002................................................ 101.93%
2003................................................ 101.29%
and after August 15, 2004 at a Redemption Price equal to 100% of the principal
amount.
6. Mandatory Redemption. No sinking fund is provided for the Series A
Convertible Debentures.
7. Conversion. Subject to the next two succeeding sentences, a Holder of a
Series A Convertible Debenture may convert it into Common Stock of the Company
at any time before the close of business on August 15, 2005; provided, however,
that if a Series A Convertible Debenture is called for redemption, the Holder
may convert it at any time before the close of business on the Redemption Date.
A Series A Convertible Debenture in respect of which a Holder is exercising such
Holder's option to require the Company to purchase such Series A Convertible
Debenture upon a Repurchase Event may be converted only if the notice of
exercise is withdrawn in accordance with the terms of the Indenture.
The initial conversion price is $54.00 per share of Common Stock, subject
to adjustment in certain events described in the Indenture. The Company will
deliver cash or a check in lieu of any fractional share of Common Stock.
To convert a Series A Convertible Debenture a Holder must (i) complete and
manually sign the conversion notice on the back of the Series A Convertible
Debenture or complete and manually sign a facsimile of such notice to the
Conversion Agent (or the office or agency referred to in Section 5.2 of the
First Supplemental Indenture) or, if applicable, complete and deliver to The
Depository Trust Company ("DTC" or the "Depositary," which term includes any
successor thereto) the appropriate instruction form for conversion pursuant to
the Depository's book-entry conversion program, (ii) surrender the Series A
Convertible Debenture to a Conversion Agent by physical or book-entry delivery
(which is not necessary in the case of conversion pursuant to the Depositary's
book-entry conversion program), (iii) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (iv) pay any transfer or similar
A-5
tax, if required. Book-entry delivery of a Series A Convertible Debenture to the
Conversion Agent may be made by any financial institution that is a participant
in the Depositary; conversion through the Depositary's book-entry conversion
program is available for any Series A Convertible Debenture that is held in an
account maintained at the Depositary by any such participant.
A Holder may convert a portion of a Series A Convertible Debenture if the
portion is $1,000 or an integral multiple of $1,000. No payment or adjustment
will be made for dividends on the Common Stock, except as provided in the
Indenture.
The conversion price will be subject to adjustment upon the occurrence of
any of the following events: (i) the subdivision, combination or
reclassification of outstanding shares of Common Stock; (ii) the payment in
shares of Common Stock of a dividend or distribution on any class of capital
stock of the Company; (iii) the issuance of rights or warrants to all holders of
Common Stock entitling them to acquire shares of Common Stock at a price per
share less than the Current Market Price; (iv) the distribution to all holders
of Common Stock of shares of capital stock other than Common Stock, evidences of
indebtedness, cash and dividends, distributions, rights and warrants referred to
above); (v) a distribution consisting exclusively of cash (excluding any cash
distributions referred to in (iv) above) to all holders of Common Stock in an
aggregate amount that, together with (A) all other cash distributions (excluding
any cash distributions referred to in (iv) above) made within the 12 months
preceding such distribution and (B) any cash and the fair market value of other
consideration payable in respect of any tender offer by the Company or a
subsidiary of the Company for the Common Stock consummated within the 12 months
preceding such distribution, exceeds 15% of the Company's market capitalization
(determined as provided in the Indenture) on the date fixed for determining the
stockholders entitled to such distribution; and (vi) the consummation of a
tender offer made by the Company or any subsidiary of the Company for the Common
Stock which involves an aggregate consideration that, together with (X) any cash
and other consideration payable in respect of any respect of any tender offer by
the Company or a subsidiary of the Company for the Common Stock consummated with
the 12 months preceding the consummation of such tender offer and (Y) the
aggregate amount of all cash distributions (excluding any cash distributions
referred to in (iv) above) to all holders of the Common Stock within the 12
A-6
months preceding the consummation of such tender offer, exceeds 15% of the
Company's market capital capitalization at the date of consummation of such
tender offer. No adjustment of the conversion price will be required to be made
until cumulative adjustments amount to at least one percent of the conversion
price, as last adjusted. Any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
If the Company is a party to a consolidation or merger of the type
specified in the Indenture, or certain transfers of all or substantially all of
its assets to another Person, or in certain other circumstances described in the
Indenture the right to convert a Series A Convertible Debenture into Common
Stock may be changed into a right to convert it into the kind and amount of
securities, cash or other assets that the Holder would have received if the
Holder had converted such Holder's Series A Convertible Debentures immediately
prior to such transaction.
8. Offers to Purchase. The Indenture provides upon the occurrence of a
Repurchase Event and subject to further limitations contained therein, the
Company shall make an offer to purchase the Series A Convertible Debentures in
accordance with the procedures set forth in the Indenture.
9. Denominations, Transfer, Exchange. The Series A Convertible Debentures
are in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Series A Convertible
Debentures in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay to it any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Series A Convertible
Debenture or portion of a Series A Convertible Debenture selected for
redemption, or transfer or exchange any Series A Convertible Debentures for a
period of 15 days before selection of such Series A Convertible Debentures to be
redeemed.
10. Persons Deemed Owners. The registered holder of a Series A Convertible
Debenture may be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company
A-7
at its written request. After that, Holders entitled to the money must look to
the Company for payment as general creditors unless an "abandoned property" law
designates another Person.
12. Amendment, Supplement, Waiver. The Company and the Trustee may, without
the consent of the holders of any outstanding Series A Convertible Debentures,
amend, waive or supplement the Indenture or the Series A Convertible Debentures
for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939 or making any other change that
does not adversely affect the rights of any Holder. Other amendments and
modifications of the Indenture or the Series A Convertible Debentures may be
made by the Company and the Trustee with the consent of the Holders of not less
than a majority of the aggregate principal amount of the outstanding Series A
Convertible Debentures, subject to certain exceptions requiring the consent of
the Holders of the particular Series A Convertible Debentures to be affected.
13. Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Series A Convertible Debentures and the
Indenture and the transaction complies with the terms of Article 5 of the
Indenture, the predecessor corporation, subject to certain exceptions, will be
released from those obligations.
14. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(d) or (e) of
the Indenture with respect to the Company) occurs and is continuing, then the
holders of not less than 25% in aggregate principal amount of the outstanding
Series A Convertible Debentures may, or the Trustee may, declare the principal
of, premium, if any, plus accrued interest, if any, to be due and payable
immediately. If an Event of Default specified in Section 6.1(d) or (e) of the
Indenture with respect to the Company occurs and is continuing, the principal
of, premium, if any, and accrued interest on all of the Series A Convertible
Debentures shall ipso facto become and be immediately due and payable subject to
the prior payment in full of Senior and Subordinated Debt without any
declaration or other act on the part of the Trustee or any Holder. Series A
Convertible Debentureholders may not enforce the Indenture or the Series A
Convertible Debentures except as provided in the Indenture. The Trustee may
require indemnity
A-8
reasonably satisfactory to it before it enforces the Indenture or the Series A
Convertible Debentures. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Series A Convertible Debentures may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Series A Convertible Debentureholders notice of any continuing
default (except a default in payment of principal or interest or a failure to
comply with Article V of the Indenture) if it determines in good faith that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
15. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
16. No Recourse Against Others. A director, officer, employee, stockholder
or beneficiary, as such, of the Company shall not have any liability for any
obligations of the Company under the Series A Convertible Debentures or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Series A Convertible Debentureholder by
accepting a Series A Convertible Debenture waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Series A Convertible Debentures.
17. Defeasance. The Indenture contains provisions (which provisions apply
to this Series A Convertible Debenture) for defeasance at any time of (a) the
entire indebtedness of the Company in respect of this Series A Convertible
Debenture and (b) certain restrictive covenants and related Defaults and Events
of Default, in each case upon compliance by the Company with certain conditions
set forth therein.
18. Authentication. This Series A Convertible Debenture shall not be valid
until the Trustee signs the certificate of authentication on the other side of
this Series A Convertible Debenture.
19. Abbreviations. Customary abbreviations may be used in the name of a
Series A Convertible Debentureholder or an assignee, such as: TEN COM (= tenants
in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with
right
A-9
of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
20. Subordination. The Company's payment of principal of, premium, if any,
and interest on the Series A Convertible Debentures is subordinated in right of
payment, to the extent and in the manner provided in Article 11 of the
Indenture, to the prior payment in full of the Senior and Subordinated Debt of
the Company. Each Holder of the Series A Convertible Debentures, by his
acceptance hereof, covenants and agrees that all payments of the principal of,
premium, if any, and interest on the Series A Convertible Debentures by the
Company shall be subordinated in accordance with the provisions of Article 11 of
the Indenture, and each Holder accepts and agrees to be bound by such
provisions.
21. GOVERNING LAW. THE INDENTURE AND THIS SERIES A CONVERTIBLE DEBENTURE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Company will furnish to any Series A Convertible Debentureholder upon
written request and without charge a copy of the Indenture. Requests may be made
to:
THE AES CORPORATION
1001 North 19th Street, Suite 2000
Arlington, Virginia 22209
Telephone: (703) 522-1315
Telecopy: (703) 528-4510
Attention: General Counsel
A-10
ASSIGNMENT FORM
If you the holder want to assign this Series A Convertible Debenture, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Series A Convertible
Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)____________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
agent to transfer this Series A Convertible Debenture on the books of the
Company. The agent may substitute another to act for him.
Date: Your signature:
---------------------- -----------------------------
(Sign exactly as your name
appears on the other side of
this Series A Convertible
Debenture)
Signature Guarantee:____________________________________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Series A Convertible Debenture purchased by the
Company upon the occurrence of a Repurchase Event, check the Box: [ ]
If you wish to have a portion of this Series A Convertible Debenture
purchased by the Company upon the occurrence of a Repurchase Event, state the
amount: $
Date:__________ Your Signature:__________________
(Sign exactly as your name appears on the other side of this Series A
Convertible Debenture)
Signature Guarantee:_______________________
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
CONVERSION NOTICE
The undersigned owner of this Series A Convertible Debenture hereby
irrevocably exercises the option to convert this Series A Convertible 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 Series A
Convertible 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 Series A Convertible Debenture to be
converted ($1,000 or integral multiples thereof):
$
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Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or Other
Identifying Number
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Signature Guarantee:*____________________________
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* 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 Exchange Act of 1934, as
amended.