Document:

Exhibit 4.(a)

 

CONFORMED COPY

 

 

THE
AES CORPORATION

 

AND

 

THE
FIRST NATIONAL BANK OF CHICAGO

 

AS
TRUSTEE

 

 

JUNIOR
SUBORDINATED INDENTURE

 

 

Dated
as of March 1, 1997

 

 

JUNIOR
SUBORDINATED DEBENTURES

 

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1Definitions

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.  Definitions

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2Issue, Description, Terms,
  Execution Registration and Exchange of Debentures

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.  Designation, Terms, Amount, Authentication and Delivery of Debentures

  	
  8

  
	
  SECTION 2.02.  Form of Debenture and Trustee’s Certificate

  	
  10

  
	
  SECTION 2.03.  Date and Denominations of Debentures and Provisions for Payment of
  Principal, Premium and Interest

  	
  10

  
	
  SECTION 2.04.  Execution of Debentures

  	
  12

  
	
  SECTION 2.05.  Exchange of Debentures

  	
  13

  
	
  SECTION 2.06.  Temporary Debentures

  	
  14

  
	
  SECTION 2.07.  Mutilated, Destroyed, Lost or Stolen Debentures

  	
  15

  
	
  SECTION 2.08.  Cancellation of Surrendered Debentures

  	
  16

  
	
  SECTION 2.09.  Provisions of Indenture and Debentures for Sole Benefit of Parties
  and Debentureholders

  	
  16

  
	
  SECTION 2.10.  Appointment of Authenticating Agent

  	
  16

  
	
  SECTION 2.11.  Global Debenture

  	
  17

  
	
  SECTION 2.12.  CUSIP Numbers

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3Redemption of Debentures and
  Sinking Fund Provisions

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.  Redemption of Debentures

  	
  18

  
	
  SECTION 3.02.  Notice of Redemption

  	
  18

  
	
  SECTION 3.03.  Debentures Due and Payable

  	
  19

  
	
  SECTION 3.04.  Sinking Funds for Debentures

  	
  20

  
	
  SECTION 3.05.  Satisfaction of Sinking Fund Payments With Debentures

  	
  20

  
	
  SECTION 3.06.  Redemption of Debentures for Sinking Fund

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4Particular Covenants of the
  Company

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.  Payment of Principal of (And Premium, if any) and Interest on
  Debentures

  	
  21

  

 

i

 

	
  SECTION 4.02.  Maintenance of Office or Agent for Payment of Debentures, Designation
  of Office or Agency for Payment, Registration, Transfer and Exchange of
  Debentures

  	
  21

  
	
  SECTION 4.03.  Duties of Paying Agent; Company as Payment Agent; and Holding Sums of
  Trust

  	
  21

  
	
  SECTION 4.04.  Appointment to Fill Vacancy in Office of Trustee

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5Debentureholder’s Lists and
  Reports by the Company and the Trustee

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.  Company to Furnish Trustee Information as to Names and Addresses of
  Debentures

  	
  23

  
	
  SECTION 5.02.  Trustee to Preserve Information as to Names and Addresses of
  Debentureholders

  	
  23

  
	
  SECTION 5.03.  Annual and Other Reports to Be Filed by Company With Trustee

  	
  24

  
	
  SECTION 5.04.  Trustee to Transmit Annual Report to Debentureholders

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6Remedies of the Trustee and
  Debentureholders on Event of Default

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.  Events of Default Defined

  	
  27

  
	
  SECTION 6.02.  Covenant of Company to Pay to Trustee Whole Amount Due on Debentures
  on Default in Payment of Interest or Principal (and Premiums, if any)

  	
  29

  
	
  SECTION 6.03.  Application of Moneys Collected by Trustee

  	
  31

  
	
  SECTION 6.04.  Limitation on Suits by Holders of Debentures

  	
  31

  
	
  SECTION 6.05.  Remedies Cumulative; Delay or Omission in Exercise of Rights Not
  Waiver of Default

  	
  32

  
	
  SECTION 6.06.  Rights of Holders of Majority in Principal Amount of Debentures to
  Direct Trustee and to Waive Defaults

  	
  32

  
	
  SECTION 6.07.  Trustee to Give Notice of Defaults Known To It, But May Withhold in
  Certain Circumstances

  	
  33

  
	
  SECTION 6.08.  Requirements of an Undertaking to Pay Costs in Certain Suits Under
  Indenture or Against Trustee

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7Concerning the Trustee

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.  Upon Event of Default Occurring and Continuing, Trustee Shall
  Exercise Powers Vested In It, and Use Same Degree of Care and Skill In Their
  Exercise, as Prudent Individual Would Use

  	
  34

  
	
  SECTION 7.02.  Subject to Provisions of Section 7.01

  	
  36

  
	
  SECTION 7.03.  Trustee Not Liable for Recitals In Indenture Or In Debentures

  	
  37

  

 

ii

 

	
  SECTION 7.04.  Trustee, Paying Agent or Debenture Registrar May Own Debentures

  	
  38

  
	
  SECTION 7.05.  Moneys Received by Trustee to Be Held In Trust Without Interest

  	
  38

  
	
  SECTION 7.06.  Trustee Entitled to Compensation, Reimbursement and Indemnity

  	
  38

  
	
  SECTION 7.07.  Right of Trustee to Rely on Certificate of Officers of Company Where
  No Other Evidence Specifically Prescribed

  	
  38

  
	
  SECTION 7.08.  Trustee Acquiring Conflicting Interest to Eliminate Conflict or
  Resign

  	
  39

  
	
  SECTION 7.09.  Requirements for Eligibility of Trustee

  	
  45

  
	
  SECTION 7.10.  Resignation of Trustee and Appointment of Successor

  	
  45

  
	
  SECTION 7.11.  Acceptance by Successor to Trustee

  	
  47

  
	
  SECTION 7.12.  Successor to Trustee by Merger, Consolidation or Succession to
  Business

  	
  48

  
	
  SECTION 7.13.  Limitations on Rights of Trustee as a Creditor to Obtain Payment of
  Certain Claims Within Four Months Prior to Default or During Default, or to
  Realize on Property as such Creditor Thereafter

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8Concerning the Debentures

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.  Evidence of Action by Debentureholders

  	
  52

  
	
  SECTION 8.02.  Proof of Execution of Instruments and of Holding of Debentures

  	
  53

  
	
  SECTION 8.03.  Who May Be Deemed Owners of Debentures

  	
  53

  
	
  SECTION 8.04.  Debentures Owned by a Company or Controlled or Controlling Companies
  Disregarded for Certain Purposes

  	
  54

  
	
  SECTION 8.05.  Instruments Executed by Debentureholders Bind Future Holders

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9Supplemental Indentures

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.  Purposes for Which Supplemental Indenture May Be Entered Into Without
  Consent of Debentureholders

  	
  55

  
	
  SECTION 9.02.  Modification of Indenture with Consent of Debentureholders

  	
  56

  
	
  SECTION 9.03.  Effect of Supplemental Indentures

  	
  57

  
	
  SECTION 9.04.  Debentures May Bear Notation of Changes By Supplemental Indentures

  	
  57

  
	
  SECTION 9.05.  Opinion of Counsel

  	
  57

  

 

iii

 

	
  ARTICLE 10Consolidation, Merger, Sale or
  Conveyance

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.  Satisfaction and Discharge of Indenture

  	
  58

  
	
  SECTION 10.02.  Successor Corporation Substituted

  	
  58

  
	
  SECTION 10.03.  Opinion of Counsel

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11Satisfaction and Discharge of
  Indenture; Unclaimed Moneys

  
	
   

  	
   

  	
   

  
	
  SECTION 11.01.  Satisfaction and Discharge of Indentures

  	
  59

  
	
  SECTION 11.02.  Application of Trustee of Funds Deposited For Payment of Debentures

  	
  61

  
	
  SECTION 11.03.  Application by Trustee of Funds Deposited For Payment of Debentures

  	
  61

  
	
  SECTION 11.04.  Repayment of Moneys Held by Paying Agent

  	
  61

  
	
  SECTION 11.05.  Repayment of Moneys Paid by Trustee

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12Immunity of Incorporators,
  Stockholders, Officers and Directors

  
	
   

  	
   

  	
   

  
	
  SECTION 12.01.  Incorporators, Stockholders, Officers and Directors of Company Exempt
  From Individual Liability

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13Miscellaneous Provisions

  
	
   

  	
   

  	
   

  
	
  SECTION 13.01.  Successors and Assigns of Company Bound by Indenture

  	
  63

  
	
  SECTION 13.02.  Acts of Board, Committee or Officer of Successor Company Valid

  	
  63

  
	
  SECTION 13.03.  Surrender of Powers of Company

  	
  63

  
	
  SECTION 13.04.  Required Notices or Demands May be Served by Mail

  	
  63

  
	
  SECTION 13.05.  Indenture and Debentures to Be Construed in Accordance with Laws of
  the State of New York

  	
  63

  
	
  SECTION 13.06.  Officer’s Certificate and Opinion of Counsel to be Furnished Upon
  Application or Demands by Company; Statements To Be Included In Each
  Certificate or Opinion With Respect to Compliance With Condition or Covenant

  	
  63

  
	
  SECTION 13.07.  Payments Due on Sundays or Holidays

  	
  64

  
	
  SECTION 13.08.  Provisions Required by Trust Indenture Act of 1939 to Control

  	
  64

  
	
  SECTION 13.09.  Indenture May Be Executed by its Counterparts

  	
  64

  
	
  SECTION 13.10.  Separability of Indenture Provisions

  	
  64

  
	
  SECTION 13.11.  Assignment by Company to Subsidiary

  	
  65

  
	
  SECTION 13.12.  Holders of Preferred Securities as Third Party Beneficiaries of the
  Indenture; Holders of Preferred Securities May Institute Legal Proceedings
  Against the Company in Certain Cases

  	
  65

  

 

iv

 

	
  ARTICLE 14Subordination of Debentures

  
	
   

  	
   

  	
   

  
	
  SECTION 14.01.  Agreement to Subordinate

  	
  66

  
	
  SECTION 14.02.  Payments to Debentureholders

  	
  66

  
	
  SECTION 14.03.  Subrogation of Debentures

  	
  68

  
	
  SECTION 14.04.  Authorization by Debentureholders

  	
  69

  
	
  SECTION 14.05.  Notice to Trustee

  	
  69

  
	
  SECTION 14.06.  Trustee’s Relation to Senior and Subordinated Debt

  	
  70

  
	
  SECTION 14.07.  No Impairment to Subordination

  	
  70

  

 

v

 

THIS
INDENTURE, is dated as of the first day of March, 1997, between The AES
Corporation, a corporation duly organized and existing under the laws of the
State of Delaware (hereinafter sometimes referred to as the “Company”), and The
First National Bank of Chicago, as Trustee (hereinafter sometimes referred to
as the “Trustee”):

 

WHEREAS, for
its lawful corporate purposes, the Company has fully authorized the execution
and delivery of this Indenture to provide for the issuance of unsecured
debentures (hereinafter referred to as the “Debentures”), in an unlimited
aggregate principal amount to be issued from time to time in one or more series
in accordance with the terms of this Indenture, as registered Debentures
without coupons, to be authenticated by the certificate of the Trustee;

 

WHEREAS, to
provide the terms and conditions upon which the Debentures are to be
authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture;

 

WHEREAS, the
Debentures and the certificate of authentication to be borne by the Debentures
(the “Certificate of Authentication”) are to be substantially in such forms as
may be approved by the Board of Directors (as defined below) or set forth in
any indenture supplemental to this Indenture;

 

AND WHEREAS,
all acts and things necessary to make the Debentures issued pursuant hereto,
when executed by the Company and authenticated and delivered by the Trustee in
accordance with the terms of this Indenture, the valid, binding and legal
obligations of the Company, and to constitute a valid indenture and agreement
according to its terms, have been done and performed or will be done and
performed prior to the issuance of such Debentures, and the execution of this
Indenture has been and the issuance hereunder of the Debentures has been or
will be prior to issuance in all respects duly authorized, and the Company, in
the exercise of the legal right and power in it vested, executes this Indenture
and proposes to make, execute, issue and deliver the Debentures;

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

 

That in order
to declare the terms and conditions upon which the Debentures are and are to be
authenticated, issued and delivered, and in consideration of the premises and
of the acquisition and acceptance of the Debentures by the holders thereof, the
Company covenants and agrees with the Trustee, for the equal and proportionate
benefit (subject to the provisions of this Indenture) of the respective holders
from time to time of the Debentures, without any discrimination, preference or
priority of any one Debenture over any other by reason of priority in the time
of issue, sale or negotiation thereof, or otherwise, except as provided herein,
as follows:

 

 

ARTICLE 1

 

DEFINITIONS

 

SECTION 1.01. 
Definitions.  The terms defined in this Section (except as
in this Indenture otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture, any resolution of the Board of
Directors of the Company and of any indenture supplemental hereof shall have
the respective meanings specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act of 1939, as amended, or
which are by reference in such Act defined in the Securities Act of 1933, as amended
(except as herein otherwise expressly provided or unless the context otherwise
requires), shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date of this
instrument.

 

 “AES Trust” means such statutory business
trust created under the laws of the State of Delaware specified in the
applicable Board Resolution or supplemental indenture establishing a particular
series of Debentures pursuant to Section 2.01 hereof.

 

“Affiliate” of
the Company means any company at least a majority of whose outstanding voting
stock shall at the time be owned by the Company, or by one or more direct or
indirect subsidiaries of the Company or by the Company and one or more direct
or indirect subsidiaries of the Company. For the purposes only of this
definition of the term “Affiliate”, the term “voting stock”, as applied to the
stock of any company, shall mean stock of any class or classes having ordinary
voting power for the election of a majority of the directors of such company,
other than stock having such power only by reason of the occurrence of a
contingency.

 

“Authenticating
Agent” means an authenticating agent with respect to all or any of the series
of Debentures, as the case may be, appointed with respect to all or any series
of the Debentures, as the case may be, by the Trustee pursuant to Section 2.10.

 

“Bank Credit
Agreement” means the Credit Agreement dated as of May 20, 1996 among the
Company, the Banks named on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as such Agreement has been and may be
amended, restated, supplemented or otherwise modified from time to time, and
includes any agreement extending the maturity of, or restructuring (including,
but not limited to, the inclusion of additional borrowers thereunder that are
Subsidiaries of the Company and whose obligations are guaranteed by the Company
thereunder) all or any portion of, the Debt under such Agreement or any
successor agreements and includes any agreement with one or more banks or other
lending institutions refinancing all or any portion of the Debt under such
Agreement or any successor agreements.

 

2

 

“Board of
Directors” means the Board of Directors of the Company, or any committee of
such Board duly authorized to act hereunder.

 

“Board
Resolution” means a copy of one or more resolutions, certified by the secretary
or an assistant secretary of the Company to have been adopted or consented to
by the Board of Directors and to be in full force and effect, and delivered to
the Trustee.

 

“Business day”,
with respect to any series of Debentures, means any day other than a day on
which banking institutions in the Borough of Manhattan, the City and State of
New York, are authorized or obligated by law or executive order to close.

 

“Certificate”
means a certificate signed by the principal executive officer, the principal
financial officer or the principal accounting officer of the Company. The
Certificate need not comply with the provisions of Section 13.06.

 

“Change of
Control” means the occurrence of one or more of the following events:  (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company to any Person or group (as that
term is used in Section 13(d)(3) of the Securities Exchange Act of
1934) of Persons, (ii) a Person or group (as so defined) of Persons (other
than management of the Company on the date of this Indenture or their
Affiliates) shall have become the beneficial owner of more than 35% of the
outstanding voting stock of the Company, or (iii) during any one-year
period, individuals who at the beginning of such period constitute the Board of
Directors (together with any new director whose election or nomination was
approved by a majority of the directors then in office who were either
directors at the beginning of such period or who were previously so approved)
cease to constitute a majority of the Board of Directors.

 

“Common
Securities” means the common undivided beneficial interests in the assets of
the applicable AES Trust.

 

“Common Stock”
means the common stock of the Company, par value $.01 per share.

 

“Company”
means The AES Corporation, a corporation duly organized and existing under the
laws of the State of Delaware, and, subject to the provisions of Article Ten,
shall also include its successors and assigns.

 

“Corporate
Trust Office” means the office of the Trustee at which at any particular time
its corporate trust business shall be principally administered, which office at
the date of the execution of this Indenture is located at One First National
Plaza, Suite 0126, Chicago, IL 60670-0126, Attention: Corporate Trust
Administration.

 

“Currency Agreement”
means, with respect to any Person, any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to

 

3

 

protect such Person or any of
its Subsidiaries against fluctuations in currency values to or under which such
Person or any of its Subsidiaries is a party or a beneficiary on the date
hereof or becomes a party or a beneficiary thereafter.

 

“Debt” means,
with respect to any Person at any date of determination (without duplication), (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person in respect of letters of credit or
bankers’ acceptance or other similar instruments (or reimbursement obligations
with respect thereto), (iv) all obligations of such Person to pay the
deferred purchase price of property or services, except Trade Payables, (v) all
obligations of such Person as lessee under capitalized leases, (vi) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person; provided
that, for purposes of determining the amount of any Debt of the type described
in this clause, if recourse with respect to such Debt is limited to such asset,
the amount of such Debt shall be limited to the lesser of the fair market value
of such asset or the amount of such Debt, (vii) all Debt of others
Guaranteed by such Person to the extent such Debt is Guaranteed by such Person,
(viii) all redeemable stock valued at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends and (ix) to
the extent not otherwise included in this definition, all obligations of such
Person under Currency Agreements and Interest Rate Agreements.

 

“Declaration
of Trust” means the Declaration of Trust of the AES Trust, if any, specified in
the applicable Board Resolution or supplemental indenture establishing a
particular series of Debentures pursuant to Section 2.01 hereof.

 

“Debenture” or
“Debentures” means any Debenture or Debentures, as the case may be,
authenticated and delivered under this Indenture.

 

“Debentureholder”,
“holder of Debentures”, “registered holder”, or other similar term, means the
person or persons in whose name or names a particular Debenture shall be
registered on the books of the Company kept for the purpose in accordance with
the terms of this Indenture.

 

“Default”
means any event, act or condition which with notice or lapse of time, or both,
would constitute an Event of Default.

 

“Depositary”
means with respect to Debentures of any series, for which the Company shall
determine that such Debentures will be issued as a Global Debenture, The Depository
Trust Company, New York, New York, another clearing agency, or any successor
registered as a clearing agency under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or other applicable statute or regulation, which,
in each case, shall be designated by the Company pursuant to either Section 2.01
or 2.11.

 

4

 

“Designated
Senior and Subordinated Debt” means (i) Debt under the Bank Credit
Agreement and (ii) Debt constituting Senior and Subordinated Debt which,
at the time of its determination, (A) has an aggregate principal amount of
at least $30 million and (B) is specifically designated in the instrument
evidencing such Senior and Subordinated Debt as “Designated Senior and
Subordinated Debt” by the Company.

 

“Event of
Default”, with respect to Debentures of a particular series means any event
specified in Section 6.01(a), continued for the period of time, if any,
therein designated.

 

“Global
Debenture” means, with respect to any series of Debentures, a Debenture
executed by the Company and delivered by the Trustee to the Depositary or
pursuant to the Depositary’s instruction, all in accordance with the Indenture,
which shall be registered in the name of the Depositary or its nominee.

 

“Governmental
Obligations” means securities that are (i) direct obligations of the
United States of America for the payment of which its full faith and credit is
pledged or (ii) obligations of a person controlled or supervised by and
acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a) (2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on any
such Governmental Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depository receipt.

 

“Guarantee”
means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Debt or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for purposes of assuring in any other
manner the obligee of such Debt or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part); provided that the term “Guarantee” shall
not include endorsements for collection or deposit in the ordinary course of
business.  The term “Guarantee” used as a
verb has a corresponding meaning.

 

5

 

“Guarantee
Agreement” means the guarantee, if any, that the Company may enter into that
operates directly or indirectly for the benefit of holders of Preferred
Securities issued by a AES Trust.

 

“Indenture”
means this instrument as originally executed, or, if amended or supplemented as
herein provided, as so amended or supplemented.

 

“Interest
Payment Date” when used with respect to any installment of interest on a
Debenture of a particular series means the date specified in such Debenture or
in a Board Resolution or in an indenture supplemental hereto with respect to
such series as the fixed date on which an installment of interest with respect
to Debentures of that series is due and payable.

 

“Interest Rate
Agreement” means, with respect to any Person, any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in interest rates to or under which such Person or any of its
Subsidiaries is a party or a beneficiary on the date hereof or becomes a party
or a beneficiary thereafter.

 

“Lien” means,
with respect to any Property, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such Property.  For purposes of this Indenture, the Company
shall be deemed to own subject to a Lien any Property which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
Property.

 

“Officers’
Certificate” means a certificate signed by the President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary of the Company
and who shall be satisfactory to the Trustee. 
Each such certificate shall include the statements provided for in Section 13.06,
if and to the extent required by the provisions thereof.

 

“Opinion of
Counsel” means an opinion in writing signed by legal counsel, who may be an
employee of or counsel for the Company and who shall be satisfactory to the
Trustee. Each such opinion shall include the statements provided for in section
13.06, if and to the extent required by the provisions thereof.

 

“Outstanding”,
when used with reference to Debentures of any series, subject to the provisions
of Section 8.01, means, as of any particular time, all Debentures of that
series theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Debentures theretofore canceled by the Trustee or
any paying agent, or delivered to the Trustee or any paying agent for
cancellation or which have previously been canceled; (b) Debentures or
portions thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust

 

6

 

with the Trustee or with any
paying agent (other than the Company) or shall have been set aside and
segregated in trust for the holders of such Debentures by the Company (if the
Company shall act as its own paying agent); provided, however, that if such
Debentures or portions of such Debentures are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in Article Three
provided, or provision satisfactory to the Trustee shall have been made for
giving such notice; and (c) Debentures in lieu of or in substitution for
which other Debentures shall have been authenticated and delivered pursuant to
the terms of Section 2.07.

 

“Person” means
any individual, corporation, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

 

“Predecessor
Debenture” of any particular Debenture means every previous Debenture
evidencing all or a portion of the same debt as that evidenced by such
particular Debenture; and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 2.07 in lieu of a lost,
destroyed or stolen Debenture shall be deemed to evidence the same debt as the
lost, destroyed or stolen Debenture.

 

“Preferred
Securities” means the preferred undivided beneficial interests in the assets of
the applicable AES Trust.

 

“Property
Trustee” means the entity performing the function of the Property Trustee under
the applicable Declaration of Trust of an AES Trust.

 

“Responsible
Officer” when used with respect to the Trustee means the chairman of the board
of directors, the president, any vice president, the secretary, the treasurer,
any trust officer, any corporate trust officer or any other officer or
assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.

 

“Security
Exchange” when used with respect to the Debentures of any series which are held
as trust assets of an AES Trust pursuant to the Declaration of Trust of such
AES Trust, means the distribution of the Debentures of such series by such AES
Trust in exchange for the Preferred Securities and Common Securities of such
AES Trust in dissolution of such AES Trust pursuant to the Declaration of Trust
of such AES Trust.

 

“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 Indenture; provided
that such Senior and Subordinated Debt shall not include (i) 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, (ii) 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
Debentures, and in

 

7

 

particular the 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 (iii) redeemable stock of the Company.

 

“Subsidiary”
means any corporation at least a majority of whose outstanding voting stock
shall at the time be owned by the Company or by one or more subsidiaries or by
the Company and one or more Subsidiaries. For the purposes only of this
definition of the term “Subsidiary”, the term “voting stock”, as applied to the
stock of any corporation, shall mean stock of any class or classes having
ordinary voting power for the election of a majority of the directors of such
corporation, other than stock having such power only by reason of the
occurrence of a contingency.

 

“Trade
Payables” means, with respect to any Person, any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person or any of its Subsidiaries arising in the ordinary
course of business in connection with the acquisition of goods or services.

 

“Trustee”
means The First National Bank of Chicago, and, subject to the provisions of Article Seven,
shall also include its successors and assigns, and, if at any time there is
more than one person acting in such capacity hereunder, “Trustee” shall mean
each such person. The term “Trustee” as used with respect to a particular
series of the Debentures shall mean the trustee with respect to that series.

 

“Trust
Indenture Act”, subject to the provisions of Section 9.01 and 9.02, means
the Trust Indenture Act of 1939, as amended and in effect at the date of
execution of this Indenture.

 

“Trust
Securities” means the Common Securities and the Preferred Securities of the
applicable AES Trust.

 

ARTICLE 2

 

ISSUE, DESCRIPTION, TERMS, EXECUTION
REGISTRATION AND EXCHANGE OF DEBENTURES

 

SECTION
2.01.     Designation,
Terms, Amount, Authentication and Delivery of Debentures.  The aggregate principal amount of Debentures
which may be authenticated and delivered under this Indenture is unlimited.

 

The Debentures
may be issued in one or more series up to the aggregate principal amount of
Debentures of that series from time to time authorized by or pursuant to a
Board Resolution or pursuant to one or more indentures supplemental hereto,
prior to the initial issuance of Debentures of a particular series. Prior to
the initial issuance of Debentures of any series, there shall be established in
or pursuant to a Board Resolution,

 

8

 

and set forth in an Officers’
Certificate, or established in one or more indentures supplemental hereto:

 

(1)           the title of the Debentures of the
series (which shall distinguish the Debentures of the series from all other
Debentures);

 

(2)           any limit upon the aggregate
principal amount of the Debentures of that series which may be authenticated
and delivered under this Indenture (except for Debentures authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Debentures of that series):

 

(3)           the date or dates on which the
principal of the Debentures of the series is payable;

 

(4)           the rate or rates at which the
Debentures of the series shall bear interest or the manner of calculation of
such rate or rates, if any;

 

(5)           the date or dates from which such
interest shall accrue, the Interest Payment Dates on which such interest will
be payable or the manner of determination of such Interest Payment Dates and
the record date for the determination of holders to whom interest is payable on
any such Interest Payment Dates;

 

(6)           the right, if any, to extend or defer
the interest payment periods and the duration of such extension;

 

(7)           the period or periods within which,
the price or prices at which, and the terms and conditions upon which,
Debentures of the series may be redeemed, in whole or in part, at the option of
the Company;

 

(8)           the obligation, if any, of the
Company to redeem or purchase Debentures of the series pursuant to any sinking
fund or analogous provisions (including payments made in cash in anticipation
of future sinking fund obligations) or at the option of a holder thereof and
the period or periods within which, the price or prices at which, and the terms
and conditions upon which, Debentures of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;

 

(9)           any exchangeability, conversion or
prepayment provisions of the Debentures;

 

(10)         the form of the Debentures of the
series including the form of the Certificate of Authentication for such series;

 

9

 

(11)         if other than denominations of $50 or any integral multiple
thereof, the denominations in which the Debentures of the series shall be
issuable;

 

(12)         any and all other terms with respect to such series (which
terms shall not be inconsistent with the terms of this Indenture); and

 

(13)         whether the Debentures are issuable as a Global Debenture
and, in such case, the identity of the Depositary for such series.

 

(14)         If the Debentures of such series are to be deposited as
trust assets in a AES Trust the name of the applicable AES Trust (which shall
distinguish such statutory business trust from all other AES Trusts) into which
the Debentures of such series are to be deposited as trust assets and the date
of its Declaration of Trust.

 

All Debentures of any one series shall be
substantially identical except as to denomination and except as may otherwise
be provided in or pursuant to any such Board Resolution or in any indenture
supplemental hereto.

 

If any of the terms of the series are
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers’ Certificate setting forth  the terms of the series.

 

SECTION 2.02. 
Form of Debenture and Trustee’s
Certificate.  The Debentures
of any series and the Trustee’s certificate of authentication to be borne by
such Debentures shall be substantially of the tenor and purport as set forth in
one or more indentures supplemental hereto or as provided in a Board Resolution
and as set forth in an Officers’ Certificate, and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Indenture,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Debentures of that series may be listed, or to conform
to usage.

 

SECTION 2.03. 
Date and Denominations of Debentures
and Provisions for Payment of Principal, Premium and Interest.  The Debentures shall be issuable as
registered Debentures and in the denominations of $50 or any integral multiple
thereof, subject to Section 2.01(10). The Debentures of a particular
series shall bear interest payable on the dates and at the rate specified with
respect to that series. The principal of and the interest on the Debentures of
any series, as well as any premium thereon in case of redemption thereof prior
to maturity, shall be payable in the coin or currency of the United States of
America which at the time is legal tender for public and private debt, at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City and State of New York. Each Debenture shall be dated the
date of

 

10

 

its authentication. Interest on the Debentures shall be computed on the
basis of a 360-day year composed of twelve 30-day months.

 

The interest installment on any Debenture
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date for Debentures of that series shall be paid to the person in whose
name said Debenture (or one or more Predecessor Debentures) is registered at
the close of business on the regular record date for such interest installment.
In the event that any Debenture of a particular series or portion thereof is
called for redemption and the redemption date is subsequent to a regular record
date with respect to any Interest Payment Date and prior to such Interest
Payment Date, interest on such Debenture will be paid upon presentation and
surrender of such Debenture as provided in Section 3.03.

 

Any interest on any Debenture which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date for Debentures of the same series (herein called “Defaulted
Interest”) shall forthwith cease to be payable to the registered holder on the
relevant regular record date by virtue of having been such holder; and such
Defaulted Interest shall be paid by the Company, at its election, as provided
in clause (1) or clause (2) below:

 

(1)  The Company may make payment of any
Defaulted Interest on Debentures to the persons in whose names such Debentures
(or their respective Predecessor Debentures) are registered at the close of
business on a special record date for the payment of such Defaulted Interest,
which shall be fixed in the following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each such Debenture and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date for the
payment of such Defaulted Interest which shall not be more than 15 nor less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such special record date and,
in the name and at the expense of the 
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first class postage
prepaid, to each Debentureholder at his or her address as it appears in the
Debenture Register (as hereinafter defined), not less than 10 days prior to
such special record date. Notice of the proposed payment of such Defaulted
Interest and

 

11

 

the special record date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the persons in
whose names such Debentures (or their Predecessor Debentures) are registered on
such special record date and shall be no longer payable pursuant to the
following clause (2).

 

(2)  The Company may make payment of any
Defaulted Interest on any Debentures in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Debentures may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.

 

Unless otherwise set forth in a Board
Resolution or one or more indentures supplemental hereto establishing the terms
of any series of Debentures pursuant to Section 2.01 hereof, the term
“regular record date” as used in this Section with respect to a series of
Debentures with respect to any Interest Payment Date for such series shall mean
either the fifteenth day of the month immediately preceding the month in which
an Interest Payment Date established for such series pursuant to
Section 2.01 hereof shall occur, if such Interest Payment Date is the
first day of a month, or the last day of the month immediately preceding the
month in which an Interest Payment Date established for such series pursuant to
Section 2.01 hereof shall occur, if such Interest Payment Date is the
fifteenth day of a month, whether or not such date is business day.

 

Subject to the foregoing provisions of this
Section, each Debenture of a series delivered under this Indenture upon
transfer of or in exchange for or in lieu of any other Debenture of such series
shall carry the rights to interest accrued and unpaid, and to accrue, which
were carried by such other Debenture.

 

SECTION 2.04. 
Execution of Debentures.  The Debentures shall, subject to the
provisions of Section 2.06, be printed on steel engraved borders or fully
or partially engraved, or legibly typed, as the proper officers of the Company
may determine, and shall be signed on behalf of the Company by the Chairman or
Vice Chairman of its Board of Directors or its President or one of its Vice
Presidents, under its corporate seal attested by its Secretary or one of its
Assistant Secretaries. The signature of the Chairman, Vice Chairman, President
or a Vice President and/or the signature of the Secretary or an Assistant
Secretary in attestation of the corporate seal, upon the Debentures, may be in
the form of a manual or facsimile signature of a present or any future
Chairman, Vice Chairman, President or Vice President and of a present or any
future Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Debentures and for that purpose the Company may use the
manual or facsimile signature of any person who shall have been a Chairman,
Vice Chairman, President or Vice President, or of any person who shall have
been a Secretary or Assistant Secretary, notwithstanding the fact

 

12

 

that at the time the Debentures shall be authenticated and delivered or
disposed of such person shall have ceased to be the Chairman, Vice Chairman,
President or a Vice President, or the Secretary or an Assistant Secretary, of
the Company, as the case may be. The seal of the Company may be in the form of
a facsimile of the seal of the Company and may be impressed, affixed, imprinted
or otherwise reproduced on the Debentures.

 

Only such Debentures as shall bear thereon a
Certificate of Authentication substantially in the form established for such
Debentures, executed manually by an authorized signatory of the Trustee, or by
any Authenticating Agent with respect to such Debentures, shall be entitled to
the benefits of this Indenture or be valid or obligatory for any purpose. Such
certificate executed by the Trustee, or by any Authenticating Agent appointed
by the Trustee with respect to such Debentures, upon any Debenture executed by
the Company shall be conclusive evidence that the Debenture so authenticated
has been duly authenticated and made available for delivery hereunder and that
the holder is entitled to the benefits of this Indenture.

 

At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver Debentures of
any series executed by the Company to the Trustee for authentication, together
with a written order of the Company for the authentication and delivery of such
Debentures, signed by its President or any Vice President and its Treasurer or
any Assistant Treasurer, and the Trustee in accordance with such written order
shall authenticate and make available for delivery such Debentures.

 

In authenticating such Debentures and
accepting the additional responsibilities under this Indenture in relation to
such Debentures, the Trustee shall be entitled to receive, and (subject to
Section 7.01) shall be fully protected in relying upon, an Opinion of
Counsel stating that the form and terms thereof have been established in
conformity with the provisions of this Indenture.

 

The Trustee shall not be required to
authenticate such Debentures if the issue of 
such Debentures pursuant to this Indenture will affect the Trustee’s own
rights, duties or immunities under the Debentures and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.

 

SECTION 2.05.  Exchange
of Debentures.  (a) 
Debentures of any series may be exchanged upon presentation thereof at the
office or agency of the Company designated for such purpose in the Borough of
Manhattan, The City and State of New York, for other Debentures of such series
of authorized denominations, and for a like aggregate principal amount, upon
payment of a sum sufficient to cover any tax or other governmental charge in
relation  thereto, all as provided in
this Section. In respect of any Debentures so surrendered for exchange, the
Company shall execute, the Trustee shall authenticate and such office or agency
shall make available for delivery in exchange therefor the Debenture or
Debentures of the same series which the Debentureholder making the

 

13

 

exchange shall be entitled to receive, bearing numbers not contemporaneously
outstanding.

 

(b)  The Company shall keep, or cause to
be kept, at its office or agency designated for such purpose in the Borough of
Manhattan, The City and State of New York, or such other location designated by
the Company a register or registers (herein referred to as the “Debenture
Register”) in which, subject to such reasonable regulations as it may
prescribe, the Company shall register the Debentures and the transfers of
Debentures as in this Article provided and which at all reasonable times
shall be open for inspection by the Trustee. The registrar for the purpose of
registering Debentures and transfer of Debentures as herein provided shall be
appointed as authorized by Board Resolution (the “Debenture Registrar”).

 

Upon surrender for transfer of any Debenture
at the office or agency of the Company designated for such purpose in the
Borough of Manhattan, The City and State of New York, the Company shall
execute, the Trustee shall authenticate and such office or agency shall make
available for delivery in the name of the transferee or transferees a new
Debenture or Debentures of the same series as the Debenture presented for a
like aggregate principal amount.

 

All Debentures presented or surrendered for
exchange or registration of transfer, as provided in this Section, shall be
accompanied (if so required by the Company or the Debenture Registrar) by a
written instrument or instruments of transfer, in form satisfactory to the
Company or the Debenture Registrar, duly executed by the registered holder or
by his duly authorized attorney in writing.

 

(c)  No service charge shall be made for
any exchange or registration of transfer of Debentures, or issue of new
Debentures in case of partial redemption of any series, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge in relation thereto, other than exchanges pursuant to Section 2.06,
the second paragraph of Section 3.03 and Section 9.04 not involving
any transfer.

 

(d)  The Company shall not be required
(i) to issue, exchange or register the transfer of any Debentures during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of less than all the outstanding Debentures
of the same series and ending at the close of business on the day of such
mailing, nor (ii) to register the transfer of or exchange any Debentures
of any series or portions thereof called for redemption. The provisions of this
Section 2.05 are, with respect to any Global Debenture, subject to
Section 2.11 hereof.

 

SECTION 2.06. 
Temporary Debentures.  Pending the preparation of definitive
Debentures of any series, the Company may execute, and the Trustee shall
authenticate and make available for delivery, temporary Debentures (printed,
lithographed or typewritten) of any authorized denomination, and substantially
in the form of the definitive Debentures in lieu of which they are issued, but
with such omissions, insertions

 

14

 

and variations as may be appropriate for temporary Debentures, all as
may be determined by the Company. Every temporary Debenture of any series shall
be executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Debentures of such series. Without unnecessary delay the Company
will execute and will furnish definitive Debentures of such series and
thereupon any or all temporary Debentures of such series may be surrendered in
exchange therefor (without charge to the holders), at the office or agency of
the Company designated for the purpose in the Borough of Manhattan, The City
and State of New York, and the Trustee shall authenticate and such office or
agency shall make available for delivery in exchange for such temporary
Debentures an equal aggregate principal amount of definitive Debentures of such
series, unless the Company advises the Trustee to the effect that definitive
Debentures need not be executed and furnished until further notice from the
Company. Until so exchanged, the temporary Debentures of such series shall be
entitled to the same benefits under this Indenture as definitive Debentures of
such series authenticated and delivered hereunder.

 

SECTION 2.07. 
Mutilated, Destroyed, Lost or Stolen
Debentures.  In case any
temporary or definitive Debenture shall become mutilated or be destroyed, lost
or stolen, the Company (subject to the next succeeding sentence) shall execute,
and upon its request the Trustee (subject as aforesaid) shall authenticate and
make available for delivery, a new Debenture of the same series bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated Debenture, or in lieu of and in substitution for the Debenture so
destroyed, lost or stolen. In every case the applicant for a substituted
Debenture shall furnish to the Company and to the Trustee such security or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and to the Trustee evidence to their satisfaction of the
destruction, loss or theft of  the
applicant’s Debenture and of the ownership thereof. The Trustee may
authenticate any such substituted Debenture and make available for delivery the
same upon the written request or authorization of any officer of the Company.
Upon the issuance of any substituted Debenture, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith. In case any Debenture which
has matured or is about to mature shall become mutilated or be destroyed, lost
or stolen, the Company may, instead of issuing a substitute Debenture, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Debenture) if the applicant for such payment shall furnish to
the Company and to the Trustee such security or indemnity as they may require
to save them harmless, and, in case of destruction, loss or theft, evidence to
the satisfaction of the Company and the Trustee of the destruction, loss or
theft of such Debenture and of the ownership thereof.

 

Every Debenture issued pursuant to the
provisions of this Section in substitution for any Debenture which is
mutilated, destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the mutilated,

 

15

 

destroyed, lost or stolen Debenture shall be found at any time, or be
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debentures of the
same series duly issued hereunder. All Debentures shall be held and owned upon
the express condition that the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted
to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

 

SECTION 2.08. 
Cancellation of Surrendered
Debentures.  All Debentures
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be delivered
to the Trustee for cancellation, or, if surrendered to the Trustee, shall be
canceled by it, and no Debentures shall be issued in lieu thereof except as
expressly required or permitted by any of the provisions of this Indenture. On written
request of  the Company, the Trustee
shall deliver to the Company canceled Debentures held by the Trustee. If the
Company shall otherwise acquire any of the Debentures, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Debentures unless and until the same are
delivered to the Trustee for cancellation.

 

SECTION 2.09. 
Provisions of Indenture and
Debentures for Sole Benefit of Parties and Debentureholders.  Nothing in this Indenture or in the
Debentures, express or implied, shall give or be construed to give to any
person, firm or corporation, other than the parties hereto and the holders of
the Debentures, any legal or equitable right, remedy or claim under or in
respect of this Indenture, or under any covenant, condition or provision herein
contained; all such covenants, conditions and provisions being for the sole
benefit of the parties hereto and of the holders of the Debentures.

 

SECTION 2.10. 
Appointment of Authenticating Agent.  So long as any of the Debentures of any
series remain outstanding there may be an Authenticating Agent for any or all
such series of Debentures which the Trustee shall have the right to
appoint.  Said Authenticating Agent shall
be authorized to act on behalf of the Trustee to authenticate Debentures of
such series issued upon exchange, transfer or partial redemption thereof, and
Debentures so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder.  All references in
this Indenture to the authentication of Debentures by the Trustee shall be
deemed to include authentication by an Authenticating Agent for such series except
for authentication upon original issuance or pursuant to Section 2.07
hereof.  Each Authenticating Agent shall
be acceptable to the Company and shall be a corporation which has a combined
capital and surplus, as most recently reported or determined by it, sufficient
under the laws of any jurisdiction under which it is organized or in which it
is doing business to conduct a trust business, and which is otherwise
authorized under such laws to conduct such business and is subject to
supervision or

 

16

 

examination by Federal or State authorities.  If at any time any Authenticating Agent shall
cease to be eligible in accordance with these provisions, it shall resign
immediately.

 

Any Authenticating Agent may at any time
resign by giving written notice of resignation to the Trustee and to the
Company.  The Trustee may at any time
(and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. 
Upon resignation, termination or cessation of eligibility of any
Authenticating Agent, the Trustee may appoint an eligible successor
Authenticating Agent acceptable to the Company. 
Any successor Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and duties of its
predecessor hereunder as if originally named as an Authenticating Agent
pursuant hereto.

 

SECTION 2.11. 
Global Debenture.  (a)  If the Company shall establish
pursuant to Section 2.01 that the Debentures of a particular series are to
be issued as one or more Global Debentures, then the Company shall execute and
the Trustee shall, in accordance with Section 2.04, authenticate and
deliver, one or more Global Debentures which (i) shall represent, and
shall be denominated in an aggregate amount equal to the aggregate principal
amount of, all of the Outstanding Debentures of such series, (ii) shall be
registered in the name of the Depositary or its nominee, (iii) shall be delivered
by the Trustee to the Depositary or pursuant to the Depositary’s instruction
and (iv) shall bear a legend substantially to the following effect:  “Except as otherwise provided in
Section 2.11 of the Indenture, this Debenture may be transferred, in whole
but not in part, only to another nominee of the Depositary or to a successor
Depositary or to a nominee of such successor Depositary.”

 

(b)  Notwithstanding the provisions of
Section 2.05, the Global Debenture of a series may be transferred, in
whole but not in part and in the manner provided in Section 2.05, only to
another nominee of the Depositary for such series, or to a successor Depositary
for such series selected or approved by the Company or to a nominee of such
successor Depositary.

 

(c)  If at any time the Depositary for a
series of Debentures notifies the Company that it is unwilling or unable to
continue as Depositary for such series or if at any time the Depositary for
such series shall no longer be registered or in good standing under the Exchange
Act, or other applicable statute or regulation and a successor Depositary for
such series is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case may be,
this Section 2.11 shall no longer be applicable to the Debentures of such
series and the Company will execute, and subject to Section 2.05, the
Trustee will authenticate and make available for delivery Debentures of such
series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Debentures of such series in exchange for such Global
Debenture.  In addition, the Company may
at any time determine that the Debentures of any series

 

17

 

shall no longer be represented by one or more Global Debentures and
that the provisions of this Section 2.11 shall no longer apply to the
Debentures of such series.  In such event
the Company will execute and subject to Section 2.05, the Trustee, upon
receipt of an Officers’ Certificate evidencing such determination by the
Company, will authenticate and deliver Debentures of such series in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global
Debentures of such series in exchange for such Global Debentures.  Upon the exchange of the Global Debentures
for such Debentures in definitive registered form without coupons, in
authorized denominations, the Global Debentures shall be canceled by the
Trustee.  Such Debentures in definitive
registered form issued in exchange for the Global Debentures pursuant to this
Section 2.11(c) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee.  The Trustee shall deliver such Debentures to
the Depositary for delivery to the persons in whose names such Debentures are
so registered.

 

SECTION 2.12. 
CUSIP Numbers.  The Company in issuing the Debentures may use
“CUSIP” and “CINS” numbers (if then generally in use), and the Trustee shall
use CUSIP numbers or CINS numbers, as the case may be, in notices of redemption
or exchange as a convenience to Debentureholders and no representation shall be
made as to the correctness of such numbers either as printed on the Debentures
or as contained in any notice of redemption or exchange.

 

ARTICLE 3

 

REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS

 

SECTION 3.01. 
Redemption of Debentures.  The Company may redeem the Debentures of any
series issued hereunder on and after the dates and in accordance with the terms
established for such series pursuant to Section 2.01 hereof.

 

SECTION 3.02. 
Notice of Redemption.  (a)  In case the Company shall desire to
exercise such right to redeem all or, as the case may be, a portion of the
Debentures of any series in accordance with the right reserved so to do, it
shall give notice of such redemption to holders of the Debentures of such
series to be redeemed by mailing, first class postage prepaid, a notice of such
redemption not less than 30 days and not more than 60 days before the date
fixed for redemption of that series to such holders at their last addresses as
they shall appear upon the Debenture Register. 
Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the registered
holder receives the notice.  In any case,
failure duly to give such notice to the holder of any Debenture of any series
designated for redemption in whole or in part, or any defect in the notice,
shall not affect the validity of the proceedings

 

18

 

for the redemption of any other Debentures of such series or any other
series.  In the case of any redemption of
Debentures prior to the expiration of any restriction on such redemption
provided in the terms of such Debentures or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers’ Certificate evidencing
compliance with any such restriction.

 

Each such notice of redemption shall specify
the date fixed for redemption and the redemption price at which Debentures of
that series are to be redeemed, and shall state that payment of the redemption
price of such Debentures to be redeemed will be made at the office or agency of
the Company in the Borough of Manhattan, the City and State of New York, upon
presentation and surrender of such Debentures, that interest accrued to the
date fixed for redemption will be paid as specified in said notice, that from
and after said date interest will cease to accrue and that the redemption is
for a sinking fund, if such is the case. 
If less than all the Debentures of a series are to be redeemed, the
notice to the holders of Debentures of that series to be redeemed in whole or
in part shall specify the particular Debentures to be so redeemed.  In case any Debenture is to be redeemed in
part only, the notice which relates to such Debenture shall state the portion
of the principal amount thereof to be redeemed, and shall state that on and
after the redemption date, upon surrender of such Debenture, a new Debenture or
Debentures of such series in principal amount equal to the unredeemed portion
thereof will be issued.

 

(b)  If less than all the Debentures of
a series are to be redeemed, the Company shall give the Trustee at least 45
days’ notice in advance of the date fixed for redemption as to the aggregate
principal amount of Debentures of the series to be redeemed, and thereupon the
Trustee shall select, by lot or in such other manner as it shall deem
appropriate and fair in its discretion and which may provide for the selection
of a portion or portions (equal to $50 or any integral multiple thereof) of the
principal amount of such Debentures of a denomination larger than $50, the
Debentures to be redeemed and shall thereafter promptly notify the Company in
writing of the numbers of the Debentures to be redeemed, in whole or in part.

 

The Company may, if and whenever it shall so
elect, by delivery of instructions signed on its behalf by its President or any
Vice President, instruct the Trustee or any paying agent to call all or any
part of the Debentures of a particular series for redemption and to give notice
of redemption in the manner set forth in this Section, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may
deem advisable.  In any case in which
notice of redemption is to be given by the Trustee or any such paying agent,
the Company shall deliver or cause to be delivered to, or permit to remain
with, the Trustee or such paying agent, as the case may be, such Debenture
Register, transfer books or other records, or suitable copies or extracts
therefrom, sufficient to enable the Trustee or such paying agent to give any
notice by mail that may be required under the provisions of this Section.

 

19

 

SECTION 3.03. 
Debentures Due and Payable.  (a)  If the giving of notice of
redemption shall have been completed as above provided, the Debentures or
portions of Debentures of the series to be redeemed specified in such notice
shall become due and payable on the date and at the place stated in such notice
at the applicable redemption price, together with interest accrued to the date
fixed for redemption and interest on such Debentures or portions of Debentures
shall cease to accrue on and after the date fixed for redemption, unless the
Company shall default in the payment of such redemption price and accrued
interest with respect to any such Debenture or portion thereof.  On presentation and surrender of such
Debentures on or after the date fixed for redemption at the place of payment
specified in the notice, said Debentures shall be paid and redeemed at the
applicable redemption price for such series, together with interest accrued
thereon to the date fixed for redemption (but if the date fixed for redemption
is an Interest Payment Date, the interest installment payable on such date
shall be payable to the registered holder at the close of business on the
applicable record date pursuant to Section 2.03).

 

(b)  Upon presentation of any Debenture
of such series which is to be redeemed in part only, the Company shall execute
and the Trustee shall authenticate and the office or agency where the Debenture
is presented shall make available for delivery to the holder thereof, at the
expense of the Company, a new Debenture or Debentures of the same series, of
authorized denominations in principal amount equal to the unredeemed portion of
the Debenture so presented.

 

SECTION 3.04. 
Sinking Funds for Debentures.  The provisions of Sections 3.04, 3.05 and
3.06 shall be applicable to any sinking fund for the retirement of Debentures
of a series, except as otherwise specified as contemplated by Section 2.01
for Debentures of such series.

 

The minimum amount of any sinking fund
payment provided for by the terms of Debentures of any series is herein
referred to as a “mandatory sinking fund payment”, and any payment in excess of
such minimum amount provided for by the terms of Debentures of any series is
herein referred to as on “optional sinking fund payment”. If provided for by
the terms of Debentures for any series, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 3.05. Each
sinking fund payment shall be applied to the redemption of Debentures of any
series as provided for by the terms of Debentures of such series.

 

SECTION 3.05. 
Satisfaction of Sinking Fund Payments
With Debentures.  The Company
(i) may deliver outstanding Debentures of a series (other than any
previously called for redemption) and (ii) may apply as a credit Debentures
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Debentures or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Debentures, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Debentures of such series required to be

 

20

 

made pursuant to the terms of such Debentures as provided for by the
terms of such series; provided that such Debentures have not been previously so
credited. Such Debentures shall be received and credited for such purpose by
the Trustee at the redemption price specified in such Debentures for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.

 

SECTION 3.06. 
Redemption of Debentures for Sinking
Fund.  Not less than 45 days
prior to each sinking fund payment date for any series of Debentures, the
Company will deliver to the Trustee an Officers’ Certificate specifying the
amount of the next ensuing sinking fund payment for that series pursuant to the
terms for that series, the portion thereof, if any, which is to be satisfied by
delivering and crediting Debentures of that series pursuant to
Section 3.05 and the basis for such credit and will, together with such
Officers’ Certificate, deliver to the Trustee any Debentures to be so
delivered. Not less than 30 days before each such sinking fund payment date the
Trustee shall select the Debentures to be redeemed upon such sinking fund
payment date in the manner specified in Section 3.02 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 3.02. Such notice having been
duly given, the redemption of such Debentures shall be made upon the terms and
in the manner stated in Section 3.03.

 

ARTICLE 4

 

PARTICULAR
COVENANTS OF THE COMPANY

 

The Company covenants and agrees for each series of the Debentures as
follows:

 

SECTION 4.01. 
Payment of Principal of (And Premium,
if any) and Interest on Debentures.  
The Company will duly and punctually pay or cause to be paid the
principal of (and premium, if any) and interest on the Debentures of that
series at the time and place and in the manner provided herein and established
with respect to such Debentures.

 

SECTION 4.02. 
Maintenance of Office or Agent for
Payment of Debentures, Designation of Office or Agency for Payment,
Registration, Transfer and Exchange of Debentures.  So long as any series of the Debentures
remain outstanding, the Company agrees to maintain an office or agency in the
Borough of Manhattan, The City and State of New York, with respect to each such
series and at such other location or locations as may be designated as provided
in this Section 4.02, where (i) Debentures of that series may be
presented for payment, (ii) Debentures of that series may be presented as
herein above authorized for registration of transfer and exchange, and (iii) notices
and demands to or upon the Company in respect of the Debentures of that series
and this Indenture may be given or served, such designation to continue with
respect to such office or agency until the Company shall, by written notice
signed by its President or a Vice President and

 

21

 

delivered to the Trustee, designate some other office or agency for
such purposes or any of them. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, notices
and demands.

 

SECTION 4.03. 
Duties of Paying Agent; Company as
Payment Agent; and Holding Sums of Trust.  (a)  If the Company shall appoint one or
more paying agents for all or any series of the Debentures, other than the
Trustee, the Company will cause each such paying agency to execute and deliver
to the Trustee an instrument in which such agent shall agree with the Trustee,
subject to the provisions of this Section:

 

(1)  that it will hold all sums held by
it as such agent for the payment of the principal of (and premium, if any) or
interest on the Debentures of that series (whether such sums have been paid to
it by the Company or by any other obligor of such Debentures) in trust for the
benefit of the persons entitled thereto:

 

(2)  that it will give the Trustee
written notice of any failure by the Company (or by any other obligor of such
Debentures) to make any payment of the principal of (and premium, if any) or
interest on the Debentures of that series when the same shall be due and
payable;

 

(3)  that it will, at any time during
the continuance of any failure referred to in the preceding paragraph
(a)(2) above, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such paying agent; and

 

(4)  that it will perform all other
duties of paying agent as set forth in this Indenture.

 

(b)  If the Company shall act as its own
paying agent with respect to any series of the Debentures, it will on or before
each due date of the principal of (and premium, if any) or interest on
Debentures of that series, set aside, segregate and hold in trust for the
benefit of the persons entitled thereto a sum sufficient to pay such principal
(and premium, if any) or interest so becoming due on Debentures of that series
until such sums shall be paid to such persons or otherwise disposed of as
herein provided and will promptly notify in writing the Trustee of such action,
or any failure (by it or any other obligor on such Debentures) to take such
action. Whenever the Company shall have one or more paying agents for any
series of Debentures, it will, prior to each due date of the principal of (and
premium, if any) or interest on any Debentures of that series, deposit with the
paying agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
persons

 

22

 

entitled to such principal, premium or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of
its action or failure so to act.

 

(c)  Anything in this Section to
the contrary notwithstanding, (i) the agreement to hold sums in trust as
provided in this Section is subject to the provisions of
Section 11.04, and (ii) the Company may at any time, for the purpose
of obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or direct any paying agent to pay, to the Trustee all sums held
in trust by the Company or such paying agent, such sums to be held by the
Trustee upon the same terms and conditions as those upon which such sums were
held by the Company or such paying agent; and, upon such payment by any paying
agent to the Trustee, such paying agent shall be released from all further
liability with respect to such money.

 

SECTION 4.04. 
Appointment to Fill Vacancy in Office
of Trustee.  The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 7.10, a Trustee, so that there
shall at all times be a Trustee hereunder.

 

ARTICLE 5

 

DEBENTUREHOLDER’S LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE

 

SECTION 5.01. 
Company to Furnish Trustee
Information as to Names and Addresses of Debentures.  The Company will furnish or cause to be
furnished to the Trustee (a) on a quarterly basis on each regular record
date (as defined in Section 2.03) a list, in such form as the Trustee may
reasonably require, of the  names and
addresses of the holders of each series of Debentures as of such regular record
date, provided, that the Company shall not be obligated to furnish or cause to
furnish such list at any time that the list shall not differ in any respect
from the most recent list furnished to the Trustee by the Company and
(b) at such other times as the Trustee may request in writing within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished; provided, however, no such list need be furnished for any series
for which the Trustee shall be the Debenture Registrar.

 

SECTION 5.02. 
Trustee to Preserve Information as to
Names and Addresses of Debentureholders.  (a)  The Trustee shall preserve, in as
current a form as is reasonably practicable, all information as to the names
and addresses of the holders of Debentures contained in the most recent list
furnished to it as provided in Section 5.01 and as to the names and
addresses of holders of Debentures received by the Trustee in its capacity as
Debenture Registrar (if acting in such capacity).

 

23

 

(b)  The Trustee may destroy any list
furnished to it as provided in Section 5.01 upon receipt of a new list so
furnished.

 

(c)  In case three or more holders of
Debentures of a series (hereinafter referred to as “applicants”) apply in
writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Debenture for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other holders of Debentures of such
series or holders of all Debentures with respect to their rights under this
Indenture or under such Debentures, and is accompanied by a copy of the form of
proxy or other communication which such applicants propose to transmit, then
the Trustee shall within five business days after the receipt of such
application, at its election, either:

 

(1)  afford to such applicants access to
the information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 5.02; or

 

(2)  inform such applicants as to the
approximate number of holders of Debentures of such series or of all
Debentures, as the case may be, whose names and addresses appear in the
information preserved at the time by the Trustee, in accordance with the
provisions of subsection (a) of this Section 5.02, and as to the approximate
cost of mailing to such Debentureholders the form of proxy or other
communication, if any, specified in such application.

 

(d)  If the Trustee shall elect not to
afford such applicants access to such information, the Trustee shall, upon the
written request of such applicants, mail to each holder of such series or of
all Debentures, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 5.02, a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender, the Trustee shall mail
to such applicants and file with the Securities and Exchange Commission (the
“Commission”), together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the holders of Debentures of such series
or of all Debentures, as the case may be, or would be in violation of
applicable law. Such written statement shall specify the basis of such
opinion.  If the Commission, after
opportunity for a hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Debentureholders

 

24

 

with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise, the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.

 

(e)  Each and every holder of the
Debentures, by receiving and holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor any paying agent nor any
Debenture Registrar shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the holders of Debentures
in accordance with the provisions of subsection (b) of this Section,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under said subsection (b).

 

SECTION 5.03. 
Annual and Other Reports to Be Filed
by Company With Trustee . 
(a)  The Company covenants and agrees to file with the Trustee,
within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which
the Company may be required to file with the Commission pursuant to
Section 13 or Section 15 (d) of the Exchange Act; or, if the
Company is not required to file information, documents or reports pursuant to
either of such sections, then to file with the Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Exchange
Act, in respect of a security listed and registered on a national securities
exchange as  may be prescribed from time
to time in such rules and regulations. 
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee’s receipt of such shall not
constitute constructive notice of any information contained therein, including
the Company’s compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers’ Certificates).

 

(b)  The Company covenants and agrees to
file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants provided for in this Indenture as may be
required from time to time by such rules and regulations.

 

(c)  The Company covenants and agrees to
transmit by mail, first class postage prepaid, or reputable over-night delivery
service which provides for evidence of receipt, to the Debentureholders, as
their names and addresses appear upon the Debenture Register, within 30 days
after the filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to 

 

25

 

subsections (a) and (b) of this Section as may be
required by rules and regulations prescribed from time to time by the
Commission.

 

(d)  The Company covenants and agrees to
furnish to the Trustee, on or before May 15 in each calendar year in which
any of the Debentures are outstanding, or on or before such other day in each
calendar year as the Company and the Trustee may from time to time agree upon,
a Certificate as to his or her knowledge of the Company’s compliance with all
conditions and covenants under this Indenture. 
For purposes of this subsection (d), such compliance shall be determined
without regard to any period of grace or requirement of notice provided under
this Indenture.

 

SECTION 5.04. 
Trustee to Transmit Annual Report to
Debentureholders.  (a) 
On or before July 15 in each year in which any of the Debentures are
outstanding, the Trustee shall transmit by mail, first class postage prepaid,
to the Debentureholders, as their names and addresses appear upon the Debenture
Register, a brief report dated as of the preceding May 15, with respect to
any of the following events which may have occurred within the previous twelve
months (but if no such event has occurred within such period no report need be
transmitted):

 

(1)  any change to its eligibility under
Section 7.09, and its qualifications under Section 7.08;

 

(2)  the creation of or any material
change to a relationship specified in paragraphs (1) through (10) of
subsection (c) of Section 7.08;

 

(3)  the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) which remain unpaid on the
date of such report, and for the reimbursement of which it claims or may claim
a lien or charge, prior to that of the Debentures, on any property or funds
held or collected by it as Trustee if such advances so remaining unpaid
aggregate more than 1⁄2 of 1% of the principal amount of the Debentures
outstanding on the date of such report;

 

(4)  any change to the amount, interest
rate, and maturity date of all other indebtedness owing by the Company, or by
any other obligor on the Debentures, to the Trustee in its individual capacity,
on the date of such report, with a brief description of any property  held as collateral security therefor, except
any indebtedness based upon a creditor relationship arising in any manner
described in paragraph (2), (3), (4), or (6) of subsection (b) of
Section 7.13;

 

(5)  any change to the property and
funds, if any, physically in the possession of the Trustee as such on the date
of such report;

 

26

 

(6)   any release, or release and substitution, of
property subject to the lien of this Indenture (and the consideration thereof,
if any) which it has not previously reported;

 

(7)   any additional issue of Debentures which the
Trustee has not previously reported; and

 

(8)   any action taken by the Trustee in the
performance of its duties under this Indenture which it has not previously
reported and which in its opinion materially affects the Debentures or the
Debentures of any series, except any action in respect of a default, notice of
which has been or is to be withheld by it in accordance with the provisions of
Section 6.07.

 

(b)   The Trustee shall transmit by mail, first
class postage prepaid, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, a brief report with respect to the
character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee as such
since the date of the last report transmitted pursuant to the provisions of
subsection (a) of this Section (or if no such report has yet been so
transmitted, since the date of execution of this Indenture), for the
reimbursement of which it claims or may claim a lien or charge prior to that of
the Debentures of any series on property or funds held or collected by it as
Trustee, and which it has not previously reported pursuant to this subsection
if such advances remaining unpaid at any time aggregate more than 10% of the
principal amount of Debentures of such series outstanding at such time, such
report to be transmitted within 90 days after such time.

 

(c)   A copy of each such report shall, at the time
of such transmission to Debentureholders, be filed by the Trustee with the
Company, with each stock exchange upon which any Debentures are listed (if so
listed) and also with the Commission. 
The Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange.

 

ARTICLE 6

 

REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT

 

SECTION 6.01.   Events of Default Defined.  (a) 
Whenever used herein with respect to Debentures of a particular series,
“Event of Default” means any one or more of the following events which has
occurred and is continuing:

 

(1)   default in the payment of any installment of
interest upon any of the Debentures of that series, as and when the same shall
become due and payable, and continuance of such default for a period of 30
days; provided,

 

27

 

 

however, that
a valid extension of an interest payment period by the Company in accordance
with the terms of any indenture supplemental hereto, shall not constitute a
default in the payment of interest for this purpose;

 

(2)   default in the payment of the principal of
(or premium, if any, on) any of the Debentures of that series as and when the
same shall become due and payable whether at maturity, upon redemption, by
declaring or otherwise, or in any payment required by any sinking or analogous
fund established with respect to that series;

 

(3)   failure on the part of the Company duly to
observe or perform any other of the covenants or agreements on the part of the
Company with respect to that series contained in such Debentures or otherwise
established with respect to that series of Debentures pursuant to Section 2.01
hereof or contained in this Indenture (other than a covenant or agreement which
has been expressly included in this Indenture solely for the benefit of one or
more series of Debentures other than such series) for a period of 90 days after
the date on which written notice of such failure, requiring the same to be
remedied and stating that such notice is a “Notice of Default” hereunder, shall
have been given to the Company by the Trustee, by registered or certified mail,
or to the Company and the Trustee by the holders of at least 25% in principal
amount of the Debentures of that series at the time outstanding;

 

(4)   a decree or order by a court having
jurisdiction in the premises shall have been entered adjudging the Company as
bankrupt or insolvent, or approving as properly filed  a petition seeking liquidation or
reorganization of the Company under the Federal Bankruptcy Code or any other
similar applicable Federal or State law, and such decree or order shall have
continued unvacated and unstayed for a period of 90 days; or an involuntary
case shall be commenced under such Code in respect of the Company and shall
continue undismissed for a period of 90 days or an order for relief in such
case shall have been entered; or a decree or order of a court having
jurisdiction in the premises shall have been entered for the appointment on the
ground of insolvency or bankruptcy of a receiver or custodian or liquidator or
trustee or assignee in bankruptcy or insolvency of the Company or of its
property, or for the winding up or liquidation of its affairs, and such decree
or order shall have remained in force unvacated and unstayed for a period of 90
days; or

 

(5)   the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking liquidation or

 

28

 

reorganization
under the Federal Bankruptcy Code or any other similar applicable Federal or
State law, or shall consent to the filing of any such petition, or shall
consent to the appointment on the ground of insolvency or bankruptcy of a
receiver or custodian or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or shall make an assignment for the
benefit of creditors.

 

(b)           In each and every such case, unless
the principal of all the Debentures of that series shall have already become
due and payable, either the Trustee or the holders of not less than 25% in
aggregate principal amount of the Debentures of that series then outstanding
hereunder, by notice in writing to the Company (and to the Trustee if given by
such Debentureholders), may declare the principal of all the Debentures of that
series to be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable, anything contained
in this Indenture or in the Debentures of that series or established with
respect to that series pursuant to Section 2.01 hereof to the contrary
notwithstanding.

 

(c)           Section 6.01(b), however, is subject
to the condition that if, at any time after the principal of the Debentures of
that series shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained
or entered as hereinafter provided, the Company shall pay or shall deposit with
the Trustee a sum sufficient to pay all matured installments of interest upon
all the Debentures of that series and the principal of (and premium, if any,
on) any and all Debentures of that series which shall have become due otherwise
than by acceleration (with interest upon such principal and premium, if any,
and, to the extent that such payment is enforceable under applicable law, upon
overdue installments of interest, at the rate per annum expressed in the
Debentures of that series to the date of such payment or deposit) and the
amount payable to the Trustee under Section 7.06, and any and all defaults
under the Indenture, other than the nonpayment of principal on Debentures of
that series which shall not have become due by their terms, shall have been
remedied or waived as provided in Section 6.06 then and in every such case the
holders of a majority in aggregate principal amount of the Debentures of that
series then outstanding (subject to, in the case of any series of Debentures
held as trust assets of a 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), by written notice
to the Company and to the Trustee, may rescind and annul such declaration and
its consequences with respect to that series of Debentures; but no such
rescission and annulment shall extend to or shall affect any subsequent
default, or shall impair any right consequent thereon.

 

(d)           In case the Trustee shall have
proceeded to enforce any right with respect to Debentures of that series under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other

 

29

 

reason or shall have been
determined adversely to the Trustee, then and in every such case the Company
and the Trustee shall be restored respectively to their former positions and
rights hereunder, and all rights, remedies and powers of the Company and the
Trustee shall continue as though no such proceedings had been taken.

 

(e)           If, prior to a Security Exchange with
respect to the Debentures of any series, a Default with respect to the
Debentures of such series shall have occurred, the Company expressly
acknowledges that under the circumstances set forth in the applicable
Declaration of Trust, any holder of Preferred Securities of the applicable AES
Trust may enforce directly against the Company the applicable Property
Trustee’s rights hereunder.  In
furtherance of the foregoing and for the avoidance of any doubt, the Company
acknowledges that, under the circumstances described in the applicable
Declaration of Trust, any such holder of Preferred Securities, in its own name,
in the name of the applicable AES Trust or in the name of the holders of the
Preferred Securities issued by such AES Trust, may institute or cause to be
instituted a proceeding, including, without limitation, any suit in equity, an
action at law or other judicial or administrative proceeding, to enforce the
applicable Property Trustee’s rights hereunder directly against the Company as
issuer of the applicable series of Debentures, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the
Company.

 

SECTION 6.02.  Covenant of Company to Pay
to Trustee Whole Amount Due on Debentures on Default in Payment of Interest or
Principal (and Premiums, if any). 
(a)  The Company covenants that
(1) in case default shall be made in the payment of any installment of interest
on any of the Debentures of a series, or any payment required by any sinking or
analogous fund established with respect to that series as and when the same
shall have become due and payable, and such default shall have continued for a
period of 10 business days, or (2) in case default shall be made in the payment
of the principal of (or premium, if any, on) any of the Debentures of a series
when the same shall have become due and payable, whether upon maturity of the
Debentures of a series or upon redemption or upon declaration or otherwise,
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Debentures of that series, the whole amount that
then shall have become due and payable on all such Debentures for principal
(and premium, if any) or interest, or both, as the case may be, with interest
upon the overdue principal (and premium, if any) and (to the extent that
payment of such interest is enforceable under applicable law and without
duplication of any other amounts paid by the Company or the applicable AES
Trust in respect thereof) upon overdue installments of interest at the rate per
annum expressed in the Debentures of that series; and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, and the amount payable to the Trustee under Section 7.06.

 

(b)           In case the Company shall fail
forthwith to pay such amounts upon such demand, the Trustee, in its own name
and as trustee of an express trust, shall be entitled and empowered to
institute any action or proceedings at law or in equity for the collection

 

30

 

of the sums so due and unpaid,
and may prosecute any such action or proceeding to judgment or final decree,
and may enforce any such judgment or final decree against the Company or other
obligor upon the Debentures of that series and collect in the manner provided
by law out of the property of the Company or other obligor upon the Debentures
of that series wherever situated the moneys adjudged or decreed to be payable.

 

(c)           In case of any receivership,
insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement,
composition or other judicial proceedings affecting the Company, any other
obligor on such Debentures, or the creditors or property of either, the Trustee
shall have the power to intervene in such proceedings and take any action
therein that may be permitted by the court and shall (except as may be
otherwise provided by law) be entitled to file such proofs of claim and other
papers and documents as may be necessary or advisable in order to have the
claims of the Trustee and of the holders of Debentures of such series allowed
for the entire amount due and payable by the Company or such other obligor
under the Indenture at the date of institution of such proceedings and for any
additional amount which may become due and payable by the Company or such other
obligor after such date, and to collect and receive any moneys or other
property payable or deliverable on any such claim, and to distribute the same
after the deduction of the amount payable to the Trustee under Section 7.06;
and any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the holders of Debentures of such series to make such
payments to the Trustee, and, in the event that the Trustee shall consent to
the making of such payments directly to such Debentureholders, to pay to the
Trustee any amount due it under Section 7.06.

 

(d)           All rights of action and of asserting
claims under this Indenture, or under any of the terms established with respect
to Debentures of that series, may be enforced by the Trustee without the
possession of any of such Debentures, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for payment to the Trustee
of any amounts due under Section 7.06, be for the ratable benefit of the
holders of the Debentures of such series.

 

In case of an
Event of Default hereunder, the Trustee may in its discretion proceed to
protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant
or agreement contained in the Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.

 

Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Debentureholder any plan of reorganization,
arrangement, adjustment or composition affecting the Debentures of that

 

31

 

series or the rights of any
holder thereof or to authorize the Trustee to vote in respect of the claim of
any Debentureholder in any such proceeding.

 

SECTION
6.03.  Application
of Moneys Collected by Trustee. 
Any moneys collected by the Trustee pursuant to Section 6.02 with
respect to a particular series of Debentures shall be applied in the order
following, at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal (or premium, if any) or
interest, upon presentation of the several Debentures of that series, and
stamping thereon the payment, if only partially paid, and upon surrender
thereof if fully paid:

 

FIRST:  To the payment of costs and expenses of
collection and of all amounts payable to the Trustee under Section 7.06; and

 

SECOND:  To the payment of the amounts then due and
unpaid upon Debentures of such series for principal (and premium, if any) and
interest, in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to
the amounts due and payable on such Debentures for principal (and premium, if
any) and interest, respectively.

 

SECTION 6.04.  Limitation on Suits by
Holders of Debentures.  No
holder of any Debenture of any series shall have any right by virtue or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof with
respect to Debentures of such series specifying such Event of Default, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Debentures of such series then outstanding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee for
60 days after its receipt of such notice, request and offer of indemnity, shall
have failed to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by the taker and holder
of every Debenture of such series with every other such taker and holder and
Trustee, that no one or more holders of Debentures of such series shall have
any right in any manner whatsoever by virtue or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of the holders of any
other of such Debentures, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Debentures of such series.  For the protection and enforcement of the
provisions of this 

 

32

 

Section, each and every
Debentureholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.

 

Notwithstanding
any other provisions of this Indenture, however, the right of any holder of any
Debenture to receive payment of the principal of (and premium, if any) and
interest on such Debenture, as therein provided, on or after the respective due
dates expressed in such Debenture (or in the case of redemption, on the
redemption date), or to institute suit for the enforcement of any such payment
on or after such respective dates or redemption date, shall not be impaired or
affected without the consent of such holder.

 

SECTION 6.05.  Remedies Cumulative; Delay
or Omission in Exercise of Rights Not Waiver of Default.  (a) 
All powers and remedies given by this Article to the Trustee or to the
Debentureholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any others thereof or of any other powers and remedies
available to the Trustee or the holders of the debentures, by judicial
proceedings or otherwise, to enforce performance or observance of the covenants
and agreements contained in this Indenture or otherwise established with
respect to such Debentures.

 

(b)           No delay or omission of the Trustee
or of any holder of any of the Debentures to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any
such default or an acquiescence therein; and, subject to the provisions of
Section 6.04, every power and remedy given by this Article or by law to the
Trustee or to the Debentureholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Debentureholders.

 

SECTION 6.06.  Rights of Holders of
Majority in Principal Amount of Debentures to Direct Trustee and to Waive
Defaults.  The holders of a
majority in aggregate principal amount of the Debentures of any series at the
time outstanding, determined in accordance with Section 8.04 (with, in the case
of any series of Debentures held as trust assets of a 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),
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to such series; provided, however,
that such direction shall not be in conflict with any rule of law or with this
Indenture or unduly prejudicial to the rights of holders of Debentures of any
other series at the time outstanding determined in accordance with Section 8.04
not parties thereto.  Subject to the
provisions of Section 7.01, the Trustee shall have the right to decline to
follow any such direction if the Trustee in good faith shall, by a Responsible
Officer or Officers of the Trustee, determine that the proceeding so directed
would involve the Trustee in personal liability.  The holders of a majority in aggregate
principal amount of the Debentures of any series at the time outstanding
affected thereby, determined in accordance with section 8.04 (with, in the case
of any

 

33

 

series of Debentures held as
trust assets of a 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), may on behalf of the holders of all of
the Debentures of such series waive any past default in the performance of any
of the covenants contained herein or established pursuant to section 2.01 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
that series as and when the same shall become due by the terms of such Debentures
otherwise than by acceleration (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal and any
premium has been deposited with the Trustee (in accordance with Section
6.01(c)) or a call for redemption of Debentures of that series.  Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of this Indenture and the
Company, the Trustee and the holders of the Debentures of such series shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.

 

SECTION 6.07.  Trustee to Give Notice of
Defaults Known To It, But May Withhold in Certain Circumstances.  The Trustee shall, within 90 days after the
occurrence of a default with respect to a particular series, transmit by mail,
first class postage prepaid, to the holders of Debentures of that series, as
their names and addresses appear upon the Debenture Register, notice of all
defaults with respect to that series known to the Trustee, unless such defaults
shall have been cured before the giving of such notice (the term “defaults” for
the purposes of this Section being hereby defined to be the events specified in
subsections (1), (2), (3), (4) and (5) of Section 6.01(a), not including any
periods of grace provided for therein and irrespective of the giving of notice
provided for by subsection (3) of Section 6.01(a)); provided, that, except in the
case of default in the payment of the principal of (or premium, if any) or
interest on any of the Debentures of that series or in the payment of any
sinking fund installment established with respect to that series, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers, of the Trustee in good faith determine that the
withholding of such notice is in the interests of the holders of Debentures of
that series; provided further, that in the case of any default of the character
specified in Section 6.01(a)(3) with respect to Debentures of such series no
such notice to the holders of the Debentures of that series shall be given until
at least 30 days after the occurrence thereof.

 

The Trustee
shall not be deemed to have knowledge of any default, except (i) a default
under subsection (a)(1) or (a)(2) of Section 6.01 as long as the Trustee is
acting as paying agent for such series of Debentures or (ii) any default as to
which the Trustee shall have received written notice or a Responsible Officer
charged with the administration of this Indenture shall have obtained written
notice.

 

34

 

SECTION
6.08.  Requirements
of an Undertaking to Pay Costs in Certain Suits Under Indenture or Against
Trustee.  All parties to this
Indenture agree, and each holder of any Debentures by his or her acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted
by it as Trustee, the filing by any party litigant in such suit of an undertaking
to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Debentureholder, or group of Debentureholders, holding more
than 10% in aggregate principal amount of the outstanding Debentures of any
series, or to any suit instituted by any Debentureholder for the enforcement of
the payment of the principal of (or premium, if any) or interest on any
Debenture of such series, on or after the respective due dates expressed in
such Debenture or established pursuant to this Indenture.

 

ARTICLE 7

 

CONCERNING THE TRUSTEE

 

SECTION
7.01.  Upon Event
of Default Occurring and Continuing, Trustee Shall Exercise Powers Vested In
It, and Use Same Degree of Care and Skill In Their Exercise, as Prudent
Individual Would Use. 
(a)  The Trustee, prior to the
occurrence of an Event of Default with respect to Debentures of a series and
after the curing of all Events of Default with respect to Debentures of that
series which may have occurred, shall undertake to perform with respect to
Debentures of such series such duties and only such duties as are specifically
set forth in this Indenture, and no implied covenants shall be read into this
Indenture against the Trustee.  In case
an Event of Default with respect to Debentures of a series has occurred (which
has not been cured or waived), the Trustee shall exercise with respect to
Debentures of that series such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.

 

(b)           No provision of this Indenture shall
be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

 

(1)           prior to the
occurrence of an Event of Default with respect to Debentures of a series and
after the curing or waiving of all such Events of Default with respect to that
series which may have occurred:

 

35

 

(i)  the duties and obligations of the Trustee
shall with respect to Debentures of such series be determined solely by the
express provisions of this Indenture, and the Trustee shall not be liable with
respect to Debentures of such series except for the performance of such duties
and obligations as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and

 

(ii)  in the absence of bad faith on the part of
the Trustee, the Trustee may with respect to Debentures of such series
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein;

 

(2)           the Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;

 

(3)           the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the holders of not less than a majority in
principal amount of the Debentures of any series at the time outstanding
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee under this Indenture with respect to the Debentures of that
series; and

 

(4)           none of the provisions contained in
this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or liability
is not reasonably assured to it 

 

36

 

under the
terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it.

 

(5)           Whether or not therein expressly so
provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Article 7.

 

SECTION
7.02.  Subject to
Provisions of Section 7.01. 
Except as otherwise provided in Section 7.01:

 

(a)           The Trustee may rely
and shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, security or other paper or document believed by it to
the genuine and to have been signed or presented by the proper party or
parties;

 

(b)           Any request,
direction, order or demand of the Company mentioned herein shall be
sufficiently evidenced by a Board Resolution or an instrument signed in the
name of the Company by the President or any Vice President and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer (unless
other evidence in respect thereof is specifically prescribed herein);

 

(c)           The Trustee may
consult with counsel of its selection and the written advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted hereunder in good faith
and in reliance thereon;

 

(d)           The Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by
this Indenture at the request, order or direction of any of the
Debentureholders, pursuant to the provisions of this Indenture, unless such
Debentureholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing herein contained shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default with respect to a
series of the Debentures (which has not been cured or waived) to exercise with
respect to Debentures of that series such of the rights and powers vested in it
by this Indenture, and to use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;

 

(e)           The Trustee shall
not be liable for any action taken or omitted to be taken by it in good faith
and believed by it to be authorized

 

37

 

or within the
discretion or rights or powers conferred upon it by this Indenture;

 

(f)            The Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, security, or other papers or
documents, unless requested in writing so to do by the holders of not less than
a majority in principal amount of the outstanding Debentures of the particular
series affected thereby (determined as provided in Section 8.04); provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding. 
The reasonable expense of every such examination shall be paid by the
Company or, if paid by the Trustee, shall be repaid by the Company upon demand;
and

 

(g)           The Trustee may
execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys and the Trustee shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.

 

SECTION 7.03.  Trustee Not Liable for Recitals
In Indenture Or In Debentures. 
(a)  The recitals contained herein
and in the Debentures (other than the Certificate of Authentication on the
Debentures) shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for the correctness of the same.

 

(b)           The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Debentures.

 

(c)           The Trustee shall not be accountable
for the use or application by the Company of any of the Debentures or of the
proceeds of such Debentures, or for the use or application of any moneys paid
over by the Trustee in accordance with any provision of this Indenture or
established pursuant to Section 2.01, or for the use or application of any
moneys received by any paying agent other than the Trustee.

 

SECTION
7.04.  Trustee,
Paying Agent or Debenture Registrar May Own Debentures.  The Trustee or any paying agent or Debenture
Registrar, in its individual or any other capacity, may become the owner or
pledgee of Debentures with the same rights it would have if it were not
Trustee, paying agent or Debenture Registrar.

 

38

 

SECTION
7.05.  Moneys
Received by Trustee to Be Held In Trust Without Interest.  Subject to the provisions of Section 11.04,
all moneys received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated from other funds except to the extent required by
law.  The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.

 

SECTION
7.06.  Trustee
Entitled to Compensation, Reimbursement and Indemnity.  (a) 
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such reasonable compensation as the
Company and the Trustee shall from time to time agree in writing (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution
of the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. 
The Company also covenants to indemnify the Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any
loss, liability or expense including taxes (other than taxes based upon,
measured by or determined by the income of the Trustee) incurred without
negligence or bad faith on the part of the Trustee and arising out of or in
connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim of liability in the
premises.

 

(b)           The obligations of the Company under
this Section to compensate and indemnify the Trustee and to pay or reimburse
the Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder.  Such
additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the holders of particular
Debentures.

 

SECTION
7.07.  Right of
Trustee to Rely on Certificate of Officers of Company Where No Other Evidence
Specifically Prescribed. 
Except as otherwise provided in Section 7.01, whenever in the
administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting to take any action hereunder, such matter (unless
other evidence in respect thereof be herein specifically prescribed) may, in
the absence of negligence or bad faith on the part of the Trustee, be deemed to
be conclusively proved and established by an Officers’ Certificate delivered to
the Trustee and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken, suffered or omitted to be taken by it under the provisions of this
Indenture upon the faith thereof.

 

39

 

SECTION 7.08.  Trustee
Acquiring Conflicting Interest to Eliminate Conflict or Resign.  (a)  If the Trustee has or shall acquire
any conflicting interest, as defined in this Section, with respect to the
Debentures of any series and if the Default to which such conflicting interest
relates has not been cured, duly waived or otherwise eliminated, within 90 days
after ascertaining that it has such conflicting interest, it shall either
eliminate such conflicting interest, except as otherwise provided herein, or
resign with respect to the Debentures of that series in the manner and with the
effect specified in Section 7.10 and the Company shall promptly appoint a
successor Trustee in the manner provided herein.

 

(b)  In the event that
the Trustee shall fail to comply with the provisions of subsection (a) of
this Section, with respect to the Debentures of any series the Trustee shall,
within ten days after the expiration of such 90-day period, transmit notice of
such failure by mail, first class postage prepaid, to the Debentureholders of
that series as their names and addresses appear upon the registration books.

 

(c)  For the purposes
of this Section the Trustee shall be deemed to have a conflicting interest
with respect to the Debentures of any series if a Default has occurred and is
continuing and:

 

(1)  the Trustee is
trustee under this Indenture with respect to the outstanding Debentures of any
series other than that series, or is trustee under another indenture under
which any other securities, or certificates of interest or participation in any
other securities, of the Company are outstanding, unless such other indenture
is a collateral trust indenture under which the only collateral consists of
Debentures issued under this Indenture; provided that there shall be excluded
from the operation of this paragraph the Debentures of any series other than
that series and any other indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the
Company are outstanding if (i) this Indenture and such other indenture or
indentures and all series of securities issuable thereunder are wholly
unsecured and rank equally and such other indenture or indentures (and such
series) are hereafter qualified under the Trust Indenture Act, unless the
Commission shall have found and declared by order pursuant to subsection
(b) of Section 305 or subsection (c) of Section 307 of the
Trust Indenture Act, that differences exist between (A) the provisions of
this Indenture with respect to Debentures of that series and with respect to
one or more other series or (B) the provisions of this Indenture and the
provisions of such other indenture or indentures (or such series), which are so
likely to involve a material conflict of interest as to make it necessary in
the public interest or for the protection of investors to disqualify the
Trustee from acting as such under this Indenture with respect to the Debentures
of that series and such other series or such other indenture or indentures, or
(ii) the Company

 

40

 

shall have sustained the
burden of proving, on application to the Commission and after opportunity for
hearing thereon, that the trusteeship under this Indenture with respect to Debentures
of that series and such other series or such other indenture or indentures is
not so likely to involve a material conflict of interest as to make it
necessary in the public interest or for the protection of investors to
disqualify the Trustee from acting as such under this Indenture with respect to
Debentures of that series and such other series or under such other indentures;

 

(2)  the Trustee or any
of its directors or executive officers is an underwriter for the Company;

 

(3)  the Trustee directly
or indirectly controls or is directly or indirectly controlled by or is under
direct or indirect common control with or an underwriter for the Company;

 

(4)  the Trustee or any
of its directors or executive officers is a director, officer, partner, employee,
appointee or representative of the Company, or of an underwriter (other than
the Trustee itself) for the Company who is currently engaged in the business of
underwriting, except that (A) one individual may be a director and/or an
executive officer of the Trustee and a director and/or an executive officer of
the Company, but may not be at the same time an executive officer of both the
Trustee and the Company; (B) if and so long as the number of directors of
the Trustee in office is more than nine, one additional individual may be a
director and/or an executive officer of the Trustee and a director of the
Company; and (C) the Trustee may be designated by the Company or by an
underwriter for the Company to act in the capacity of transfer agent, registrar,
custodian, paying agent, fiscal agent, escrow agent, or depository, or in any
other similar capacity, or, subject to the provisions of paragraph (1) of
this subsection (c), to act as trustee whether under an indenture or otherwise;

 

(5)  10% or more of the
voting securities of the Trustee is beneficially owned either by the Company or
by any director, partner, or executive officer thereof, or 20% or more of such
voting securities is beneficially owned, collectively, by any two or more of
such persons; or 10% or more of the voting securities of the Trustee is
beneficially owned either by an underwriter for the Company or by any director,
partner, or executive officer thereof, or is beneficially owned, collectively
by any two or more such persons;

 

(6)  the Trustee is the
beneficial owner of, or holds as collateral security for an obligation which is
in default (as hereinafter in this subsection (c) defined), (A) 5% or
more of the voting securities, or 10% or more of any

 

41

 

other class of security, of
the Company, not including the Debentures issued under this Indenture and
securities issued under any other indenture under which the Trustee is also
trustee, or (B) 10% or more of any class of security of an underwriter for
the Company;

 

(7)  the Trustee is the
beneficial owner of, or holds as collateral security for an obligation which is
in default (as hereinafter in this subsection (c) defined), 5% or more of
the voting securities of any person who, to the knowledge of the Trustee, owns
10% or more of the voting securities of, or controls directly or indirectly or
is under direct or indirect common control with, the Company;

 

(8)  the Trustee is the
beneficial owner of, or holds as collateral security for an obligation which is
in default (as hereinafter in this subsection (c) defined), 10% or more of
any class of security of any person who, to the knowledge of the Trustee, owns
50% or more of the voting securities of the Company;

 

(9)  the Trustee owns,
on the date of Default upon the Debentures of any series or any anniversary of
such Default while such Default upon the Debentures issued under this Indenture
remains outstanding, in the capacity of executor, administrator, testamentary
or inter vivos trustee, guardian, committee or conservator, or in any other
similar capacity, an aggregate of 25% or more of the voting securities, or of
any class of security, of any person, the beneficial ownership of a specified
percentage of which would have constituted a conflict of interest under
paragraph (6), (7), or (8) of this subsection (c).  As to any such securities of which the
Trustee acquired ownership through becoming executor, administrator or
testamentary trustee of an estate which includes them, the provisions of the
preceding sentence shall not apply, for a period of two years from the date of
such acquisition, to the extent that such securities in such estate do not
exceed 25% of such voting securities or 25% of any such class of security.  Promptly after the dates of any such Default
upon the Debentures issued under this Indenture and annually in each succeeding
year that the Debentures issued under this Indenture remain in Default, the
Trustee shall make a check of its holding of such securities in any of the above-mentioned
capacities as of such dates.  If the
Company fails to make payment in full of principal of or interest on any of the
Debentures when and as the same becomes due and payable, and such failure
continues for 30 days thereafter, the Trustee shall make a prompt check of its
holding of such securities in any of the above-mentioned capacities as of the
date  of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing provisions of this
paragraph (9), all such securities so held by the Trustee, with sole or joint
control over such securities vested in it,

 

42

 

shall, but only so long as
such failure shall continue, be considered as though beneficially owned by the
Trustee for the purposes of paragraphs (6), (7) and (8) of this
subsection (c); or

 

(10)  except under the
circumstances described in paragraph (1), (3), (4), (5) or (6) of
subsection (b) of Section 7.13 the Trustee shall be or shall become a
creditor of the Company.

 

For purposes of paragraph
(1) of this subsection (c), and of Section 6.06, the term “series of
securities” or “securities” means a series, class or group of securities
issuable under an indenture pursuant to whose terms holders of one such series
may vote to direct the indenture trustee, or otherwise take action pursuant to
a vote of such holders, separately from holders of another such series;
provided, that, “series of securities” or “series” shall not include any series
of securities issuable under an indenture if all such series rank equally and
are wholly secured.

 

The specification of
percentages in paragraphs (5) to (9), inclusive, of this subsection
(c) shall not be construed as indicating that the ownership of such
percentages of securities of a person is or is not necessary or sufficient to
constitute direct or indirect control for the purposes of paragraph (3) or
(7) of this subsection (c).

 

For the purposes of
paragraphs (6), (7), (8) and (9) of this subsection (c) only,
(A) the terms “security” and “securities” shall include only such
securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (B) an obligation shall be
deemed to be in “default”, when a default in payment of principal shall have
continued for 30 days or more and shall not have been cured; and (C) the
Trustee shall not be deemed to be the owner or holder of (i) any security
which it holds as collateral security (as trustee or otherwise) for any
obligation which is not in default as defined in clause (B) above, or
(ii) any security which it holds as collateral security under this
Indenture, irrespective of any Default hereunder, or (iii) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.

 

Except as above provided,
the word “security” or securities” as used in this Indenture shall mean any
note, stock, treasury stock, bond, debenture, evidence of indebtedness,
certificate of interest or participation in any profit-sharing agreement,
collateral trust certificate, pre-organization certificate or subscription,
transferable share, investment contract, voting trust certificate, certificate
of deposit for a security, fractional undivided interest in oil, gas, or other
mineral rights, or, in general, any interest or instrument commonly known as a
“security”, or any certificate of interest or participation 

 

43

 

in, temporary or interim
certificate for, receipt for, guarantee of, or warrant or right to subscribe to
or purchase, any of the foregoing.

 

(d)  For the purposes
of this Section:

 

(1)  The term
“underwriter” when used with reference to the Company shall mean every person,
who, within one year prior to the time as of which the determination is made,
has purchased from the Company with a view to, or has offered or sold for the
Company in connection with, the distribution of any security of the Company, or
has participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct or
indirect underwriting of any such undertaking, but such term shall not include
a person whose interest was limited to a commission from an underwriter or
dealer not in excess of the usual and customary distributors’ or sellers’
commission.

 

(2)  The term
“director” shall mean any member of the board of directors of a corporation or
any individual performing similar functions with respect to any organization
whether incorporated or unincorporated.

 

(3)  The term “person”
shall mean an individual, a corporation, a partnership, an association, a
joint-stock company, a trust, an unincorporated organization or a government or
political subdivision thereof.  As used
in this paragraph, the term “trust” shall include only a trust where the
interest or interests of the beneficiary or beneficiaries are evidenced by a
security.

 

(4)  The term “voting
security” shall mean any security presently entitling the owner or holder
thereof to vote in the direction or management of the affairs of a person, or
any security issued under or pursuant to any trust, agreement or arrangement
whereby a trustee or trustees or agent or agents for the owner or holder of
such security are presently entitled to vote in the direction or management of
the affairs of a person.

 

(5)  The term “Company”
shall mean any obligor upon the Debentures.

 

(6)  The term
“executive officer” shall mean the chairman of the board of directors,
president, every vice president, every assistant vice president, every trust
officer, the cashier, the secretary, and the treasurer of a corporation, and
any individual customarily performing similar functions with respect to any
organization whether incorporated or unincorporated.

 

(e)  The percentages of
voting securities and other securities specified in this Section shall be
calculated in accordance with the following provisions:

 

44

 

(1)  A specified
percentage of the voting securities of the Trustee, the Company or any other
person referred to in this Section (each of whom is referred to as a
“person” in this paragraph) means such amount of the outstanding voting
securities of such person as entitles the holder or holders thereof to cast such
specified percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in the
direction or management of the affairs of such person.

 

(2)  A specified
percentage of a class of securities of a person means such percentage of the
aggregate amount of securities of the class outstanding.

 

(3)  The term “amount”,
when used in regard to securities, means the principal amount if relating to
evidences of indebtedness, the number of shares if relating to capital shares
and the number of units if relating to any other kind of security.

 

(4)  The term
“outstanding” means issued and not held by or for the account of the
issuer.  The following securities shall
not be deemed outstanding within the meaning of this definition:

 

(i)  securities of an
issuer held in a sinking fund relating to securities of the issuer of the same
class;

 

(ii)  securities of an
issuer held in a sinking fund relating to another class of securities of the
issuer, if the obligation evidenced by such other class of securities is not in
default as to principal or interest or otherwise;

 

(iii)  securities
pledged by the issuer thereof as security for an obligation of the issuer not
in default as to principal or interest or otherwise; and

 

(iv)  securities held
in escrow if placed in escrow by the issuer thereof, provided, however, that
any voting securities of an issuer shall be deemed outstanding if any person
other than the issuer is entitled to exercise the voting rights thereof.

 

(5)  A security shall
be deemed to be of the same class as another security if both securities confer
upon the holder or holders thereof substantially the same rights and
privileges; provided, however, that, in the case of secured evidences of
indebtedness, all of which are issued under a single indenture, differences in
the interest rates or maturity dates of various series thereof shall not be
deemed sufficient to constitute such series different classes; and provided,
further, that, in the case of unsecured

 

45

 

evidences of indebtedness,
differences in the interest rates or maturity dates thereof shall not be deemed
sufficient to constitute them securities of different classes, whether or not
they are issued under a single indenture.

 

(f)  Except in the case
of a default in the payment of the principal of (or premium, if any) or
interest on any Debentures issued under this Indenture, or in the payment of
any sinking or analogous fund installment, the Trustee shall not be required to
resign as provided by this Section 7.08 if such Trustee shall have
sustained the burden of proving, on application to the Commission and after
opportunity for hearing thereon, that (i) the default under the Indenture
may be cured or waived during a reasonable period and under the procedures
described in such application and (ii) a stay of the Trustee’s duty to
resign will not be inconsistent with the interests of Debentureholders.  The filing of such an application shall
automatically stay the performance of the duty to resign until the Commission
orders otherwise.

 

Any resignation of the
Trustee shall become effective only upon the appointment of a successor trustee
and such successor’s acceptance of such an appointment.

 

SECTION 7.09.  Requirements
for Eligibility of Trustee. 
There shall at all times be a Trustee with respect to the Debentures
issued hereunder which shall at all times be a corporation organized and doing
business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or other
person permitted to act as trustee by the Commission, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least 50 million dollars, and subject to supervision or examination by
Federal, State, Territorial, or District of Columbia authority.  If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published.  The Company
may not, nor may any person directly or indirectly controlling, controlled by,
or under common control with the Company, serve as Trustee.  In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 7.10.

 

SECTION 7.10.  Resignation
of Trustee and Appointment of Successor.  (a)  The Trustee or any successor
hereafter appointed, may at any time resign with respect to the Debentures of
one or more series by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage prepaid, to the
Debentureholders of such series, as their names and addresses appear upon the
Debenture Register.  Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee
with respect to Debentures of such series by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor
trustee.  If no

 

46

 

successor trustee shall have
been so appointed and have accepted appointment within 30 days after the mailing
of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee with respect
to Debentures of such series, or any Debentureholder of that series who has
been a bona fide holder of a Debenture or Debentures for at least six months
may, subject to the provisions of Section 6.08, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor trustee.  Such court may thereupon
after such notice, if any, as it may deem proper and prescribe, appoint a
successor trustee.

 

(b)  In case at any
time any of the following shall occur:

 

(1)  the Trustee shall
fail to comply with the provisions of subsection (a) of Section 7.08
after written request therefor by the Company or by any Debentureholder who has
been a bona fide holder of a Debenture or Debentures for at least six months;
or

 

(2)  the Trustee shall
cease to be eligible in accordance with the provisions of Section 7.09 and
shall fail to resign after written request therefor by the Company or by any
such Debentureholder; or

 

(3)  the Trustee shall
become incapable of acting, or shall be adjudged  bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,

 

then, in any such case, the
Company may remove the Trustee with respect to all Debentures and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.  If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the mailing of
such notice of removal, the Trustee so removed may petition any court of
competent jurisdiction for the appointment of a successor trustee with respect
to Debentures of such series, or any Debentureholder of that series who has
been a bona fide holder of a Debenture or Debentures for at least six months
may, subject to the provisions of Section 6.08, on behalf of himself and
all others similarly situated, petition any such court for the removal of the
Trustee and the appointment of a successor trustee.  Such court may thereupon after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.

 

(c)  The holders of a
majority in aggregate principal amount of the Debentures of any series at the
time outstanding may at any time remove the Trustee with respect to such series
and appoint a successor trustee.

 

47

 

(d)  Any resignation or
removal of the Trustee and appointment of a successor trustee with respect to
the Debentures of a series pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 7.11.

 

(e)  Any successor
trustee appointed pursuant to this Section may be appointed with respect
to the Debentures of one or more series or all of such series, and at any time
there shall be only one Trustee with respect to the Debentures of any
particular series.

 

SECTION 7.11.  Acceptance
by Successor to Trustee. 
(a)  In case of the appointment hereunder of a successor trustee
with respect to all Debentures, every such successor trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such successor
trustee all the rights, powers, and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such retiring Trustee hereunder.

 

(b)  In case of the
appointment hereunder of a successor trustee with respect to the Debentures of
one or more (but not all) series, the Company, the retiring Trustee and each
successor trustee with respect to the Debentures of one or more series shall
execute and deliver an indenture supplemental hereto wherein each successor
trustee shall accept such appointment and which shall (1) contain such
provisions as shall be necessary or desirable to transfer and confirm to, and
to vest in, each successor trustee all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Debentures of that or those series to
which the appointment of such successor trustee relates, (2) contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debentures of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust, that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee and that no Trustee shall be responsible for any act or failure to
act on the part of any other Trustee hereunder; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein, such
retiring Trustee shall with respect to the Debentures of that or those series
to which the appointment of such successor trustee relates have no further
responsibility for the exercise of rights and powers or for the performance of
the duties and obligations vested 

 

48

 

in the Trustee under this
Indenture, and each such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Debentures of that or those series
to which the appointment of such successor trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor trustee, to the extent contemplated by
such supplemental indenture, the property and money held by such retiring
Trustee hereunder with respect to the Debentures of that or those series to
which the appointment of such successor trustee relates.

 

(c)  Upon request of
any such successor trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor
trustee all such rights, power and trusts referred to in paragraph (a) or
(b) of this Section, as the case may be.

 

(d)  No successor trustee
shall accept its appointment unless at the time of such acceptance such
successor trustee shall be qualified and eligible under this Article.

 

(e)  Upon acceptance of
appointment by a successor trustee as provided in this Section, the Company
shall transmit notice of the succession of such trustee hereunder by mail,
first class postage prepaid, to the Debentureholders, as their names and
addresses appear upon the Debenture Register. 
If the Company fails to transmit such notice within ten days after acceptance
of appointment by the successor trustee, the successor trustee shall cause such
notice to be transmitted at the expense of the Company.

 

SECTION 7.12.  Successor
to Trustee by Merger, Consolidation or Succession to Business.  Any corporation into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be qualified under the provisions of
Section 7.08 and eligible under the provisions of Section 7.09,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary
notwithstanding.  In case any Debentures
shall have been authenticated, but not made available for delivery, by the
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and make available
for delivery the Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.

 

SECTION 7.13.  Limitations
on Rights of Trustee as a Creditor to Obtain Payment of Certain Claims Within
Four Months Prior to Default or During Default, or to Realize on Property as
such Creditor Thereafter. 
(a)  Subject to the provisions of subsection (b) of this
Section, if the Trustee shall be or shall become a creditor, directly or
indirectly,

 

49

 

secured or unsecured, of the
Company within three months prior to a default, as defined in subsection
(b) of this Section, or subsequent to such a default, then, unless and
until such default shall be cured, the Trustee shall set apart and hold in a
special account for the benefit of the Trustee individually, the holders of the
Debentures and the holders of other indenture securities (as defined in
subsection (c) of this Section):

 

(1)  an amount equal to
any and all reductions in the amount due and owing upon any claim as such
creditor in respect of principal or interest, effected after the beginning of
such three months’ period and valid as against the Company and its other
creditors, except any such reduction resulting from the receipt or disposition
of any property described in paragraph (2) of this subsection, or from the
exercise of any right of set-off which the Trustee could have exercised if a
petition in bankruptcy had been filed by or against the Company upon the date
of such default; and

 

(2)  all property
received by the Trustee in respect of any claim as such creditor, either as
security therefor, or in satisfaction or composition thereof, or otherwise,
after the beginning of such three months’ period, or an amount equal to the
proceeds of any such property, if disposed of, subject, however, to the rights,
if any, of the Company and its other creditors in such property or such
proceeds.

 

Nothing herein contained,
however, shall affect the right of the Trustee:

 

(A)  to retain for its
own account (i) payments made on account of any such claim by any person
(other than the Company) who is liable thereon, and (ii) the proceeds of
the bona fide sale of any such claim by the Trustee to a third person, and
(iii) distributions made in cash, securities, or other property in respect
of claims filed against the Company in bankruptcy or receivership or in a case
for reorganization pursuant to the Federal Bankruptcy Code or applicable State
law;

 

(B)  to realize, for
its own account, upon any property held by it as security for any such claim,
if such property was so held prior to the beginning of such three months’
period;

 

(C)  to realize, for
its own account, but only to the extent of the claim hereinafter mentioned,
upon any property held by it as security for any such claim, if such claim was
created after the beginning of such three months’ period and such property was
received as security therefor simultaneously with the creation thereof, and if
the Trustee shall sustain the burden of proving that at the time such property
was so received the Trustee had no reasonable cause to believe that a default,
as defined in subsection (c) of this Section, would occur within three
months; or

 

50

 

(D)  to receive payment
on any claim referred to in paragraph (B) or (C), against the release of
any property held as security for such claim as provided in such paragraph
(B) or (C), as the case may be, to the extent of the fair value of such
property.

 

For the purposes of
paragraphs (B), (C) and (D), property substituted after the beginning of
such three months’ period for property held as security at the time of such
substitution shall, to the extent of the fair value of the property released,
have the same status as the property released, and, to the extent that any
claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.

 

If the Trustee shall be
required to account, the funds and property held in such special account and
the proceeds thereof shall be apportioned between the Trustee, the
Debentureholders and the holders of other indenture securities in such manner
that the Trustee, the Debentureholders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in a case for reorganization pursuant to the Federal Bankruptcy
Code or applicable State law, the same percentage of their respective claims,
figured before crediting to the claim of the Trustee anything on account of the
receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee, the
Debentureholders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in a case for
reorganization pursuant to the Federal Bankruptcy Code or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account.  As used in this paragraph, with respect to
any claim, the term “dividends” shall include any distribution with respect to
such claim, in bankruptcy or receivership or in a case for reorganization
pursuant to the Federal Bankruptcy Code or applicable State law, whether such
distribution is made in cash, securities, or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim.  The court in which such
bankruptcy, receivership or a case for reorganization is pending shall have
jurisdiction (i) to apportion between the Trustee, the Debentureholders
and the holders of other indenture securities, in accordance with the
provisions of this paragraph, the funds and property held in such special
account and the proceeds thereof, or (ii) in lieu of such apportionment,
in whole or in part, to give to the provisions of this paragraph due
consideration in determining the fairness of the distributions to be made to
the Trustee, the Debentureholders and the holders of other indenture securities
with respect to their respective claims, in which event it shall not be
necessary to liquidate or to appraise the value of any securities or other
property held in such special account or as security for any such claim, or to
make a specific allocation of such distributions as between the

 

51

 

secured and unsecured
portions of such claims, or otherwise to apply the provisions of this paragraph
as a mathematical formula.

 

Any Trustee who has resigned
or been removed after the beginning of such three months’ period shall be
subject to the provisions of this subsection (a) as though such
resignation or removal had not occurred. 
If any Trustee has resigned or been removed prior to the beginning of
such three months’ period, it shall be subject to the provisions of this
subsection (a) if and only if the following conditions exist:

 

(i)  the receipt of
property or reduction of claim which would have given rise to the obligation to
account, if such Trustee had continued as trustee, occurred after the beginning
of such three months’ period; and

 

(ii)  such receipt of
property or reduction of claim occurred within three months after such
resignation or removal.

 

(b)  There shall be
excluded from the operation of subsection (a) of this Section a
creditor relationship arising from:

 

(1)  the ownership or
acquisition of securities issued under any indenture, or any security or
securities having a maturity of one year or more at the time of acquisition by
the Trustee;

 

(2)  advances
authorized by a receivership or bankruptcy court of competent jurisdiction, or
by this Indenture, for the purpose of preserving any property other than cash
which shall at any time be subject to the lien, if any, of this Indenture or of
discharging tax liens or other prior liens or encumbrances thereon, if notice
of such advance and of the circumstances surrounding the making thereof is
given to the Debentureholders at the time and in the manner provided in this
Indenture;

 

(3)  disbursements made
in the ordinary course of business in the capacity of trustee under an
indenture, transfer agent, registrar, custodian, paying agent, subscription
agent, fiscal agent or depositary, or other similar capacity;

 

(4)  an indebtedness
created as a result of services rendered or premises rented; or an indebtedness
created as a result of goods or securities sold in a cash transaction as
defined in subsection (c) of this Section;

 

(5)  the ownership of
stock or of other securities of a Company organized under the provisions of
Section 25(a) of the Federal Reserve Act, as amended, which is
directly or indirectly a creditor of the Company; or

 

52

 

(6)  the acquisition,
ownership, acceptance or negotiation of any drafts, bills of exchange,
acceptance or obligations which fall within the classification of
self-liquidating paper as defined in subsection (c) of this Section.

 

(c)  As used in this
Section:

 

(1)  The term “default”
shall mean any failure to make payment in full of the principal of (or premium,
if any) or interest upon any of the Debenture or upon the other indenture
securities when and as such principal (or premium, if any) or interest becomes
due and payable.

 

(2)  The term “other
indenture securities” shall mean securities upon which the Company is an
obligor (as defined in the Trust Indenture Act) outstanding under any other indenture
(A) under which the Trustee is also trustee, (B) which contains
provisions substantially similar to the provisions of subsection (a) of
this Section, and (C) under which a default exists at the time of the
apportionment of the funds and property held in said special account.

 

(3)  The term “cash
transaction” shall mean any transaction in which full payment for goods or
securities sold is made within seven days after delivery of the goods or
securities in currency or in checks or other orders drawn upon banks or bankers
and payable upon demand.

 

(4)  The term
“self-liquidating paper” shall mean any draft, bill of exchange, acceptance or
obligation which is made, drawn, negotiated or incurred by the Company for the
purpose of financing the purchase, processing, manufacture, shipment, storage
or sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon , the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the goods,
wares or merchandise previously constituting the security, provided the
security is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.

 

(5)  The term “Company”
shall mean any obligor upon any of the Debentures.

 

53

 

ARTICLE 8

 

CONCERNING THE DEBENTURES

 

SECTION 8.01.  Evidence
of Action by Debentureholders. 
Whenever in this Indenture it is provided that the holders of a majority
or specified percentage in aggregate principal amount of the Debentures of a
particular series may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action) the fact that at the time of taking any such action the holders of such
majority or specified percentage of that series have joined therein may be
evidenced by any instrument or any number of instruments of similar tenor
executed by such holders of Debentures of that series in person or by agent or
proxy appointed in writing.

 

If the Company shall solicit
from the Debentureholders of any series any request, demand, authorization,
direction, notice, consent, waiver or other action, the Company may, at its
option, as evidenced by an Officers’ Certificate, fix in advance a record date
for such series for the determination of Debentureholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so.  If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other action may
be given before or after the record date, but only the Debentureholders of
record at the close of business on the record date shall be deemed to be
Debentureholders for the purposes of determining whether Debentureholders of
the requisite proportion of outstanding Debentures of that series have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
outstanding Debentures of that series shall be computed as of the record date;
provided that no such authorization, agreement or consent by such
Debentureholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.

 

SECTION 8.02.  Proof of
Execution of Instruments and of Holding of Debentures .  Subject to the provisions of
Section 7.01, proof of the execution of any instrument by a
Debentureholder (such proof will not require notarization) or his agent or
proxy and proof of the holding by any person of any of the Debentures shall be
sufficient if made in the following manner;

 

(a)  The fact and date
of the execution by any such person of any instrument may be proved in any
reasonable manner acceptable to the Trustee.

 

(b)  The ownership of
Debentures shall be proved by the Debenture Register of such Debentures or by a
certificate of the Debenture Registrar thereof.

 

(c)  The Trustee may
require such additional proof of any matter referred to in this Section as
it shall deem necessary.

 

54

 

SECTION 8.03.  Who
May Be Deemed Owners of Debentures.  Prior to the due presentment for registration
of transfer of any Debenture, the Company, the Trustee, any paying agent and
any Debenture Registrar may deem and treat the person in whose name such
Debenture shall be registered upon the books of the Company as the absolute
owner of such Debenture (whether or not such Debenture shall be overdue and
notwithstanding any notice of ownership or writing thereon made by anyone other
than the Debenture Registrar) for the purpose of receiving payment of or on
account of the principal of, premium, if any, and (subject to
Section 2.03) interest on such Debenture 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.

 

SECTION 8.04.  Debentures
Owned by a Company or Controlled or Controlling Companies Disregarded for
Certain Purposes.  In
determining whether the holders of the requisite aggregate principal amount of
Debentures of a particular series have concurred in any direction, consent or
waiver under this Indenture, Debentures of that series which are owned by the
Company or any other obligor on the Debentures of that series or by any
Subsidiary of the Company or of such other obligor on the Debentures of that
series shall be disregarded and deemed not to be outstanding for the purpose of
any such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver,
only Debentures of such series which the Trustee actually knows are so owned
shall be so disregarded.  Debentures so
owned which have been pledged in good faith may be regarded as outstanding for
the purposes of this Section, if the pledgee shall establish to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Debentures and that the pledgee is not a person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any such other obligor. 
In case of a dispute as to such right, any decision by the Trustee taken
upon the advice of counsel shall be full protection to the Trustee.

 

SECTION 8.05.  Instruments
Executed by Debentureholders Bind Future Holders .  At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 8.01, of the taking of
any action by the holders of the majority or percentage in aggregate principal
amount of the Debentures of a particular series specified in this Indenture in
connection with such action, any holder of a Debenture of that series which is
shown by the evidence to be included in the Debentures the holders of which
have consented to such action may, by filing written notice with the Trustee,
and upon proof of holding as provided in Section 8.02, revoke such action
so far as concerns such Debenture. 
Except as aforesaid any such action taken by the holder of any Debenture
shall be conclusive and binding upon such holder and upon all future holders
and owners of such Debenture, and of any Debenture issued in exchange therefor,
on registration of transfer thereof or in place thereof, irrespective of
whether or not any notation in regard thereto is made upon such Debenture.  Any action taken by the holders of the
majority or percentage in aggregate principal amount of the Debentures of a
particular series specified in this 

 

55

 

Indenture in connection with
such action shall be conclusively binding upon the Company, the Trustee and the
holders of all the Debentures of that series.

 

ARTICLE 9

 

SUPPLEMENTAL INDENTURES

 

SECTION 9.01.  Purposes
for Which Supplemental Indenture May Be Entered Into Without Consent of
Debentureholders.  In addition
to any supplemental indenture otherwise authorized by this Indenture, the
Company, when authorized by a Board Resolution, and the Trustee may from time
to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as
then in effect), without the consent of the Debentureholders, for one or more
of the following purposes:

 

(a)  to evidence the
succession of another corporation to the Company, and the assumption by any
such successor of the covenants of the Company contained herein or otherwise
established with respect to the Debentures; or

 

(b)  to add to the
covenants of the Company such further covenants, restrictions, conditions or
provisions for the protection of the holders of the Debentures of all or any
series as the Board of Directors and the Trustee shall consider to be for the
protection of the holders of Debentures of all or any series, and to make the
occurrence, or the occurrence and continuance, of a default in any of such
additional covenants, restrictions, conditions or provisions a default or an
Event of Default with respect to such series permitting the enforcement of all
or any of the several remedies provided in this Indenture as herein set forth;
provided, however, that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture may provide for
a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of the holders of a
majority in aggregate principal amount of the Debentures of such series to
waive such default; or

 

(c)  to cure any
ambiguity or to correct or supplement any provision contained herein or in any
supplemental indenture which may be defective or inconsistent with any other
provision contained herein or in any supplemental indenture, or to make such
other provisions in regard to matters or questions arising under this Indenture
as shall not be

 

56

 

inconsistent with the
provisions of this Indenture and shall not adversely affect the interests of
the holders of the Debentures of any series; or

 

(d)  to change or
eliminate any of the provisions of this Indenture, provided that any such
change or elimination shall become effective only when there is no Debenture
outstanding of any series created prior to the execution of such supplemental
indenture which is entitled to the benefit of such provision.

 

The Trustee is hereby
authorized to join with the Company in the execution of any such supplemental
indenture, and to make any further appropriate agreements and stipulations
which may be therein contained, but the Trustee shall not be obligated to enter
into any such supplemental indenture which affects the Trustee’s own rights,
duties or immunities under this Indenture or otherwise.

 

Any supplemental indenture
authorized by the provisions of this Section may be executed by the
Company and the Trustee without the consent of the holders of any of the
Debentures at the time outstanding, notwithstanding any of the provisions of
Section 9.02.

 

SECTION 9.02.  Modification
of Indenture with Consent of Debentureholders .  With the consent (evidenced as provided in
Section 8.01) of the holders of not less than a majority in aggregate
principal amount of the Debentures of each series affected by such supplemental
indenture or indentures at the time outstanding (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), the Company, when
authorized by a Board Resolution, and the Trustee may from time to time and at
any time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in effect) for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debentures of such
series under this Indenture; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of any Debentures of any
series, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, without the consent of the holder of each Debenture so
affected or (ii) reduce the aforesaid percentage of Debentures, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Debenture (and, in the case of any
series of Debentures held as trust assets of an AES Trust and with respect to
which a Security Exchange has not theretofore occurred, such consent of the
holders of the Preferred Securities and the Common Securities of such AES Trust
as may be required under the Declaration of Trust of such AES Trust) then
outstanding and affected thereby.

 

57

 

Upon the request of the
Company, accompanied by a Board Resolution authorizing the execution of any
such supplemental indenture, and upon the filing with the Trustee of evidence
of the consent of Debentureholders (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) required to consent
thereto as aforesaid, the Trustee shall join with the Company in the execution
of such supplemental indenture unless such supplemental indenture affects the
Trustee’s own rights, duties or immunities under this Indenture or otherwise,
in which case the Trustee may in its discretion but shall not be obligated to
enter into such supplemental indenture.

 

It shall not be necessary
for the consent of the Debentureholders of any series affected thereby under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

 

Promptly after the execution
by the Company and the Trustee of any supplemental indenture pursuant to the
provisions of this Section, the Trustee shall transmit by mail, first class
postage prepaid, a notice, setting forth in general terms the substance of such
supplemental indenture, to the Debentureholders of all series affected thereby
as their names and addresses appear upon the Debenture Register.  Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.

 

SECTION 9.03.  Effect of
Supplemental Indentures.  Upon
the execution of any supplemental indenture pursuant to the provisions of this
Article or of Section 10.01, this Indenture shall, with respect to
such series, be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Debentures of the series affected thereby shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.

 

SECTION 9.04.  Debentures
May Bear Notation of Changes By Supplemental Indentures.  Debentures of any series, affected by a supplemental
indenture, authenticated and delivered after the execution of such supplemental
indenture pursuant to the provisions of this Article or of
Section 10.01, may bear a notation in form approved by the Company,
provided such form meets the requirements of any exchange upon which such
series may be listed, as to any matter provided for in such supplemental
indenture.  If the Company shall so
determine, new Debentures of that series so modified as to conform, in the
opinion of the Board of Directors, to any modification of this Indenture

 

58

 

contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Debentures of that series then
outstanding.

 

SECTION 9.05.  Opinion of
Counsel.  The Trustee, subject
to the provisions of Section 7.01, may receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this
Article is authorized or permitted by, and conforms to, the terms of this
Article and that it is proper for the Trustee under the provisions of this
Article to join in the execution thereof.

 

ARTICLE 10

 

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

 

SECTION 10.01.  Satisfaction
and Discharge of Indenture. 
The Company shall not consolidate with or merge into any other Person or
transfer or lease its properties and assets substantially as an entirety to any
Person, and the Company shall not permit any other Person to consolidate with
or merge into the Company, unless:

 

(a) 
either the Company shall be the continuing corporation, or the corporation (if
other than the Company) formed by such consolidation or into which the Company
is merged or to which the properties and assets of the Company substantially as
an entity are transferred or leased shall be a corporation organized and
existing under the laws of the United States of America or any State thereof or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Debentures and this Indenture; and

 

(b) 
immediately after giving effect to such transaction no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing.

 

SECTION 10.02.  Successor
Corporation Substituted.  The
successor corporation formed by such consolidation or into which the Company is
merged or to which such transfer or lease is made shall succeed to and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein, and thereafter (except in the case of a lease to
another Person) the predecessor corporation shall be relieved of all
obligations and covenants under the Indenture and the Debentures and, in the
event of such conveyance or transfer, any such predecessor corporation may be
dissolved and liquidated.

 

59

 

SECTION 10.03.  Opinion of
Counsel.  The Trustee, subject
to the provisions of Section 7.01, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance,
transfer or other disposition, and any such assumption, comply with the
provisions of this Article.

 

ARTICLE 11

 

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED
MONEYS

 

SECTION 11.01.  Satisfaction
and Discharge of Indentures.  (A) 
If at any time (a) the Company shall have paid or caused to be paid the
principal of and interest on all the Debentures of any series Outstanding
hereunder (other than Debentures of such series which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 2.07)
as and when the same shall have become due and payable, or (b) the Company
shall have delivered to the Trustee for cancellation all Debentures of any
series theretofore authenticated (other than any Debentures of such series
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.07) or (c) (i) all the
Debentures of series not theretofore delivered to the Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (ii) the Company shall have irrevocably deposited or
caused to be deposited with the Trustee as trust funds the entire amount in
cash (other than moneys repaid by the Trustee or any paying agent to the
Company in accordance with Section 11.04) or Government Obligations,
maturing as to principal and interest at such times and in such amounts as will
insure the availability of cash, or a combination thereof, sufficient in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay (A) the
principal and interest on all Debentures of such series on each date that such
principal or interest is due and payable and (B) any mandatory sinking
fund payments on the dates on which such payments are due and payable in
accordance with the terms of the Indenture and the Debentures of such series;
and if, in any such case, the Company shall also pay or cause to be paid all
other sums payable hereunder by the Company, then this Indenture shall cease to
be of further effect (except as to (i) rights of registration of transfer
and exchange of Debentures of such series and the Company’s right of optional
redemption, if any, (ii) substitution of mutilated, defaced, destroyed,
lost or stolen Debentures, (iii) rights of holders of Debentures to
receive payments of principal thereof and interest thereon, upon the original
stated due dates therefor (but not upon acceleration), and remaining rights of
the Debentureholders to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the holders of Debentures of such series as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of
them, and (vi) the obligations of the

 

60

 

Company
under Section 4.02) and the Trustee, on demand of the Company accompanied
by an Officers’ Certificate and an Opinion of Counsel and at the cost and
expense of the Company, shall execute proper instruments acknowledging such
satisfaction of and discharging this Indenture; provided, that the
rights of Holders of the Debentures to receive amounts in respect of principal
of and interest on the Debentures held by them shall not be delayed longer than
required by then-applicable mandatory rules or policies of any securities
exchange upon which the Debentures are listed. 
The Company agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred and to compensate the Trustee for
any services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Debentures of such series.

 

(B) 
The following provisions shall apply to the Debentures of each series unless
specifically otherwise provided in a Board Resolution or indenture supplemental
hereto provided pursuant to Section 2.01. 
In addition to discharge of the Indenture pursuant to the next preceding
paragraph, the Company shall be deemed to have paid and discharged the entire
indebtedness on all the Debentures of a series on the date of the deposit
referred to in subparagraph (a) below, and the provisions of this
Indenture with respect to the Debentures of such series shall no longer be in
effect (except as to (i) rights of registration of transfer and exchange
of Debentures of such series and the Company’s right of optional redemption, if
any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Debentures, (iii) rights of holders of Debentures to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the holders of
Debentures to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the Holders of Debentures as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them and (vi) the
obligations of the Company under Section 4.02) and the Trustee, at the
expense of the Company, shall at the Company’s request, execute proper
instruments acknowledging the same, if

 

(a) 
with reference to this provision the Company has irrevocably deposited or
caused to be irrevocably deposited with the Trustee as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the benefit of
the holders of the Debentures of such series (i) cash in an amount, or (ii) Governmental
Obligations maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (A) the principal and interest on all
Debentures of such series on each date that such principal or interest is due
and payable or is earlier redeemed (irrevocably provided for under arrangements
satisfactory to the Trustee), as the case may be, and (B) any mandatory
sinking fund payments on the dates on which such

 

61

 

payments
are due and payable in accordance with the terms of the Indenture and the
Debentures of such series;

 

(b) 
such deposit will not result in a breach or violation of, or constitute a
default under, any agreement or instrument to which the Company is a party or
by which it is bound;

 

(c) 
the Company has delivered to the Trustee an Opinion of Counsel based on the
fact that (x) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (y) since the date hereof,
there has been a change in the applicable Federal income tax law, in either
case to the effect that, and such opinion shall confirm that, the holders of
the Debentures of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;

 

(d) 
the Company has delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided for
relating to the defeasance contemplated by this provision have been complied
with; and

 

(e) 
no event or condition shall exist that, pursuant to the provisions of Section 14.02
or 14.03, would prevent the Company from making payments of the principal of or
interest on the Debentures of such series on the date of such deposit.

 

SECTION 11.02.  Application
of Trustee of Funds Deposited For Payment of Debentures.  Subject to Section 11.04, all moneys
deposited with the Trustee (or other trustee) pursuant to Section 11.01
shall be held in trust and applied by it to the payment, either directly or
through any paying agent (including the Company acting as its own paying
agent), to the Holders of the particular Debentures of such series for the
payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law.

 

SECTION 11.03.  Application
by Trustee of Funds Deposited For Payment of Debentures.  In connection with the satisfaction and
discharge of this Indenture with respect to Debentures of any series, all
moneys then held by any paying agent under the provisions of this Indenture
with respect to such series of Debentures shall, upon demand of the Company, be
repaid to it or paid to the Trustee and thereupon such paying agent shall be
released from all further liability with respect to such moneys.

 

62

 

SECTION 11.04.  Repayment
of Moneys Held by Paying Agent. 
Any moneys deposited with or paid to the Trustee or any paying agent for
the payment of the principal of or interest on any Security of any series and
not applied but remaining unclaimed for two years after the date upon which
such principal or interest shall have become due and payable, shall, upon the
written request of the Company and unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law, be
repaid to the Company by the Trustee for such series or such paying agent, and
the Holder of the Debentures of such series shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
laws, thereafter look only to the Company for any payment which such holder may
be entitled to collect, and all liability of the Trustee or any paying agent
with respect to such moneys shall thereupon cease; provided, however,
that the Trustee or such paying agent, before being required to make any such
repayment with respect to moneys deposited with it for any payment series,
shall at the expense of the Company, mail by first-class mail to holders of
such Debentures at their addresses as they shall appear on the Debenture
Register, notice, that such moneys remain and that, after a date specified
therein, which shall not be less than thirty days from the date of such mailing
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.

 

SECTION 11.05.  Repayment
of Moneys Paid by Trustee. 
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Governmental Obligations
deposited pursuant to Section 11.01 or the principal or interest received
in respect of such obligations.

 

63

 

ARTICLE 12

 

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS

 

SECTION 12.01.  Incorporators,
Stockholders, Officers and Directors of Company Exempt From Individual
Liability.  No recourse under
or upon any obligations, covenant or agreement of this Indenture, or of any
Debenture, or for any claim based thereon or otherwise in respect thereof,
shall be had against any incorporator, stockholder, officer or director, past,
present or future as such, of the Company or of any predecessor or successor
corporation, either directly or through the Company or any such predecessor or
successor corporation, whether by virtue of any constitution, statue or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers or directors as such, of the Company or of any
predecessor or successor corporation, or any of them, because of the creation
of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debentures or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debentures or implied therefrom, are hereby expressly waived and released
as a condition of, and as a consideration for, the execution of this Indenture
and the issuance of such Debentures.

 

ARTICLE 13

 

MISCELLANEOUS PROVISIONS

 

SECTION 13.01.  Successors
and Assigns of Company Bound by Indenture.  All the covenants, stipulations, promises and
agreements in this Indenture contained by or on behalf of the Company shall
bind its successors and assigns, whether so expressed or not.

 

SECTION 13.02.  Acts of
Board, Committee or Officer of Successor Company Valid.  Any act or proceeding by any provision of
this Indenture authorized or required to be done or performed by any board,
committee or officer of the Company shall and may be done and performed with
like force and effect by the corresponding board, committee or officer of any
corporation that shall at the time be the lawful sole successor of the Company.

 

SECTION 13.03.  Surrender
of Powers of Company.  The
Company by instrument in writing executed by authority of two-thirds of its
Board of Directors and delivered to the Trustee may surrender any of the powers
reserved to the Company and thereupon such power so surrendered shall terminate
both as to the Company and as to any successor corporation.

 

64

 

SECTION 13.04.  Required
Notices or Demands May be Served by Mail.  Except as otherwise expressly provided herein
any notice or demand which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the holders of Debentures
to or on the Company may be given or served by being deposited first class
postage prepaid in a post-office letterbox addressed (until another address is
filed in writing by the Company with the Trustee), as follows:  The AES Corporation, 1001 North 19th Street,
Arlington, Virginia 22209,  Attention:
General Counsel and Secretary.  Any
notice, election, request or demand by the Company or any Debentureholder to or
upon the Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.

 

SECTION 13.05.  Indenture
and Debentures to Be Construed in Accordance with Laws of the State of New York.  This Indenture and each Debenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State
(without regard to principles of conflicts of laws thereof).

 

SECTION 13.06.  Officer’s
Certificate and Opinion of Counsel to be Furnished Upon Application or Demands
by Company; Statements To Be Included In Each Certificate or Opinion With
Respect to Compliance With Condition or Covenant.  (a) Upon any application or demand by
the Company to the Trustee to take any action under any of the provisions of
this Indenture, the Company shall furnish to the Trustee an Officers’
Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.

 

(b) 
Each certificate or opinion provided for in this Indenture and delivered to the
Trustee with respect to compliance with a condition or covenant in this
Indenture (other than the certificate provided pursuant to Section 5.03(d) of
this Indenture) shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.

 

SECTION 13.07.  Payments
Due on Sundays or Holidays. 
Except as provided pursuant to Section 2.01 pursuant to a Board
Resolution, and as set forth in an Officers’

 

65

 

Certificate,
or established in one or more indentures supplemental to the Indenture, in any
case where the date of maturity of interest or principal of any Debenture or
the date of redemption of any Debenture shall not be a business day then
payment of interest or principal (and premium, if any) may be made on the next
succeeding business day with the same force and effect as if made on the
nominal date of maturity or redemption, and no interest shall accrue for the
period after such nominal date.

 

SECTION 13.08.  Provisions
Required by Trust Indenture Act of 1939 to Control .  If and to the extent that any provision of
this Indenture limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.

 

SECTION 13.09.  Indenture May Be
Executed by its Counterparts. 
This 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.

 

SECTION 13.10.  Separability
of Indenture Provisions.  .In
case any one or more of the provisions contained in this Indenture or in the
Debentures of any series shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of such Debentures,
but this Indenture and such Debentures shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.

 

SECTION 13.11.  Assignment
by Company to Subsidiary.  The
Company will have the right at all times to assign any of its rights or
obligations under this Indenture to a direct or indirect wholly owned
Subsidiary of the Company; provided that, in the event of any such assignment,
the Company will remain jointly and severally liable for all such
obligations.  Subject to the foregoing,
this Indenture is binding upon and inures to the benefit of the parties thereto
and their respective successors and assigns. 
This Indenture may not otherwise be assigned by the parties hereto.

 

SECTION 13.12.  Holders of
Preferred Securities as Third Party Beneficiaries of the Indenture; Holders of
Preferred Securities May Institute Legal Proceedings Against the Company
in Certain Cases.  The Company
hereby acknowledges that, to the extent specifically set forth herein, prior to
a Security Exchange with respect to the Debentures of any series held as trust
assets of a AES Trust, the holders of the Preferred Securities of such AES Trust
shall expressly be third party beneficiaries of this Indenture.  The Company further acknowledges that, prior
to a Security Exchange with respect to Debentures of any series held as trust
assets of a AES Trust, if the Property Trustee of such AES Trust fails to
enforce its rights under this Indenture as the holder of the Debentures of a
series held as trust assets of such AES Trust, any holder of the Preferred
Securities of such AES Trust may institute legal proceedings directly against
the Company to enforce such Property Trustee’s rights under this Indenture
without first instituting any legal proceedings against such Property Trustee
or any other person or

 

66

 

entity;
provided that, if an Event of Default
has occurred and is continuing and such event is attributed to the failure of
the Company to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on
the redemption date), then a holder of Preferred Securities of such AES Trust
may directly institute a proceeding for enforcement of payment to such holder
of the principal of or interest on the Debentures having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder (a “Holder Direct Action”) on or after the respective due date specified
in the Debentures.  In connection with
such Holder Direct Action, the rights of the holders of the Common Securities
of such AES Trust will be subrogated to the rights of such holder of Preferred
Securities to the extent of any payment made by the Company to such holders of
Preferred Securities in such Holder Direct Action.  Except as provided in the preceding
sentences, the holders of Preferred Securities of such AES Trust will not be
able to exercise directly any other remedy available to the holders of the
Debentures.  Reference to a “holder” of
Preferred Securities or Common Securities herein shall mean a “Holder” of such
securities as defined in the Declaration of Trust.

 

ARTICLE 14

 

SUBORDINATION OF DEBENTURES

 

SECTION 14.01.  Agreement
to Subordinate.  The Company
covenants and agrees, and each Debentureholder issued hereunder by his
acceptance thereof likewise covenants and agrees, that all Debentures shall be
issued subject to the provisions of this Article; and each person holding any
Debenture, whether upon original issue or upon transfer, assignment or exchange
thereof accepts and agrees that the Principal of and interest on all Debentures
issued hereunder shall, to the extent and in the manner herein set forth, be
subordinated and subject in right to the prior payment in full of all Senior
and Subordinated Debt.

 

SECTION 14.02.  Payments
to Debentureholders.  No
payments on account of principal of, premium, if any, or interest on the
Debentures shall be made if at the time of such payment or immediately after
giving effect thereto there shall exist a default in any payment with respect
to any Senior and Subordinated Debt, and such event of default shall not have
been cured or waived or shall not have ceased to exist.  In addition, during the continuance of any
other event of default (other than a payment default) with respect to
Designated Senior and Subordinated Debt pursuant to which the maturity thereof
may be accelerated, from and after the date of receipt by the Trustee of
written notice from the holders of such Designated Senior and Subordinated Debt
or from an agent of such holders, no payments on account of principal, premium,
if any, or interest in respect of the Debentures may be made by the Company for
a period (“Payment Blockage Period”) commencing on the date of delivery of such
notice and ending 179 days thereafter (unless

 

67

 

such
Payment Blockage Period shall be terminated by written notice to the Trustee
from the holders of such Designated Senior and Subordinated Debt or from an
agent of such holders, or such event of default has been cured or waived or has
ceased to exist).  Only one Payment
Blockage Period may be commenced with respect to the Debentures during any
period of 360 consecutive days.  No event
of default which existed or was continuing on the date of the commencement of
any Payment Blockage Period with respect to the Designated Senior and
Subordinated Debt initiating such Payment Blockage Period shall be or be made
the basis for the commencement of any subsequent Payment Blockage Period by the
holders of such Designated Senior and Subordinated Debt, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days.

 

Upon
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any liquidation,
dissolution, winding up, receivership, reorganization, assignment for the
benefit of creditors, marshalling of assets and liabilities or any bankruptcy,
insolvency or similar proceedings of the Company, all amounts due or to become
due upon all Senior and Subordinated Debt shall first be paid in full, in cash
or cash equivalents, or payment thereof provided for in accordance with its
terms, before any payment is made on account of the principal of, premium, if
any, or interest on the indebtedness evidenced by the Debentures, and upon any
such liquidation, dissolution, winding up, receivership, reorganization,
assignment, marshalling or proceeding, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to which the Debentureholders or the Trustee under this Indenture would be
entitled, except for the provisions hereof, shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Debentureholders or by the
Trustee under this Indenture if received by them or it, directly to the holders
of Senior and Subordinated Debt (pro rata to such holders on the basis of the
respective amounts of Senior and Subordinated Debt held by such holders) or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior and
Subordinated Debt may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior and Subordinated Debt in full
(including, without limitation, except to the extent, if any, prohibited by
mandatory provisions of law, post-petition interest, in any such proceedings),
after giving effect to any concurrent payment or distribution to or for the
holders of Senior and Subordinated Debt, before any payment or distribution is
made to the holders of the indebtedness evidenced by the Debentures or to the
Trustee under this Indenture.

 

In
the event that, notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, prohibited by the foregoing, shall be received by the Trustee under
this Indenture or the holders of the Debentures before all Senior and
Subordinated Debt is paid in full or provision is made for such payment in
accordance with its terms, such payment or

 

68

 

distribution
shall be held in trust for the benefit of and shall be paid over or delivered
to the holders of such Senior and Subordinated Debt or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior and Subordinated Debt may
have been issued, as their respective interests may appear, for application to
the payment of all Senior and Subordinated Debt remaining unpaid until all such
Senior and Subordinated Debt shall have been paid in full in accordance with
its terms, after giving effect to any concurrent payment or distribution to or
for the holders of such Senior and Subordinated Debt.

 

For
purposes of this Article, the words, “cash, property or securities” shall not
be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of arrangement, reorganization or readjustment, the payment of which
is subordinated (at least to the extent provided in this Article with
respect to the Debentures) to the payment of all Senior and Subordinated Debt
which may at the time be outstanding; provided,
that (i) the Senior and Subordinated Debt is assumed by the new
corporation, if any, resulting from any such arrangement, reorganization or
readjustment, and (ii) the rights of the holders of the Senior and
Subordinated Debt are not, without the consent of such holders, altered by such
arrangement, reorganization or readjustment. 
The consolidation of the Company with, or the merger of the Company
into, another corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article 10 shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section if
such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article 10.  Nothing in this Section shall apply to
claims of, or payments to, the Trustee under or pursuant to Article 7,
except as provided therein.  This Section shall
be subject to the further provisions of Section 14.05.

 

SECTION 14.03.  Subrogation
of Debentures.   Subject to
the payment in full of all Senior and Subordinated Debt, the holders of the
Debentures shall be subrogated to the rights of the holders of Senior and
Subordinated Debt to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior and Subordinated Debt until
the principal of and interest on the Debentures shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders
of the Senior and Subordinated Debt of any cash, property or securities to
which the holders of the Debentures or the Trustee on their behalf would be
entitled except for the provisions of this Article, and no payment over
pursuant to the provisions of this Article to the holders of Senior and
Subordinated Debt by holders of the Debentures or the Trustee on their behalf
shall, as between the Company, its creditors other than holders of Senior and
Subordinated Debt and the holders of the Debentures, be deemed to be a payment
by the Company to or on account of the Senior and Subordinated Debt; and no
payments or distributions of cash, property or securities to or for the benefit
of the Debentureholders pursuant to the subrogation provision of this Article,
which would otherwise have been 

 

69

 

paid
to the holders of Senior and Subordinated Debt shall be deemed to be a payment
by the Company to or for the account of the Debentures.  It is understood that the provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the
holders of the Debentures, on the one hand, and the holders of the Senior and
Subordinated Debt, on the other hand.

 

Nothing
contained in this Article or elsewhere in this Indenture or in the
Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior and Subordinated Debt, and the
holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of and
interest on the Debentures as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Debentures and creditors of the Company other than
the holders of the Senior and Subordinated Debt, nor shall anything herein or
therein prevent the holder of any Debenture or the Trustee on his behalf from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of
the holders of Senior and Subordinated Debt in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.

 

Upon
any payment or distribution of assets of the Company referred to in this
Article, the Trustee, subject to the provisions of Article 7, and the
holders of the Debentures shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such liquidation,
dissolution, winding up, receivership, reorganization, assignment or
marshalling proceedings are pending, or a certificate of the receiver, trustee
in bankruptcy, liquidating trustee, agent or other person making such payment
or distribution, delivered to the Trustee or to the holders of the Debentures,
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior and Subordinated Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.

 

SECTION 14.04.  Authorization
by Debentureholders.  Each
holder of a Debenture by his acceptance thereof authorizes the Trustee in his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes.

 

SECTION 14.05.  Notice to
Trustee.   The Company shall
give prompt written notice to the Trustee and to any paying agent of any fact
known to the Company which would prohibit the making of any payment of moneys
to or by the Trustee or any paying agent in respect of the Debentures pursuant
to the provisions of this Article. 
Regardless of anything to the contrary contained in this Article or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any Senior and Subordinated Debt or of any default or event of
default with respect to any Senior and

 

70

 

Subordinated
Debt or of any other facts which would prohibit the making of any payment of
moneys to or by the Trustee, unless and until the Trustee shall have received
notice in writing at its principal Corporate Trust Office to that effect signed
by an officer of the Company, or by a holder or agent of a holder of Senior and
Subordinated Debt who shall have been certified by the Company or otherwise
established to the reasonable satisfaction of the Trustee to be such holder or
agent, or by the trustee under any indenture pursuant to which Senior and
Subordinated Debt shall be outstanding, and, prior to the receipt of any such
written notice, the Trustee shall, subject to the provisions of Article 7,
be entitled to assume that no such facts exist; provided that if on a date at least three Business days
prior to the date upon which by the terms hereof any such moneys shall become
payable for any purpose (including, without limitation, the payment of the
principal of, or interest on any Debenture) the Trustee shall not have received
with respect to such moneys the notice provided for in this Section, then,
regardless of anything herein to the contrary, the Trustee shall have full
power and authority to receive such moneys and to apply the same to the purpose
for which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such prior date.

 

Regardless
of anything to the contrary herein, nothing shall prevent (a) any payment
by the Company or the Trustee to the Debentureholders of amounts in connection
with a redemption of Debentures if (i) notice of such redemption has been
given pursuant to Article 3 prior to the receipt by the Trustee of written
notice as aforesaid, and (ii) such notice of redemption is given not
earlier than 60 days before the redemption date, or (b) any payment by the
Trustee to the Debentureholders of amounts deposited with it pursuant to Article 11.

 

The
Trustee shall be entitled to rely on the delivery to it of a written notice by
a person representing himself to be a holder of Senior and Subordinated Debt
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of Senior and Subordinated Debt or a trustee on behalf of any
such holder.  In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior and Subordinated Debt to
participate in any payment or distribution pursuant to this Article, the
Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior and Subordinated Debt
held by such person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such person under this Article, and if such evidence is not furnished the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.

 

SECTION 14.06.  Trustee’s
Relation to Senior and Subordinated Debt.  The Trustee and any agent of the Company or
the Trustee shall be entitled to all the rights set forth in this Article with
respect to any Senior and Subordinated Debt which may at any time be held by it
in its individual or any other capacity to the same extent as any other

 

71

 

holder
of Senior and Subordinated Debt and nothing in this Indenture shall deprive the
Trustee or any such agent, of any of its rights as such holder.  Nothing in this Article shall apply to
claims of, or payments to, the Trustee under or pursuant to Article 7.

 

With
respect to the holders of Senior and Subordinated Debt, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior and Subordinated Debt shall be read into
this Indenture against the Trustee.  The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
and Subordinated Debt and, subject to the provisions of Article 7, the
Trustee shall not be liable to any holder of Senior and Subordinated Debt if it
shall pay over or deliver to holders of Debentures, the Company or any other
person moneys or assets to which any holder of Senior and Subordinated Debt
shall be entitled by virtue of this Article or otherwise.

 

SECTION 14.07.  No
Impairment to Subordination. 
No right of any present or future holder of any Senior and Subordinated
Debt to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.

 

The
First National Bank of Chicago, as Trustee, hereby accepts the trust in this
Indenture declared and provided, upon the terms and conditions herein above set
forth.

 

72

 

IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

 

	
   

  	
   

  	
   

  	
  THE
  AES CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
    /s/
  BARRY J. SHARP

  
	
   

  	
   

  	
   

  	
  Name:
  Barry J. Sharp

  
	
   

  	
   

  	
   

  	
  Title:Vice
  President and Chief Financial Officer

  

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  WILLIAM R. LURASCHI

  	
   

  	
   

  
	
   

  	
  Name:
  William R. Luraschi

  	
   

  	
   

  
	
   

  	
  Title:General
  Counsel and SEcretary

  	
   

  	
   

  
					

 

	
   

  	
   

  	
   

  	
  THE
  FIRST NATIONAL BANK OF CHICAGO, AS TRUSTEE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
    /s/
  MARY FONTI

  
	
   

  	
   

  	
   

  	
  Name:
  Mary Fonti

  
	
   

  	
   

  	
   

  	
  Title:
  Assistant Vice President

  

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  MELISSA WEISMAN

  	
   

  	
   

  
	
   

  	
  Name:Melissa
  Weisman

  	
   

  	
   

  
	
   

  	
  Title:
  Vice President

  	
   

  	
   

  
					

 

73Exhibit 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:

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