Exhibit 4.(b)


 


THE AES
CORPORATION


 


AND


 


BANK ONE,
NATIONAL ASSOCIATION


 


as
Trustee


 


 






 


 


THIRD
SUPPLEMENTAL INDENTURE


 


Dated as of October 14,
1999


 


 


TO


 


 


JUNIOR
SUBORDINATED INDENTURE


 


 


Dated as of March 1,
1997


 


 






 


 


6.75% Junior
Subordinated Convertible Debentures


 


Due October 15,
2029


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE ONE

  	
  General Terms and Conditions of the
  Series 6.75% Debentures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO

  	
  Optional Redemption of the
  Series 6.75% Debentures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE THREE

  	
  Extension of Interest Payment Period

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR

  	
  Covenants Applicable to Series 6.75%
  Debentures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE

  	
  Conversion of Debentures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX

  	
  Form of Series 6.75% Debentures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE SEVEN

  	
  Original Issue of Series 6.75%
  Debentures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT

  	
  Amendments to the Indenture

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE NINE 

  	
  Miscellaneous Provisions

  	
   

  



 

















 


The Third Supplemental Indenture, dated as of
the 14th day of October, 1999 (the “Third 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
BANK ONE, NATIONAL ASSOCIATION, formerly known as 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 6.75% Junior Subordinated Convertible
Debentures due 2029 (said series being hereinafter referred to as the “Series 6.75%
Debentures”), the form and substance of such Series 6.75% Debentures and
the terms, provisions and conditions thereof to be set forth as provided in the
Indenture and this Third Supplemental Indenture; and


 


WHEREAS, the
Company has caused to be formed AES Trust III (“AES Trust III” or the “Trust”)
as a statutory business trust under the Business Trust Act of the State of
Delaware (12 Del. Code § 3801 et seq.)
pursuant to a declaration of trust dated November 13, 1996 (the “Original
Declaration”) and the filing of a restated certificate of trust with the
Secretary of State of the State of Delaware on October 14, 1999; and


 


WHEREAS, the Original Declaration is to be
amended and restated in its entirety pursuant to an Amended and Restated
Declaration of Trust dated as of October 14, 1999 (such Amended and
Restated Declaration of Trust, as amended from time to time, the “Declaration
of Trust”); and


 


WHEREAS, AES Trust III desires to issue its
Trust Convertible Preferred Securities (the “Preferred Securities”) and sell
such Preferred Securities to certain underwriters; 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 III, AES Trust
III will purchase as trust assets Series 6.75% Debentures; and


 


WHEREAS, pursuant to the Declaration of
Trust, the legal title to the Series 6.75% Debentures shall be owned and
held of record in the name of Bank One, 


 

















 


National Association 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 III shall, unless the Series 6.75%
Debentures are redeemed as described herein, dissolve AES Trust III 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 6.75% 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 6.75% 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 Third
Supplemental Indenture, and all requirements necessary to make this Third
Supplemental Indenture a valid instrument, in accordance with its terms, and to
make the Series 6.75% 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 6.75% Debentures by the holders
thereof, and for the purpose of setting forth, as provided in the Indenture,
the form and substance of the Series 6.75% 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 6.75% Debentures


 


SECTION 1.01.  There
shall be and is hereby authorized a series of Debentures designated the “6.75%
Junior Subordinated Convertible Debentures Due 2029”, limited in aggregate
principal amount to $463,917,550 (except as provided in this Section 1.01
and Section 7.01).  Upon exercise of the overallotment option set
forth in the Underwriting Agreement (as defined in the Declaration of Trust),
additional Series 6.75% Debentures in the aggregate principal amount of up
to $69,587,650 may be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said Series 6.75%
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 6.75% Debentures shall mature
and the principal shall be due and payable together with all accrued and 


 

















 


unpaid
interest thereon, including Compounded Interest (as hereinafter defined), on October 15,
2029 (the “Maturity Date”).


 


SECTION 1.02.  (a) 
Except as provided in Section 1.02(b), the Series 6.75% Debentures
shall be issued in fully registered certificated form without interest coupons
in denominations of $50 and integral multiples thereof.  Principal and
interest on the Series 6.75% Debentures issued in certificated form will
be payable, the transfer of such Series 6.75% Debentures will be
registrable and such Series 6.75% Debentures will be exchangeable for Series 6.75%
Debentures bearing identical terms and provisions at the corporate trust office
of the Trustee 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 6.75% Debentures will only be made upon surrender of the Series 6.75%
Debentures to the Trustee.  Notwithstanding the foregoing, so long as the
Property Trustee is the legal owner and record holder of the Series 6.75%
Debentures, the payment of the principal of and interest (including Compounded
Interest, if any) on the Series 6.75% 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 6.75%
Debentures in certificated form may be presented to the Trustee by the Property
Trustee in exchange for a Global Debenture representing the Series 6.75%
Debentures in an aggregate principal amount equal to all Outstanding Series 6.75%
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 6.75% Debentures in
such aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture and this Third
Supplemental Indenture.  Payments on the Series 6.75% 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 6.75%
Debentures in certificated form may be presented to the Trustee by the Property
Trustee and any Preferred Security Certificate (as defined in the Declaration
of Trust) which represents Preferred Securities other than Preferred Securities
held by the Clearing Agency (as defined in the Declaration of Trust) or its
nominee (“Non Book-Entry Preferred Securities”) will be deemed to represent
beneficial interests in Series 6.75% 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 is
presented to the Debenture Registrar for transfer or reissuance, at which time
such Preferred Security Certificate will be canceled and a Series 6.75%
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 Third Supplemental
Indenture.  On issue of such Series 6.75% Debentures, Series 6.75%
Debentures with an equivalent aggregate amount that were presented by the
Property Trustee to the Trustee will be deemed to have been canceled.


 


(c)  In
addition to the events listed in Section 2.11(c) of the Indenture,
Global Debentures, as defined in the Indenture, if and when issued pursuant to
the terms hereof, will be exchanged by the Company for Series 6.75%
Debentures in definitive registered certificated form, without coupons, in
accordance with Section 2.11(c) of the Indenture, in the event that
an Event of Default, as defined in the Indenture, has occurred with respect to
the Series 6.75% Debentures.


 


SECTION 1.03.  Each Series 6.75%
Debenture will bear interest at the rate of 6.75% per annum from October 14,
1999 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 January 15, April 15, July 15 and October 15
(each an “Interest Payment Date”), commencing on January 15, 2000, to the
person in whose name such Series 6.75% Debenture or any predecessor Series 6.75%
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 6.75% Debentures of which the Property Trustee is
the registered holder 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 6.75% Debentures are not represented by a Global
Debenture, the regular record dates for such interest installment shall be the
first date of the month in which the relevant 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 6.75%
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 6.75% 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 6.75%
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.


 

















 


The amount of interest payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months. 
In the event that any date on which interest is payable on the Series 6.75%
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 III 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 6.75% Debentures
such additional amounts as shall be required so that the net amounts received
and retained by AES Trust III after paying any such taxes, duties, assessments
or other governmental charges will be equal to the amounts AES Trust III would
have received had no such taxes, duties, assessments or other governmental
charges been imposed.


 


SECTION 1.04.  The
Series 6.75% Debentures are not subject to any sinking fund.


 


ARTICLE TWO


 


Optional
Redemption


of the Series 6.75% Debentures


 


SECTION 2.01.  Except as provided in Section 2.02
and subject to the provisions below, Series 6.75% Debentures may not be
redeemed by the Company prior to October 17, 2002.  Subject to the
terms of Article Three of the Indenture, the Company shall have the right
to redeem the Series 6.75% Debentures, in whole or in part, from time to
time, on or after October 17, 2002, upon not less than 30 nor more than 60
days’ notice to the Holders of the Series 6.75% Debentures, at the
following prices (expressed as percentages of the principal amount of the Series 6.75%
Debentures) (the “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 October 15:


 


	
  Year

  	
   

  	
  Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2002

  	
   

  	
  104.219

  	
  %

  
	
  2003

  	
   

  	
  103.375

  	
  %

  
	
  2004

  	
   

  	
  102.531

  	
  %

  
	
  2005

  	
   

  	
  101.688

  	
  %

  
	
  2006

  	
   

  	
  100.844

  	
  %

  



 


and 100% if
redeemed on or after October 15, 2007.


 














 


If the Series 6.75% 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 6.75%
Debentures unless all accrued and unpaid interest thereon, including Compounded
Interest, if any, has been paid for all interest payment 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 6.75% 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 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 notice of redemption shall have been given and
funds deposited as required, then from the redemption date, interest will cease
to accrue on the Series 6.75% Debentures called for redemption, such Series 6.75%
Debentures will no longer be deemed to be outstanding and all rights of holders
of such Series 6.75% Debentures so called for redemption will cease,
except the right of the holders of such Series 6.75% Debentures to receive
the applicable Redemption Price, but without interest on such Redemption Price.


 


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 calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption.


 


If the Company fails to repay the Series 6.75%
Debentures on maturity or the date fixed for redemption, or if payment of the
Redemption Price in respect of Series 6.75% Debentures is improperly
withheld or refused and not paid by the Company, interest on such Series 6.75%
Debentures will continue to accrue, from the original redemption date to the
date of payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the applicable Redemption
Price.


 


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 6.75%
Debentures for United States federal income tax purposes even if the
Series 6.75% Debentures were distributed to the holders of Preferred
Securities and Common Securities in liquidation of such holders’ interest in
AES Trust III 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 III, the Company shall have
the right at any time, upon not less than 30 nor more than 60 days’ notice, to
redeem the Series 6.75% 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 III 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 III, the Company or the holders of the Preferred
Securities, the Company or the Regular Trustees on behalf of AES Trust III will
pursue such measure in lieu of redemption and provided further
that the Company shall have no right to redeem the Series 6.75% Debentures
while the Regular Trustees on behalf of AES Trust III are pursuing any such
Ministerial Action.


 


“Tax Event” means that the Company and the Regular
Trustees shall have obtained an opinion of nationally recognized independent
tax counsel experienced in such matters (a “Dissolution Tax Opinion”) to the
effect that on or after October 7, 1999 as a result of (a) any
amendment to, or change in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for
a position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or effective or which interpretation or pronouncement
is issued or announced or which action is taken, in each case on or after October 7,
1999 there is more than an insubstantial risk that (i) AES Trust III 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 6.75%
Debentures, (ii) AES Trust III 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 III
on the Series 6.75% 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 rulings of the Internal
Revenue Service, to the effect that the holders of the Preferred Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of a dissolution of AES Trust III and distribution of the Series 6.75%
Debentures as provided in the Declaration of Trust.


 


SECTION 2.03.  If the Series 6.75%
Debentures are only partially redeemed pursuant to this Article Two, the Series 6.75%
Debentures will be redeemed pro rata or by lot or by any other method utilized
by the Trustee; provided that if at the time of redemption, the Series 6.75%
Debentures are registered as a Global Debenture, the Depository shall determine
by lot the principal amount of such Series 6.75% 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 6.75% 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 6.75%
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 6.75%
Debentures, the Company shall have the right, at any time during the term of
the Series 6.75% Debentures, from time to time to extend the interest
payment period of such Series 6.75% 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 6.75% 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 6.75% 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 6.75%
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
or


 

















 


extend beyond the maturity of the Series 6.75%
Debentures.  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 6.75% Debentures
including any Compounded Interest which shall be payable to the holders of the Series 6.75%
Debentures in whose names the Series 6.75% Debentures are registered in
the Debenture register on the first record date after the end of the Extended
Interest Payment Period.


 


SECTION 3.02.  (a)  So
long as the Property Trustee is the sole owner and holder of record of the Series 6.75%
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 III 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 III 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 6.75% 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 6.75% 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 6.75% 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 6.75% 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 6.75% 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 6.75% Debentures to the holders of the
Preferred Securities upon a Dissolution Event, the Company will use its best
efforts to list such Series 6.75% 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 6.75% 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) to remain the sole
direct or indirect owner of all of the outstanding common securities issued by
AES Trust III and not to cause or permit the Common Securities to be
transferred except as permitted by the Declaration of Trust; provided
that any permitted successor of the Company under the Indenture may succeed to
the Company’s ownership of the Common Securities issued by AES Trust III 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 6.75% 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 6.75%
Debentures are convertible at the option of the Holder, at any time through the
close of business on October 15, 2029 (or, in the case of Series 6.75%
Debentures called for redemption, prior to the close of business on the
Business Day prior to the corresponding redemption date), into fully paid and
nonassessable shares of Common Stock of the Company at an initial conversion rate
of 0.7108 share of Common Stock for each $50 in aggregate principal amount of Series 6.75%
Debentures (equal to a conversion price (as adjusted from time to time, the “Conversion
Price”) of $70.341 per share of Common Stock), subject to adjustment as described
in this Article Five.  A Holder of Series 6.75% Debentures may
convert any portion of the principal amount of the Series 6.75% 


 

















 


Debentures into that number of fully paid and
nonassessable shares of Common Stock obtained by dividing the principal amount
of the Series 6.75% 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 1/10,000th of a share, as the case may be.


 


SECTION 5.02.  (a)  In
order to convert all or a portion of the Series 6.75% Debentures, the
Holder thereof shall deliver to the Conversion Agent an irrevocable Notice of
Conversion setting forth the principal amount of Series 6.75% 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 6.75% Debentures are definitive Series 6.75% Debentures,
surrender to the Conversion Agent the Series 6.75% 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 6.75%
Debentures held by the Trust (at an exchange rate of $50 principal amount of Series 6.75%
Debentures for each Trust Security) and (ii) immediately convert such Series 6.75%
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 6.75% 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 6.75% Debenture is registered at the
close of business on such record date, and (other than a Series 6.75%
Debenture or a portion of a Series 6.75% Debenture called for redemption
on a redemption date occurring after such record date and prior to such
Distribution payment date) when so surrendered for conversion, the Series 6.75%
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 6.75%
Debenture which is converted, interest whose Maturity Date is after the date of
conversion of such Series 6.75% 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 6.75%
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 6.75% 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 6.75%
Debentures so converted and any unpaid interest (including Compounded Interest)
accrued on such Series 6.75% 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 6.75% 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 6.75% Debentures or the holder of the
Preferred Securities so converted.


 


(d)  In the event of
the conversion of any Series 6.75% Debenture in part only, a new Series 6.75%
Debenture or Series 6.75% 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 6.75% Debentures) and as agent
of the Holders of Series 6.75% Debentures (in the conversion of Series 6.75%
Debentures into Common Stock), as the case may be.  The Conversion Agent
is hereby authorized (i) to exchange Series 6.75% Debentures held by
the Trust from time to time for Preferred Securities in connection with the
conversion of such Preferred Securities in accordance with this Article Five
and (ii) to convert all or a portion of the Series 6.75% 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 6.75% Debenture or Series 6.75% 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 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 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 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 6.75% 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 6.75% Debentures without regard to whether the shares of Common
Stock issuable upon conversion of the Series 6.75% Debentures were issued
before or after such distribution or other event.


 


(v)            In case the Company shall, by dividend or
otherwise, at any time distribute cash to all holders of Common Stock,
excluding (A) any cash dividends on Common Stock to the extent that the
aggregate cash dividends per share of Common Stock in any consecutive 12-month
period do not exceed the greater of (x) the amount per share of Common
Stock of the cash dividends paid on the Common Stock in the immediately
preceding 12-month period, to the extent that such dividends for the
immediately preceding 12-month period did not require an adjustment to the
Conversion Price pursuant to this subparagraph (v) (as adjusted to reflect
subdivisions or combinations of the Common Stock) and (y) 15% of the
average of the daily Closing Prices (as hereinafter defined) of the Common
Stock for the ten consecutive Trading Days immediately prior to the date of
declaration of such dividend and (B) any dividend or distribution in
connection with the liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary; or any redemption of any Other Rights; provided,
however, that no adjustment shall be made pursuant to this subparagraph
(v) if such distribution would otherwise constitute a Fundamental Change
(as hereinafter defined) and be reflected in a resulting adjustment to the
Conversion Price as provided in this Article Five) then, in each case
(unless the Company makes the election referred to in the proviso following
this clause), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect at the
close of business on such record date by a fraction the numerator of which
shall be the Closing Price of a share of Common Stock on such record date less
the amount of cash so distributed (to the extent not excluded as provided
above) applicable to one share of Common Stock, and the denominator shall be
the Closing Price of a share of Common Stock, such reduction to become
effective immediately prior to the opening of business on the day following such
record date; provided, however, that the Company may elect, in
its sole discretion, in lieu of the foregoing adjustment, to make adequate
provision so that each holder of Securities shall thereafter have the right to
receive upon conversion the amount of cash such holder would have received had
such holder converted each Security on such record date.  If any
adjustment is required to be made as set forth in this subparagraph (v) as
a result of a distribution which is a dividend described in clause (A) of
this subparagraph (v), such adjustment will be based upon the amount by which
such distribution exceeds the amount of the dividend permitted to be excluded
pursuant to such clause (A) of this subparagraph (v).  If an
adjustment is required to be made pursuant to this subparagraph (v) as a


 

















 


result of a distribution
which is not such a dividend, such adjustment would be based upon the full
amount of such distribution.


 


(vi)         In case of the consummation of a tender or exchange offer (other than
an odd-lot tender offer) made by the Company or any subsidiary of the Company
for all or any portion of the outstanding shares of Common Stock to the extent
that the cash and fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be conclusive and shall
be described in a resolution of such Board) of any other consideration included
in such payment per share of Common Stock at the last time (the “Expiration
Time”) tenders or exchanges may be made pursuant to such tender or exchange
offer (as amended) exceed by more than 10%, with any smaller excess being
disregarded in computing the adjustment to the Conversion Price provided in
this subparagraph (vi), the first reported sale price per share of Common Stock
on the Trading Day next succeeding the Expiration Time, then the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the Expiration
Time by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the first reported sale price of the Common Stock
on the Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as aforesaid) of
the aggregate consideration payable to shareholders based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred to
as the “Purchased Shares”) and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the Expiration Time and
the first reported sale price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time.


 


(vii)      For the purpose of any computation under this Article Five, the
“Current Market Price per share” of Common Stock on any day shall be deemed to
be the average of the daily Closing Prices (as hereinafter defined) per share
of Common Stock for the ten consecutive Trading Days prior to and including the
date in question; provided, however, that (1) if the “ex”
date (as hereinafter defined) for any event (other than the issuance,
distribution or Fundamental Change requiring such computation) that requires an
adjustment to the Conversion Price pursuant to this Article Five (the
“Other Event”) occurs during such ten consecutive Trading Days and prior to the
“ex” date for the issuance, distribution or Fundamental Change requiring such
computation (the “Current Event”), the Closing Price for each Trading Day prior
to the “ex” date for such Other Event shall be


 

















 


adjusted
by multiplying such Closing Price by the same fraction by which the Conversion
Price is so required to be adjusted as a result of such Other Event,
(2) if the “ex” date for any Other Event occurs on or after the “ex” date
for the Current Event and on or prior to the date in question, the Closing
Price for each Trading Day on and after the “ex” date for such Other Event
shall be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted as a
result of such Other Event (provided that in the event that such fraction is
required to be determined at a date subsequent to the date in question and with
reference to events taking place subsequent to the date in question, the Board
of Directors of the Company or, to the extent permitted by applicable law, a
duly authorized committee thereof, whose determination shall be conclusive and
described in a resolution of the Board of Directors of the Company or such duly
authorized committee thereof, as the case may be, shall in good faith estimate
such fraction based on assumptions it deems reasonable regarding such events
taking place subsequent to the date in question, and such estimated fraction
shall be used for purposes of such adjustment until such time as the actual
fraction by which the Conversion Price is so required to be adjusted as a
result of such Other Event is determined), and (3) if the “ex” date for
the Current Event is on or prior to the date in question, after taking into
account any adjustment required pursuant to clause (1) or (2) of this
proviso, the Closing Price for each Trading Day on or after such “ex” date
shall be adjusted by adding thereto the amount of any cash and the fair market
value (as determined in good faith by the Board of Directors of the Company or,
to the extent permitted by applicable law, a duly authorized committee thereof
in a manner consistent with any determination of such value for purposes of
this Article Five, whose determination shall be conclusive and described
in a resolution of the Board of Directors of the Company or such duly
authorized committee thereof, as the case may be) of the shares of capital
stock, evidences of indebtedness or other assets being distributed applicable
to one share of Common Stock as of the close of business on the day before such
“ex” date.  For purposes of this subparagraph (vii), the term “ex” date,
(1) when used with respect to any issuance, distribution or Fundamental
Change, means the first date on which the Common Stock trades regular way on
the relevant exchange or in the relevant market from which the Closing Price
was obtained without the right to receive such issuance, such distribution or
the cash, securities, property or other assets distributable in such
Fundamental Change to holders of the Common Stock, (2) when used with
respect to any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such exchange or in
such market after the time at which such subdivision or combination becomes
effective and (3) when used with respect to any tender or exchange offer
means the first date on which the Common Stock trades


 

















 


regular
way on such exchange or in such market after the Expiration Time of such offer.


 


(viii)    No adjustment in the Conversion Price shall be required pursuant to
this Section 5.03(a) unless the adjustment would require a change of
at least 1% of such price; provided, however, that any
adjustments which by reason of this subparagraph (viii) are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations shall be made to the nearest cent (with .005
being rounded upward) or to the nearest 1/10,000th of a share (with .00005 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 6.75%
Debentures and the Trustee.  In particular, 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 6.75% 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 6.75% Debentures shall include only shares of the class designated
as the Company Common Stock on the date of the initial issuance of
Series 6.75% 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 6.75%
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 6.75% 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 6.75% Debenture then
outstanding shall have the right thereafter to convert such Series 6.75%
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 6.75% 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).


 


(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 prior adjustments
effected pursuant to this Article Five, and (B) the product of
(1) the greater of the Applicable Price (as hereinafter defined) or the
then applicable Reference Market Price (as hereinafter defined) and (2) a
fraction the numerator of which shall be $100 and the denominator of which
shall be the amount set forth below (based on the date on which such Non-Stock
Fundamental Change occurs).  For the twelve month period beginning
October 14:


 


	
  Year

  	
   

  	
   

  	
  Denominator

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1999

  	
   

  	
   

  	
   

  	
  106.750

  	
  %

  
	
  2000

  	
   

  	
   

  	
   

  	
  105.906

  	
  %

  
	
  2001

  	
   

  	
   

  	
   

  	
  105.062

  	
  %

  
	
  2002

  	
   

  	
   

  	
   

  	
  104.218

  	
  %

  
	
  2003

  	
   

  	
   

  	
   

  	
  103.374

  	
  %

  
	
  2004

  	
   

  	
   

  	
   

  	
  102.530

  	
  %

  
	
  2005

  	
   

  	
   

  	
   

  	
  101.686

  	
  %

  
	
  2006

  	
   

  	
   

  	
   

  	
  100.842

  	
  %

  
	
  and thereafter

  	
   

  	
   

  	
   

  	
  100.000

  	
  %;

  



 














 


(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
prior 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
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 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 $38.125 (which is an amount equal to 66-2/3%
of the last reported sale price for the Common Stock on the New York Stock
Exchange on October 7, 1999) 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 6.75% Debentures 
pursuant to the terms of any of the subparagraphs above (including such an
adjustment that would occur but for the terms of the first sentence of Section 5.03(a)(viii) above);
or


 


(ii)     the outstanding shares of
Common Stock shall be subdivided into a greater number of shares of Common
Stock or combined into a smaller number of shares of Common Stock; or


 


(iii)    the Company shall
authorize the granting to the holders of Common Stock generally of rights or
warrants (for a period expiring within 45 days after the record date fixed for
a distribution of such rights and warrants) to subscribe for or purchase any
shares of the Company’s capital stock or other capital stock of any class or of
any other rights (including any Rights Offerings); or


 


(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 6.75%
Debentures from time to time as such Series 6.75% 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 6.75% 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 6.75% 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 in any way the obligations of the Company to convert Series 6.75%
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 6.75%
Debentures will upon issue be fully paid and non-assessable by the Company and
free of pre-emptive rights.


 


SECTION 5.07.  Notwithstanding
the foregoing provisions, the issuance of any shares of Common Stock pursuant
to any plan providing for the reinvestment of 


 

















 


dividends or interest payable on securities
of the Company and the investment of additional optional amounts in shares of
Common Stock under any such plan, and the issuance of any shares of Common
Stock or options or rights to purchase such shares pursuant to any employee
benefit plan or program of the Company or pursuant to any option, warrant,
right or exercisable, exchangeable or convertible security outstanding as of October 7,
1999, 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 6.75% 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 6.75%
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 6.75% 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 6.75% Debentures so
converted is entitled to receive in accordance with the immediately preceding
sentence, the Company may elect (such election to be evidenced by a resolution
of the Board of Directors) to distribute to such Holder a due bill for the
shares of Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash or assets to which such Holder is so entitled; provided,
that such due bill (a) meets any applicable requirements of the principal
national securities exchange or other market on which the Common Stock is then
traded and (b) requires payment or delivery of such shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets no later than the date of payment or delivery thereof to holders
of shares of Common Stock receiving such distribution.


 

















 


ARTICLE SIX


 


Form of
Series 6.75% Debentures


 


SECTION 6.01.  The
Series 6.75% 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.]


 


No.                                                                                         
$


 


CUSIP NO.  00130HAR6


 


THE
AES CORPORATION


 


6.75% JUNIOR
SUBORDINATED DEBENTURE


DUE 2029


 


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 October 15, 2029, and to pay interest on said principal sum
from October 14, 1999 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 January 15, 2000 at the rate of 6.75% 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 III are no longer in book-entry only
form, the regular record dates shall be on the first (1st) 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 6.75% Debentures ARE NOT REPRESENTED
BY A GLOBAL DEBENTURE — which shall be on the first (1st) day of the month in
which such Interest Payment Date occurs.]  Any such interest installment
not punctually paid or duly provided for shall forthwith cease to be payable to
the registered holders on such regular record date, and may be paid to the
person in whose name this Debenture (or one or more Predecessor Debentures) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered holders of this series of Debentures not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.  The
principal of (and premium, if any) and the interest on this Debenture shall be
payable at the corporate trust office of the Trustee 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.


 

















 


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.


 




	
  Bank One, National Association

  	
   

  	
   

  
	
  as Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  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 Bank One, National Association, formerly
known as The First National Bank of Chicago, a national banking association, as
Trustee (herein referred to as the “Trustee”), as supplemented by the Third
Supplemental Indenture dated as of October 14, 1999 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 6.75% Junior Subordinated Debentures due 2029
and is limited in aggregate principal amount as specified in said Third
Supplemental Indenture.


 


Except as provided in the next paragraph, the
Debentures may not be redeemed by the Company prior to October 17,
2002.  The Company shall have the right to redeem this Debenture at the
option of the Company, in whole or in part at any time on or after October 17,
2002 (an “Optional Redemption”), upon not less than 30 nor more than 60 days
notice to the Holder of the Series 6.75% 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
excluding, the date of such redemption, if redeemed during the 12-month period
beginning October 15:


 


	
  Year

  	
   

  	
  Redemption Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2002

  	
   

  	
  104.219

  	
  %

  
	
  2003

  	
   

  	
  103.375

  	
  %

  
	
  2004

  	
   

  	
  102.531

  	
  %

  
	
  2005

  	
   

  	
  101.688

  	
  %

  
	
  2006

  	
   

  	
  100.844

  	
  %

  



 


and 100% if
redeemed on or after October 15, 2007.


 


If the Series 6.75% 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 6.75%
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 6.75%
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 6.75% Debentures for United States federal income
tax purposes even if the Series 6.75% Debentures were distributed to the
holders of Preferred Securities and Common Securities in liquidation of such
holder’s interest in AES Trust III 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 III,
the Company shall have the right at any time, upon not less than 30 nor more
than 60 days’ notice, to redeem the Series 6.75% 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 III 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 III, the Company
or the holders of the Preferred Securities, the Company or the Regular Trustees
on behalf of AES Trust III will pursue such measure in lieu of redemption and provided further
that the Company shall have no right to redeem the Series 6.75% Debentures
while the Regular Trustees on behalf of AES Trust III are pursuing any such
Ministerial Action.


 


“Tax Event” means that the Company and the
Regular Trustees shall have obtained an opinion of nationally recognized
independent tax counsel experienced in such matters (a “Dissolution Tax Opinion”)
to the effect that on or after October 7, 1999, as a result of (a) any
amendment to, or change in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for
a position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or 


 

















 


regulatory authority, which amendment or
change is enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after October 7, 1999, there is more than an insubstantial risk that (i) AES
Trust III 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 6.75%
Debentures, (ii) AES Trust III 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
III on the Series 6.75% 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 III and distribution of
the Series 6.75% 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 6.75% 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 6.75% 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
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 modification may, without the consent of the holder of each
outstanding Series 6.75% Debenture affected thereby (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 6.75% per annum to the extent permitted by
applicable law, compounded quarterly (“Compounded Interest”)); provided
that no Extended Interest Payment Period may extend beyond the date of maturity
or any redemption date of the Debentures.  During such Extended Interest
Payment Period the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make 


 

















 


a distribution or liquidation payment with
respect to, any of its common stock or preferred stock, or make any guarantee
payments with respect thereto; provided that the foregoing will not
apply to any stock dividends, paid by the Company in Common Stock.  Prior
to the termination of any such Extended Interest Payment Period, the Company
may pay all or any portion of the interest accrued on the Debentures on any
Interest Payment Date to holders of record on the regular record date for such
Interest Payment Date or from time to time further extend such Extended
Interest Payment Period; provided that such Period together with all
such further extensions thereof shall not exceed 20 consecutive quarterly
interest periods.  At the termination of any such Extended Interest
Payment Period and upon the payment of all accrued and unpaid interest then
due, together with Compounded Interest, the Company may select a new Extended
Interest Payment Period, subject to the foregoing requirements.  No
interest on this Debenture shall be due and payable during an Extended Interest
Payment Period, except at the end thereof.  At the end of the Extended
Interest Payment Period the Company shall pay all interest accrued and unpaid
on the Series 6.75% Debentures including any Compounded Interest which
shall be payable to the holders of the Series 6.75% Debentures in whose
names the Series 6.75% 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 corporate trust
office of the Trustee in the Borough of Manhattan, The City and State of New
York accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures of authorized denominations and for the same aggregate
principal amount and series will be issued to the designated transferee or
transferees.  No service charge will be made for any such transfer, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.


 


Prior to due presentment for registration of
transfer of this Debenture, the Company, the Trustee, any paying agent and any
Debenture Registrar may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Debenture Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and interest due hereon
and for all other purposes, and neither the Company nor the Trustee nor any
paying agent nor any Debenture Registrar shall be affected by any notice to the
contrary.


 


No recourse shall be had for the payment of
the principal of or the interest on this Debenture, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, stockholder, officer or director, past,
present or future, as such, of the Company or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the 


 

















 


acceptance hereof
and as part of the consideration for the issuance hereof, expressly waived and
released.


 


The Holder of any Debenture has the right,
exercisable at any time through the close of business (New York time) on October 15,
2029 (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 0.7108 share of Common Stock for each Debenture (equivalent to a
Conversion Price of $70.341 per share of Common Stock), subject to adjustment
under certain circumstances.


 


To convert a Debenture, a Holder must (a) complete
and sign a conversion notice substantially in the form attached hereto, (b) surrender
the Debenture to a Conversion Agent, (c) furnish appropriate endorsements
or transfer documents if required by the Conversion Agent and (d) pay any
transfer or similar tax, if required.  If a Debenture is surrendered for
conversion after the close of business on any regular record date for payment
of a Distribution and before the opening of business on the corresponding
Distribution payment date, then, notwithstanding such conversion, the
Distribution payable on such Distribution payment date will be paid in cash to
the person in whose name the Debenture is registered at the close of business
on such record date, and (other than a Debenture or a portion of a Debenture
called for redemption on a redemption date occurring after such record date and
on or prior to such Distribution payment date) when so surrendered for
conversion, the Debenture must be accompanied by payment of an amount equal to
the Distribution payable on such Distribution payment date.  The number of
shares issuable upon conversion of a Debenture is determined by dividing the
principal amount of the Debenture converted by the Conversion Price in effect
on the Conversion Date. No fractional shares will be issued upon conversion but
a cash adjustment will be made for any fractional interest. The outstanding
principal amount of any Debenture shall be reduced by the portion of the
principal amount thereof converted into shares of Common Stock.


 


[If certificated Debentures — The Debentures
of this series are issuable only in registered form without coupons in
denominations of $50 and any integral multiple thereto.]  [If Global
Debenture — This Global Debenture is exchangeable for Debentures in definitive
form under certain limited circumstances set forth in the Indenture. 
Debentures of this series so issued are issuable only in registered form
without coupons in denominations of $50 or any integral multiple
thereof.]  As provided in the Indenture and subject to certain limitations
[If Global Debenture — herein and] therein set forth, Debentures of this series
[If Global Debenture — so issued] are exchangeable for a like aggregate
principal amount of Debentures of this series of a different authorized
denomination, as requested by the Holder surrendering the same.


 


All terms used in this Debenture which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.


 

















 


[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:(a)

  	
   

  	
   

  
									



 






(a)               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.


 

















 


ASSIGNMENT


 


	
  FOR VALUE RECEIVED, the undersigned assigns
  and transfers this Debenture to:

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Insert assignee’s social
  security or tax identification number)

  
	
   

  
	
  FOR VALUE RECEIVED, the undersigned assigns
  and transfers this Debenture to:

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (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.

  
	
   

  
	
  (Insert assignee’s social
  security or tax identification number)

  
	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  	
   

  



 


	
  Signature:

  	
   

  	
   

  	
   

  
	
   

  	
   (Sign
  exactly as your name appears on the other side of this Debenture)

  



 


 


	
  Signature 

  	
   

  	
   

  
	
  Guarantee(b):

  	
   

  	
   

  
					



 






(b)              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.


 

















 


ARTICLE SEVEN


 


Original
Issue of Series 6.75% Debentures


 


SECTION 7.01.  Except as provided in Section 1.01
and this Section 7.01, Series 6.75% Debentures in the aggregate
principal amount equal to $463,917,550 may, upon execution of this Third
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 6.75% Debentures in the aggregate principal
amount of up to $69,587,650 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 6.75% 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


 


Amendments to the Indenture


 


SECTION 8.01.  For
purposes of the Series 6.75% Debentures, “Senior and Subordinated Debt”
means the principal of (and premium, if any) and interest on all Debt of the
Company whether created, incurred or assumed before, on or after the date of
this Third Supplemental Indenture; provided that such Senior and
Subordinated Debt shall not include (i) Debt to any Affiliate, (ii) Debt
of the Company that, when incurred and without respect to any election under Section 1111(b) of
Title 11, U.S. Code, was without recourse, (iii) any other Debt of the
Company which by the terms of the instrument creating or evidencing the same is
specifically designated as not being senior in right of payment to the Series 6.75%
Debentures, and in particular the Series 6.75% Debentures shall rank pari
passu with all other debt securities and guarantees issued to any trust,
partnership or other entity affiliated with the Company which is a financing
vehicle of the Company in connection with an issuance of preferred securities
by such financing entity and (iv) redeemable stock of the Company.


 


ARTICLE NINE


 


Miscellaneous
Provisions


 


SECTION 9.01.  Except as otherwise expressly
provided in this Third Supplemental Indenture or in the form of Series 6.75%
Debenture or otherwise clearly required by the context hereof or thereof, all
terms used herein or in said form of Series  


 

















 


6.75% Debenture that are defined in the
Indenture shall have the several meanings respectively assigned to them
thereby.


 


SECTION 9.02.  The Indenture, as supplemented
by this Third Supplemental Indenture, is in all respects ratified and
confirmed.  This Third Supplemental Indenture shall be deemed part of the
Indenture in the manner and to the extent herein and therein provided.


 


SECTION 9.03.  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 Third Supplemental Indenture.


 


SECTION 9.04.  This
Third 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.


 

















 


IN WITNESS WHEREOF, the parties hereto have
caused this Third Supplemental Indenture to be duly executed on the date or
dates indicated in the acknowledgments and as of the day and year first above
written.


 




	
   

  	
   

  	
  THE AES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  






 


 




	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK ONE, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
  as Trustee

  






 


 




	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  






 


 




	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title: