As filed with the Securities and Exchange Commission on November 18, 1996
Registration No. 333-15487
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
The AES Corporation Delaware 54-1163725
AES Trust I Delaware application pending
AES Trust II Delaware application pending
AES Trust III Delaware application pending
(Exact name of Registrant (State or other (I.R.S. employer
as specified in jurisdiction identification number)
its charter) of incorporation
or organization)
1001 North 19th Street
Arlington, Virginia 22209
(703) 522-1315
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Barry J. Sharp
1001 North 19th Street
Arlington, Virginia 22209
(703) 522-1315
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Richard D. Truesdell, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities being offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
This Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said section 8(a), may determine.
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectuses to be used
in connection with offerings of the following securities:
(1) Debt Securities (consisting of Senior Debt Securities, Senior
Subordinated Debt Securities and Junior Subordinated Debt
Securities), Preferred Stock, Common Stock, Stock Purchase
Contracts and Stock Purchase Units of The AES Corporation.
(2) Preferred Securities of AES Trust I, AES Trust II or AES Trust
III, severally, Junior Subordinated Debt Trust Securities of
The AES Corporation and Guarantees by The AES Corporation of
Preferred Securities issued by AES Trust I, AES Trust II or
AES Trust III.
Each offering of securities made under this Registration Statement will be
made pursuant to one of these Prospectuses, with the specific terms of the
securities offered thereby set forth in an accompanying Prospectus Supplement.
SUBJECT TO COMPLETION, DATED NOVEMBER 18, 1996
PROSPECTUS
[LOGO]
The AES Corporation
$750,000,000
Common Stock, Preferred Stock, Debt Securities, Stock Purchase Contracts and
Stock Purchase Units
The AES Corporation (the "Company" or "AES") may from time to time offer,
together or separately, (i) shares of its common stock, par value $.01 per
share (the "Common Stock"), (ii) shares of its preferred stock, no par value
(the "Preferred Stock"), (iii) unsecured senior debt securities (the "Senior
Debt Securities"), (iv) unsecured senior subordinated debt securities (the
"Senior Subordinated Debt Securities"), (v) unsecured junior subordinated
securities (the "Junior Subordinated Debt Securities"), (vi) Stock Purchase
Contracts to purchase Common Stock ("Stock Purchase Contracts") and (vii)
Stock Purchase Units ("Stock Purchase Units"), each representing ownership of
a Stock Purchase Contract and Debt Securities or debt obligations of third
parties, including U.S. Treasury securities, securing the holder's obligation
to purchase Common Stock under the Stock Purchase Contract, in each case in
one or more series and in amounts, at prices and on terms to be determined
at or prior to the time of sale. The Senior Debt Securities, Senior
Subordinated Debt Securities and Junior Subordinated Securities are
collectively referred to herein as the "Debt Securities." The Debt
Securities, Common Stock, Preferred Stock, Stock Purchase Contracts and
Stock Purchase Units are collectively referred to herein as the
"Securities."
See "Risk Factors" Beginning On Page 4 For A Discussion of
Certain Factors That Should Be Considered By Prospective Investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The Common Stock and Preferred Stock offered pursuant to this Prospectus
may be issued in one or more series or issuances in U.S. dollars or in one
or more foreign currencies, currency units or composite securities to be
determined at or prior to the time of any offering. The Stock Purchase
Contracts and the Stock Purchase Units offered pursuant to this Prospectus
may be issued in one or more series and amounts, at prices and on terms to
be determined at or prior to the time of any such offering. The Debt
Securities offered pursuant to this Prospectus may consist of debentures,
notes or other evidences of indebtedness in one or more series and in
amounts, at prices and on terms to be determined at or prior to the time of
any such offering. The Company's obligations under the Senior Debt
Securities will rank pari passu with all unsecured and unsubordinated debt
(as defined herein) of the Company. The Company's obligations under the
Senior Subordinated Debt Securities will be subordinated in right of
payment to the prior payment in full of all Senior Debt (as defined
herein). The Company's obligations under the Junior Subordinated Debt
Securities will be subordinated in right of payment to the prior payment in
full of all Senior and Senior Subordinated Debt (as defined herein) of the
Company. See "Description of Debt Securities."
By separate prospectus, the form of which is included in the Registration
Statement of which this Prospectus forms a part, two Delaware statutory
business trusts (the "AES Trusts"), which are wholly owned subsidiaries of the
Company, may from time to time severally offer preferred securities guaranteed
by the Company to the extent set forth therein and the Company may offer from
time to time junior subordinated debt securities either directly or to an AES
Trust. The aggregate public offering price of the securities to be offered by
the Prospectus and such other prospectus shall not exceed $750,000,000 (or its
equivalent in one or more foreign currencies, currency units or composite
currencies).
Specific terms of the Securities in respect of which this Prospectus is
being delivered (the "Offered Securities") will be set forth in a Prospectus
Supplement with respect to such Offered Securities, which Prospectus
Supplement will describe, without limitation and where applicable, the
following: (i) in the case of Common Stock, the specific designation, number
of shares, purchase price and the rights and privileges thereof, together with
any qualifications or restrictions thereon and any listing on a securities
exchange; (ii) in the case of Preferred Stock, the specific designation,
number of shares, purchase price and the rights, preferences and privileges
thereof and any qualifications or restrictions thereon (including dividends,
liquidation value, voting rights, terms for the redemption, conversion or
exchange thereof and any other specific terms of the Preferred Stock) and any
listing on a securities exchange; (iii) in the case of Debt Securities, the
specific designation, aggregate principal amount, authorized denomination,
maturity, premium, if any, exchangeability, redemption, conversion, prepayment
or sinking fund provisions, if any, interest rate (which may be fixed or
variable), if any, method, if any, of calculating interest payments and dates
for payment thereof, dates on which premium, if any, will be payable, the
right of the Company, if any, to defer payment of interest on the Debt
Securities and the maximum length of such deferral period, the initial public
offering price, any listing on a securities exchange and other specific terms
of the offering; (iv) in the case of Stock Purchase Contracts, the designation
and number of shares of Common Stock issuable thereunder, the purchase price
of the Common Stock, the date or dates on which the Common Stock is required
to be purchased by the holders of the Stock Purchase Contracts, any periodic
payments required to be made by the Company to the holders of the Stock
Purchase Contract or vice versa, and the terms of the offering and sale
thereof, and (v) in the case of Stock Purchase Units, the specific terms of
the Stock Purchase Contracts and any Debt Securities or debt obligations of
third parties securing the holder's obligation to purchase the Common Stock
under the Stock Purchase Contracts, and the terms of the offering and sale
thereof. Unless otherwise indicated in the Prospectus Supplement, the Company
does not intend to list any of the Securities other than the Common Stock and
the Preferred Stock on a national securities exchange. Any Prospectus
Supplement relating to any series of Offered Securities will contain
information concerning certain United States federal income tax
considerations, if applicable, to the Offered Securities.
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan
of Distribution." Any such agents, dealers or underwriters will be set forth
in a Prospectus Supplement. If an agent of the Company, or a dealer or
underwriter is involved in the offering of the Offered Securities, the agent's
commission, dealer's purchase price, underwriter's discount and net proceeds
to the Company, as the case may be, will be set forth in, or may be calculated
from, the Prospectus Supplement. Any underwriters, dealers or agents
participating in the offering may be deemed "underwriters" within the meaning
of the Securities Act of 1933.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is , 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OF
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
AVAILABLE INFORMATION
AES is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
These reports, proxy and information statements and other information may be
inspected without charge and copied at the public reference facilities
maintained by the Commission at its principal offices at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such materials also can be obtained at prescribed rates
from the Public Reference Section of the Commission at the principal offices
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such material may also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities offered hereby (including
all amendments and supplements thereto, the "Registration Statement"). This
Prospectus, which forms a part of the Registration Statement, does not contain
all the information set forth in the Registration Statement and the exhibits
filed thereto, certain parts of which have been omitted in accordance with the
rules and regulations of the Commission. Statements contained herein
concerning the provisions of any documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto can be inspected and copied at
the public reference facilities and regional and other offices referred to
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference
thereto and makes a part hereof the following documents, heretofore filed with
the Commission pursuant to the Exchange Act: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995; (ii) the Company's
Quarterly Report on Form 10-Q for the quarters ended September 30, 1996, June
30, 1996 and March 31, 1996; (iii) the Company's Current Reports on Form 8-K
filed on July 1, 1996, June 12, 1996, May 30, 1996, February 26, 1996 and
February 6, 1996; (iv) the description of the Common Stock contained in the
Company's Registration Statement on Form 8-A (File No.0-19281) filed on
October 10, 1996 and (v) the Company's Registration Statement on Form S-3
filed on June 12, 1996.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to termination of the offering being made hereby shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the respective dates of the filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is
a part to the extent that a statement contained herein or in any subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein, modifies or supersedes such earlier statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus or such Registration
Statement.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, upon written or
oral request of any such person, a copy of any and all of the documents
referred to above which have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents which are not specifically
incorporated by reference into such documents. Requests for such copies
should be directed to William R. Luraschi, General Counsel and Secretary, The
AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209, telephone
(703) 522-1315.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus
Supplement, proceeds from the sale of the Offered Securities will be used by
the Company for general corporate purposes and initially may be temporarily
invested in short-term securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
---------------------------------------------- -------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges...... 1.31 1.37 1.63 2.08 2.18 2.04
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes
and minority interest, plus fixed charges, less capitalized interest, less
excess of earnings over dividends of less-than-fifty-percent-owned
companies. Fixed charges consist of interest (including capitalized
interest) on all indebtedness, amortization of debt discount and expense
and that portion of rental expense which the Company believes to be
representative of an interest factor. A statement setting forth the
computation of the above ratios is on file as an exhibit to the
Registration Statement of which this Prospectus is a part.
During the period from January 1, 1991 until September 30, 1996, no
shares of Preferred Stock were issued or outstanding, and during that
period the Company did not pay any Preferred Stock dividends.
THE COMPANY
With a presence in over 35 countries, The AES Corporation is a
global power company committed to supplying electricity to customers
world-wide in a socially responsible way. The Company, based in Arlington,
Virginia, markets power principally from electric generating facilities that
it develops, owns and operates. AES was one of the original entrants in the
independent power market and today is one of the world's largest independent
power companies, based on net equity ownership of generating capacity (in
megawatts) in operation or under construction.
Over the last six years, the Company has experienced
significant growth. This growth has resulted primarily from the development
and construction of new plants ("greenfield development") and also from the
acquisition of existing plants, primarily through competitively bid
privatization initiatives outside the United States.
In part, the Company's strategy in helping meet the world's
need for electricity is to participate in competitive power generation markets
as they develop either by greenfield development or by acquiring and operating
existing facilities in these markets.
Other elements of the Company's strategy include:
bullet Supplying energy to customers at the lowest cost possible,
taking into account factors such as reliability and environmental
performance.
bullet Constructing or acquiring projects of a relatively large
size (generally larger than 100 megawatts).
bullet Entering into power sales contracts with electric utilities
or other customers with credit strength.
The Company also strives for operating excellence as a key
element of its strategy, which it believes it accomplishes by minimizing
organizational layers and maximizing company-wide participation in
decision-making. AES has attempted to create an operating environment that
results in safe, clean and reliable electricity generation. Because of this
emphasis, the Company prefers to operate all facilities which it develops or
acquires; however, there can be no assurance that the Company will have
operating control of all of its facilities in the future.
The Company, a corporation organized under the laws of
Delaware, was formed in 1981. The principal office of the Company is located
at 1001 North 19th Street, Arlington, Virginia 22209, and its telephone number
is (703) 522-1315.
RISK FACTORS
Purchasers of the Securities should read this entire Prospectus
carefully. Ownership of the Securities involves certain risks. The following
factors should be considered carefully in evaluating AES and its business
before purchasing the Securities offered by this Prospectus.
Leverage and Subordination. The Company and its subsidiaries
had approximately $2.1 billion of outstanding indebtedness at September 30,
1996. As a result of the Company's level of debt, the Company might be
significantly limited in its ability to meet its debt service obligations, to
finance the acquisition and development of additional projects, to compete
effectively or to operate successfully under adverse economic conditions. As
of September 30, 1996, the Company had a consolidated ratio of total debt to
total book capitalization (including current debt) of approximately 75%.
The Senior Subordinated Debt Securities will be subordinated to
all Senior Debt, including, but not limited to, the amounts outstanding under
the Company's current $425 million credit facility. The Junior Subordinated
Debt Securities will be subordinated to all Senior and Senior Subordinated
Debt of the Company, including, but not limited to, the amounts outstanding
under the Company's current $425 million credit facility. As of September
30, 1996, the Company had approximately $331 million in aggregate principal
amount of Senior Debt and $656 million in aggregate principal amount of
Senior and Senior Subordinated Debt .
Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, receivership, reorganization,
assignment for the benefit of creditors, marshaling of assets and liabilities
or any bankruptcy, insolvency or similar proceedings of the Company, the
holders of Senior Debt will first be entitled to receive payment in full of
all amounts due or to become due under all Senior Debt before the holders of
the Senior Subordinated Debt Securities will be entitled to receive any
payment in respect of the principal of, premium, if any, or interest on such
Senior Subordinated Debt Securities and holders of Senior and Senior
Subordinated Debt will first be entitled to receive payment in full of all
amounts due or to become due under all Senior and Senior Subordinated Debt
before the holders of the Junior Subordinated Debt Securities will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on such Junior Subordinated Debt Securities. No payments
on account of principal, premium, if any, or interest in respect of the
Senior Subordinated Debt Securities or Junior Subordinated Debt Securities
may be made if there shall have occurred and be continuing a default in any
payment under any Senior Debt or Senior and Senior Subordinated Debt, and
Senior Subordinated Debt, respectively, or during certain periods when an
event of default under certain Senior Debt or Senior and Senior
Subordinated Debt, respectively, permits the respective lenders thereunder
to accelerate the maturity thereof. See "Description of Debt
Securities--Subordination of Senior Subordinated Debt Securities" and
"Description of Debt Securities--Subordination of Junior Subordinated Debt
Securities."
The Debt Securities will be effectively subordinated to the
indebtedness and other obligations (including trade payables) of the Company's
subsidiaries. At September 30, 1996, the indebtedness and obligations of the
Company's subsidiaries, aggregated approximately $1.5 billion. The ability of
the Company to pay principal of, premium, if any, and interest on the Debt
Securities will be dependent upon the receipt of funds from its subsidiaries
by way of dividends, fees, interest, loans or otherwise. Most of the
Company's subsidiaries with interests in power generation facilities currently
have in place, and the Indentures for the Debt Securities will, under certain
circumstances, permit the Company's subsidiaries to enter into, arrangements
that restrict their ability to make distributions to the Company by way of
dividends, fees, interest, loans or otherwise. The Company's subsidiaries are
separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Debt Securities or to make
any funds available therefor, whether by dividends, loans or other payments,
and do not guarantee the payment of interest on or principal of the Debt
Securities. Any right of the Company to receive any assets of any of its
subsidiaries upon any liquidation, dissolution, winding up, receivership,
reorganization, assignment for the benefit of creditors, marshaling of assets
and liabilities or any bankruptcy, insolvency or similar proceedings of the
Company (and the consequent right of the holders of the Debt Securities to
participate in the distribution of, or to realize proceeds from, those assets)
will be effectively subordinated to the claims of any such subsidiary's
creditors (including trade creditors and holders of debt issued by such
subsidiary). The Company currently conducts substantially all of its
operations through its subsidiaries.
Doing Business Outside the United States. The Company's
involvement in the development of new projects and the acquisition of existing
plants in locations outside the United States is increasing and most of the
Company's current development and acquisition activities are for projects and
plants outside the United States. The Company, through subsidiaries,
affiliates and joint ventures, has ownership interests in 27 power plants
outside the United States in operation or under construction. Five of such
power plants are located in Argentina; four in Brazil; two in England; two in
Northern Ireland; two in Pakistan; eight in the People's Republic of China;
three in Hungary; and one in Kazakhstan.
The financing, development and operation of projects outside
the United States entail significant political and financial uncertainties
(including, without limitation, uncertainties associated with first-time
privatization efforts in the countries involved, currency exchange rate
fluctuations, currency repatriation restrictions, currency inconvertibility,
political instability, civil unrest, and expropriation) and other structuring
issues that have the potential to cause substantial delays in respect of or
material impairment of the value of the project being developed or operated,
which AES may not be capable of fully insuring or hedging against. The
ability to obtain financing on a commercially acceptable non-recourse basis in
developing nations may also require higher investments by the Company than
historically have been the case. In addition, financing in countries with
less than investment grade sovereign credit ratings may also require
substantial participation by multilateral financing agencies. There can be
no assurance that such financing can be obtained when needed.
The uncertainty of the legal environment in certain countries
in which the Company, its subsidiaries and its affiliates are or in the future
may be developing, constructing or operating could make it more difficult for
the Company to enforce its respective rights under agreements relating to such
projects. In addition, the laws and regulations of certain countries may
limit the Company's ability to hold a majority interest in some of the
projects that it may develop or acquire. International projects owned by
the Company may, in certain cases, be expropriated by applicable
governments. Although AES may have legal recourse in enforcing its rights
under agreements and recovering damages for breaches thereof, there can be
no assurance that any such legal proceedings will be successful.
Competition. The global power production market is
characterized by numerous strong and capable competitors, many of whom may
have extensive and diversified developmental or operating experience
(including both domestic and international experience) and financial resources
similar to or greater than the Company. Further, in recent years, the power
production industry has been characterized by strong and increasing
competition with respect to both obtaining power sales agreements and
acquiring existing power generation assets. In certain markets, these factors
have caused reductions in prices contained in new power sales agreements and,
in many cases, have caused higher acquisition prices for existing assets
through competitive bidding practices. The evolution of competitive
electricity markets and the development of highly efficient gas-fired power
plants have also caused, or are anticipated to cause, price pressure in
certain power markets where the Company sells or intends to sell power. There
can be no assurance that the foregoing competitive factors will not have a
material adverse effect on the Company.
Development Uncertainties. The majority of the projects that
AES develops are large and complex and the completion of any such project is
subject to substantial risks. Development can require the Company to expend
significant sums for preliminary engineering, permitting, legal and other
expenses in preparation for competitive bids which the Company may not win or
before it can be determined whether a project is feasible, economically
attractive or capable of being financed. Successful development and
construction is contingent upon, among other things, negotiation on terms
satisfactory to the Company of engineering, construction, fuel supply and
power sales contracts with other project participants, receipt of required
governmental permits and consents and timely implementation and satisfactory
completion of construction. There can be no assurance that AES will be able
to obtain new power sales contracts, overcome local opposition, if any, obtain
the necessary site agreements, fuel supply and ash disposal agreements,
construction contracts, steam sales contracts, licenses and certifications,
environmental and other permits and financing commitments necessary for the
successful development of its projects. There can be no assurance that
development efforts on any particular project, or the Company's efforts
generally, will be successful. If these development efforts are not
successful, the Company may abandon a project under development. At the time
of abandonment, the Company would expense all capitalized development costs
incurred in connection therewith and could incur additional losses associated
with any related contingent liabilities. The future growth of the Company is
dependent, in part, upon the demand for significant amounts of additional
electrical generating capacity and its ability to obtain contracts to supply
portions of this capacity. Any material unremedied delay in, or
unsatisfactory completion of, construction of the Company's projects could,
under certain circumstances, have an adverse effect on the Company's
ability to meet its obligations, including the payment of principal of,
premium, if any and interest on Debt Securities. The Company also is faced
with certain development uncertainties arising out of doing business
outside of the United States. See "--Doing Business Outside the United
States."
Uncertainty of Access to Capital for Future Projects. Each of
AES's projects under development and those independent power facilities it may
seek to acquire may require substantial capital investment. Continued access
to capital with acceptable terms is necessary to assure the success of future
projects and acquisitions. AES has substantially utilized project financing
loans to fund the capital expenditures associated with constructing and
acquiring its electric power plants and related assets. Project financing
borrowings have been substantially non- recourse to other subsidiaries and
affiliates and to AES as the parent company and are generally secured by the
capital stock, physical assets, contracts and cash flow of the related project
subsidiary or affiliate. The Company intends to continue to seek, where
possible, such non-recourse project financing in connection with the assets
which the Company or its affiliates may develop, construct or acquire.
However, depending on market conditions and the unique characteristics of
individual projects, such financing may not be available or the Company's
traditional providers of project financing, particularly multinational
commercial banks, may seek higher borrowing spreads and increased equity
contributions.
Furthermore, because of the reluctance of commercial lending
institutions to provide non-recourse project financing (including financial
guarantees) in certain less developed economies, the Company, in such
locations, has and will continue to seek direct or indirect (through credit
support or guarantees) project financing from a limited number of multilateral
or bilateral international financial institutions or agencies. As a
precondition to making such project financing available, these institutions
may also require governmental guarantees of certain project and sovereign
related risks. Depending on the policies of specific governments, such
guarantees may not be offered and as a result, AES may determine that
sufficient financing will ultimately not be available to fund the related
project.
In addition to the project financing loans, if available, AES
provides a portion, or in certain instances all, of the remaining long-term
financing required to fund development, construction, or acquisition. These
investments have generally taken the form of equity investments or loans,
which are subordinated to the project financing loans. The funds for these
investments have been provided by cash flows from operations and by the
proceeds from borrowings under the short-term credit facilities and issuances
of senior subordinated notes, convertible debentures and common stock of the
Company.
The Company's ability to arrange for financing on either a
fully recourse or a substantially non-recourse basis and the costs of such
capital are dependent on numerous factors, including general economic and
capital market conditions, the availability of bank credit, investor
confidence in the Company, the continued success of current projects and
provisions of tax and securities laws which are conducive to raising capital
in this manner. Should future access to capital not be available, AES may
decide not to build new plants or acquire existing facilities. While a
decision not to build new plants or acquire existing facilities would not
affect the results of operations of AES on its currently operating facilities
or facilities under construction, such a decision would affect the future
growth of AES.
Dependence on Utility Customers and Certain Projects. The
nature of most of AES's power projects is such that each facility generally
relies on one power sales contract with a single customer for the majority, if
not all, of its revenues over the life of the power sales contract. During
1995, four customers, including Connecticut Light & Power Company, a
subsidiary of Northeast Utilities, accounted for 73% of the Company's
revenues. The prolonged failure of any one utility customer to fulfill its
contractual obligations could have a substantial negative impact on AES's
primary source of revenues. AES has sought to reduce this risk in part by
entering into power sales contracts with utilities or other customers of
strong credit quality and by locating its plants in different geographic areas
in order to mitigate the effects of regional economic downturns.
Four of the Company's plants collectively represented
approximately 61% of AES's consolidated total assets at December 31, 1995 and
generated approximately 80% of AES's consolidated total revenues for the year
ended December 31, 1995.
In October 1996, Moody's Investor Service and Standard & Poor's
revised their ratings of the senior unsecured long-term debt of Connecticut
Light & Power Company from Baa3/BBB- to Ba1/BB+.
Regulatory Uncertainty. AES's cogeneration operations in the
United States are subject to the provisions of various laws and regulations,
including the Public Utility Regulatory Policies Act of 1978, as amended
("PURPA") and the Public Utility Holding Company Act, as amended ("PUHCA").
PURPA provides to qualifying facilities ("QFs") certain exemptions from
substantial federal and state legislation, including regulation as public
utilities. PUHCA regulates public utility holding companies and their
subsidiaries. AES is not and will not be subject to regulation as a holding
company under PUHCA as long as the domestic power plants it owns are QFs under
PURPA. QF status is conditioned on meeting certain criteria, and would be
jeopardized, for example, by the loss of a steam customer. The Company
believes that, upon the occurrence of an event that would threaten the QF
status of one of its domestic plants, it would be able to react in a manner
that would avoid the loss of QF status (such as by replacing the steam
customer). In the event the Company were unable to avoid the loss of such
status for one of its plants, to avoid public utility holding company status,
AES could apply to the Federal Energy Regulatory Commission ("FERC") to obtain
status as an Exempt Wholesale Generator ("EWG"), or could restructure the
ownership of the project subsidiary. EWGs, however, are subject to broader
regulation by FERC and may be subject to state public utility commissions
regulation regarding non-rate matters. In addition, any restructuring of a
project subsidiary could result in, among other things, a reduced financial
interest in such subsidiary, which could result in a gain or loss on the sale
of the interest in such subsidiary, the removal of such subsidiary from the
consolidated income tax group or the consolidated financial statements of the
Company, or an increase or decrease in the results of operations of the
Company.
The United States Congress is considering proposed legislation
which would repeal PURPA entirely, or at least repeal the obligation of
utilities to purchase from QFs. There is strong support for grandfathering
existing QF contracts if such legislation is passed, and also support for
requiring utilities to conduct competitive bidding for new electric generation
if the PURPA purchase obligation is eliminated. Various bills have also
proposed repeal of PUHCA. Repeal of PUHCA would allow both independents and
vertically integrated utilities to acquire retail utilities in the United
States that are geographically widespread, as opposed to the current
limitations of PUHCA which require that retail electric systems be capable of
physical integration. In addition, registered holding companies would be free
to acquire non-utility businesses, which they may not do now, with certain
limited exceptions. In the event of a PUHCA repeal, competition for
independent power generators from vertically integrated utilities would likely
increase. Repeal of PURPA and/or PUHCA may or may not be part of
comprehensive legislation to restructure the electric utility industry, allow
retail competition, and deregulate most electric rates. The effect of any such
repeal cannot be predicted, although any such repeal could have a material
adverse effect on the Company.
Electric Utility Industry Restructuring Proposals. The FERC
and many state utility commissions are currently studying a number of
proposals to restructure the electric utility industry in the United States.
Such restructuring would permit utility customers to choose their utility
supplier in a competitive electric energy market. The FERC issued a final rule
in April 1996 which requires utilities to offer wholesale customers and
suppliers open access on utility transmission lines, on a comparable basis to
the utilities' own use of the lines. The final rule is subject to rehearing
and may become the subject of court litigation. Many utilities have already
filed "open access" tariffs. The utilities contend that they should recover
from departing customers their fixed costs that will be "stranded" by the
ability of their wholesale customers (and perhaps eventually, their retail
customers) to choose new electric power suppliers. The FERC final rule
endorses the recovery of legitimate and verifiable "stranded costs." These
may include the costs utilities are required to pay under many QF contracts
which the utilities view as excessive when compared with current market
prices. Many utilities are therefore seeking ways to lower these contract
prices or rescind the contracts altogether, out of concern that their
shareholders will be required to bear all or part of such "stranded" costs.
Some utilities have engaged in litigation against QFs to achieve these
ends.
In addition, future United States electric rates may be
deregulated in a restructured United States electric utility industry and
increased competition may result in lower rates and less profit for United
States electricity sellers. Falling electricity prices and uncertainty as to
the future structure of the industry is inhibiting United States utilities
from entering into long-term power purchase contracts. The effect of any such
restructuring on the Company cannot be predicted, although any such
restructuring could have a material adverse effect on the Company.
Litigation and Regulatory Proceedings. From time to time,
the Company and its affiliates are parties to litigation and
regulatory proceedings. Investors should review the descriptions of
such matters contained in the Company's Annual, Quarterly and Current
Reports filed with the Commission and incorporated by reference herein.
There can be no assurances that the outcome of such matters will not have a
material adverse effect on the Company's consolidated financial position.
Business Subject to Stringent Environmental Regulations. AES's
activities are subject to stringent environmental regulation by federal,
state, local and foreign governmental authorities. For example, the Clean Air
Act Amendments of 1990 impose more stringent standards than those previously
in effect, and require states to impose permit fees on certain emissions.
Congress and other foreign governmental authorities also may consider
proposals to restrict or tax certain emissions. These proposals, if adopted,
could impose additional costs on the operation of AES's power plants. There
can be no assurance that AES would be able to recover all or any increased
costs from its customers or that its business, financial condition or results
of operations would not be materially and adversely affected by future changes
in domestic or foreign environmental laws and regulations. The Company has
made and will continue to make capital and other expenditures to comply with
environmental laws and regulations. There can be no assurance that such
expenditures will not have a material adverse effect on the Company's
financial condition or results of operations.
Control by Existing Stockholders. As of September 30, 1996,
AES's two founders, Roger W. Sant and Dennis W. Bakke, and their immediate
families together owned beneficially approximately 26% of AES's outstanding
Common Stock. As a result of their ownership interests, Messrs. Sant and
Bakke may be able to significantly influence or exert control over the affairs
of AES, including the election of the Company's directors. As of September
30, 1996, all of AES's officers and directors and their immediate families
together owned beneficially approximately 35% of AES's outstanding Common
Stock. To the extent that they decide to vote together, these stockholders
would be able to significantly influence or control the election of AES's
directors, the management and policies of AES and any action requiring
stockholder approval, including significant corporate transactions.
Adherence to AES's Principles--Possible Impact on Results of
Operations. A core part of AES's corporate culture is a commitment to "shared
principles": to act with integrity, to be fair, to have fun and to be socially
responsible. The Company seeks to adhere to these principles not as a means
to achieve economic success, but because adherence is a worthwhile goal in and
of itself. However, if the Company perceives a conflict between these
principles and profits, the Company will try to adhere to its principles--even
though doing so might result in diminished or foregone opportunities or
financial benefits.
No Prior Public Market--Possible Price Volatility of Debt
Securities and Preferred Stock. Prior to the offering, there has been no
public market for the Senior Debt Securities, the Junior Subordinated Debt
Securities or the Preferred Stock. There can be no assurance that an active
trading market for the Senior Debt Securities, the Junior Subordinated Debt
Securities or the Preferred Stock will develop or be sustained. If such a
market were to develop, the Senior Debt Securities, the Junior Subordinated
Debt Securities or the Preferred Stock could trade at prices that may be
higher or lower than their initial offering price depending upon many factors,
including prevailing interest rates, the Company's operating results and the
markets for similar securities. Historically, the market for non-investment
grade debt has demonstrated substantial volatility in the prices of securities
similar to the Debt Securities. There can be no assurance that the future
market for the Debt Securities will not be subject to similar volatility.
DESCRIPTION OF CAPITAL STOCK
Under the Amended and Restated Certificate of Incorporation of
the Company (the "Certificate of Incorporation"), the authorized capital stock
of the Company consists of 100,000,000 shares of Common Stock, par value $.01
per share, and 1,000,000 shares of Preferred Stock, no par value.
The following summary contains a description of certain general
terms of the Common Stock and the Preferred Stock to which any Prospectus
Supplement may relate. Certain terms of any series of Preferred Stock offered
by a Prospectus Supplement will be described in the Prospectus Supplement
relating thereto. If so indicated in the Prospectus Supplement, the terms of
any series may differ from the terms set forth below. The description of
certain material provisions of the Common Stock and the Preferred Stock is
subject to and qualified in its entirety by reference to the provisions of the
Company's Certificate of Incorporation, and, in the case of the Preferred
Stock, to the Certificate of Designation (the "Certificate of Designation")
relating to each particular series of Preferred Stock which will be filed or
incorporated by reference, as the case may be, as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such Preferred Stock.
Common Stock
As of September 30, 1996, there were 77,099,303 shares of
Common Stock outstanding.
The holders of Common Stock are entitled to one vote per share
on all matters to be voted upon by the stockholders. Subject to preferences
that may be applicable to any outstanding Preferred Stock, the holders of
Common Stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by the Board of Directors of the Company (the
"Board of Directors") out of funds legally available therefor. In the event
of the liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior distribution rights of the Preferred
Stock, if any, then outstanding. The Common Stock has no preemptive or
conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding
shares of Common Stock are fully paid and non-assessable, and any shares of
Common Stock in respect of which this Prospectus is being delivered will be
fully paid and non-assessable.
The transfer agent for the Company's Common Stock is First
Chicago Trust Company.
Price Range of AES Common Stock and Common Stock Dividends
AES Common Stock began trading on the New York Stock Exchange
on October 16, 1996 under the symbol "AES." Prior to that date, Common Stock
had been quoted on the NASDAQ National Market System ("NASDAQ/NMS") under the
symbol "AESC." The following table sets forth for the periods indicated the
high and low sale prices for the Common Stock as reported by NASDAQ/NMS.
1994 High Low
- ---- -------- -------
First Quarter....... 24 1/2 19 1/2
Second Quarter...... 21 1/2 16
Third Quarter....... 20 1/8 15 3/4
Fourth Quarter...... 21 3/4 17 1/2
1995
- ----
First Quarter....... 19 3/4 16
Second Quarter...... 19 1/4 16
Third Quarter....... 21 5/8 18 1/2
Fourth Quarter...... 24 18 3/4
1996
- ----
First Quarter....... 25 1/4 21
Second Quarter...... 29 5/8 22 1/4
Third Quarter....... 40 1/2 27 7/8
On December 7, 1993, the Board of Directors authorized a three-for-two
stock split, effected in the form of a stock dividend, payable to
stockholders of record on January 15, 1994. Additionally, on February 17,
1994, the Company declared a 3% stock dividend, payable to stockholders of
record on March 10, 1994. No cash dividends have been paid on Common Stock
since December 22, 1993 in order to provide capital for the Company's
equity investments in projects.
The Company's ability to declare and pay dividends is dependent,
among other things, on the ability of its project subsidiaries to declare
and pay dividends (and otherwise distribute cash) to it, the Company's
ability to service its parent company debt and the Company's ability to
meet certain criteria for paying dividends under its corporate credit
facility and under existing indentures of Debt Securities.
The ability of the Company's subsidiaries to declare and pay dividends
and otherwise distribute cash to the Company is subject to certain
limitations in the project loans and other documents entered into by such
project subsidiaries. Such limitations permit the payment of dividends out
of current cash flow for quarterly, semi-annual or annual periods only at
the end of such periods and only after payment of principal and interest on
project loans due at the end of such periods.
Cash dividend payments on Common Stock are limited to a certain
percentage of cash flow under the Company's corporate credit agreement.
The indentures relating to the Company's existing senior subordinated notes
preclude the payment of cash dividends if at the time of such payment or
after giving effect thereto an event of default (as defined) or an event
that, after the giving of notice or lapse of time or both, would become an
event of default, shall have occurred and be continuing, if certain fixed
charge coverage ratios are not met or if the payment of such dividends,
together with other restricted payments, would exceed certain limits.
Preferred Stock
As of September 30, 1996, there were no shares of Preferred
Stock outstanding.
The Board of Directors has the authority to issue Preferred
Stock in one or more classes or series and to fix, by resolution, the rights,
preferences, privileges and restrictions thereof, including dividend rights,
dividend rates, conversion rights, exchange rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of
shares constituting any class or series or the designation of such class or
series, without any further action or vote by the stockholders. Preferred
Stock, if issued, will not be entitled to any preemptive or similar rights.
The applicable Prospectus Supplement will describe the following terms of any
Preferred Stock in respect of which the Prospectus is being delivered (to the
extent applicable to such Preferred Stock): (i) the specific designation,
number of shares, seniority and purchase price; (ii) any liquidation
preference per share; (iii) any date of maturity; (iv) any redemption,
repayment or sinking fund provisions; (v) any dividend rate or rates and the
dates on which any such dividends will be payable (or the method by which such
rates or dates will be determined); (vi) any voting rights; (vii) if other
than the currency of the United States, the currency or currencies including
composite currencies in which such Preferred Stock is denominated and/or in
which payments will or may be payable; (viii) the method by which amounts in
respect of such Preferred Stock may be calculated and any commodities,
currencies or indices, or value, rate or price, relevant to such calculation;
(ix) whether such Preferred Stock is convertible or exchangeable and, if so,
the securities or rights into which such Preferred Stock is convertible or
exchangeable, and the terms and conditions upon which such conversions or
exchanges will be effected including conversion or exchange prices or rates,
the conversion or exchange period and any other related provisions; (x) the
place or places where dividends and other payments on the Preferred Stock will
be payable; and (xi) any additional voting, dividend, liquidation, redemption
and other rights, preferences, privileges, limitations and restrictions.
All shares of Preferred Stock offered hereby, or issuable upon
conversion, exchange or exercise of Securities, will, when issued, be fully
paid and non-assessable. Any shares of Preferred Stock that are issued would
have priority over the Common Stock with respect to dividend or liquidation
rights or both.
The transfer agent for each series of Preferred Stock will be
described in the applicable Prospectus Supplement.
Description of Certain Provisions of Certificate of Incorporation and By-Laws
The Certificate of Incorporation and By-Laws of AES contain
several provisions that may make the acquisition of control of AES by means of
a tender offer, open market purchases, a proxy fight or otherwise more
difficult. Set forth below is a description of certain of these provisions in
the Certificate of Incorporation and By-Laws.
Special Meetings of Stockholders. AES's By-Laws provide that,
unless otherwise prescribed by law, special meetings of stockholders may be
called by a resolution adopted by a majority of the entire Board of Directors,
by the Chairman of the Board or by the President and shall be called by the
Chairman of the Board or by the President upon written request of stockholders
owning at least 10% of stock entitled to vote. Only such business as shall be
specified in the notice of stockholders of the special meeting shall be
considered.
Stockholder Nomination of Directors. AES's By-Laws contain a
procedure for stockholder nomination of directors. The By-Laws provide that
any record owner of stock entitled to be voted generally in the election of
directors may nominate one or more persons for election as a director at a
stockholders meeting only if written notice is given to the Secretary of AES
of the intent to make such nomination. The notice must be given, with respect
to an annual meeting, not later than 90 days in advance of such annual meeting
and with respect to a special meeting, not later than the close of business on
the seventh day following the earlier of (a) the date on which notice of such
special meeting is first given to stockholders and (b) the date on which a
public announcement of such meeting is first made. Each notice must include
(i) the name and address of each stockholder who intends to appear in person
or by proxy to make the nomination and of the person or persons to be
nominated; (ii) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming them)
pursuant to which the nomination is to be made by the stockholder; (iii) such
other information regarding each nominee proposed by such stockholder as would
have been included in a proxy statement filed pursuant to Rule 14a-8 under the
Exchange Act; and (iv) the consent of each nominee to serve if elected. The
presiding officer of the meeting may refuse to acknowledge the nomination of
any person not made in compliance with this procedure.
The procedure for stockholder nomination of directors described
above may have the effect of precluding a nomination for election of directors
at a particular meeting if the required procedure is not followed.
Elimination of Liability; Indemnification. Except as set forth
below, the Certificate of Incorporation eliminates the liability of AES's
directors to AES or its stockholders for monetary damages resulting from
breaches of their fiduciary duties as directors. Directors remain liable for
breaches of their duty of loyalty to the Company or its stockholders, as well
as for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law and transactions from which a
director derives improper personal benefit. The Certificate of Incorporation
also does not absolve directors of liability under Section 174 of the Delaware
General Corporation Law (the "GCL"), which makes directors personally liable
for unlawful dividends or unlawful stock repurchases or redemptions if the
unlawful conduct is willful or results from negligence.
Under AES's By-Laws, and in accordance with Section 145 of the
GCL, AES shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than any action or suit by or in the right of the Company to procure a
judgment in its favor, a "derivative action") by reason of the fact that such
person is or was a director or officer of or employed by AES, or is or was
serving in such capacity or as an agent at the request of the Company for
another entity, to the full extent authorized by Delaware law, against
expenses (including, but not limited to, attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with the defense or settlement of such action, suit or proceeding if such
person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of AES, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe was
unlawful. AES shall indemnify persons in a derivative action under the same
conditions, except that no indemnification is permitted without judicial
approval if the person is adjudged to be liable to the Company in the
performance of his or her duty. Agents of the Company may be similarly
indemnified at the discretion of the Board of Directors.
Under Section 145 of the GCL, a similar of care is applicable
in the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such an action and then, where the person is adjudged to be
liable to AES, only if and to the extent that the Court of Chancery of the
State of Delaware or the court in which such action was brought determines
that such person is fairly and reasonably entitled to such indemnity and only
for such expenses as the court shall deem proper.
Pursuant to AES's By-Laws, a person eligible for
indemnification may have the expenses incurred in connection with any matter
described above paid in advance of a final disposition by AES. However, such
advances will only be made upon the delivery of an undertaking by or on
behalf of the indemnified person to repay all amounts so advanced if it is
ultimately determined that such person is not entitled to indemnification.
In addition, under AES's By-Laws, the Company may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of AES or of another corporation against any liability
asserted against and incurred by such person in such capacity, or arising out
of the person's status as such whether or not AES would have the power or the
obligation to indemnify such person against such liability under the
provisions of AES's By-Laws. The Company maintains directors' and officers'
insurance.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may consist of Senior Debt Securities,
Subordinated Debt Securities or Junior Subordinated Debt Securities. The
Senior Debt Securities will be issued under an indenture (the "Senior Debt
Indenture") between The AES Corporation, as issuer, and The First National
Bank of Chicago, as trustee. The Senior Subordinated Debt Securities will be
issued under an indenture (the "Senior Subordinated Debt Indenture") dated
as of July 1, 1996 between The AES Corporation, as issuer, and The First
National Bank of Chicago, as trustee. The Junior Subordinated Debt
Securities will be issued under an indenture (the "Junior Subordinated Debt
Indenture") between The AES Corporation, as issuer, and The First National
Bank of Chicago, as trustee. The First National Bank of Chicago, in its
capacity as trustee under each of the Indentures, is referred to herein as
the "Trustee."
Copies of the Indentures (or the forms thereof) have been
incorporated by reference or included herein as exhibits to the Registration
Statement of which this Prospectus is a part and are also available for
inspection at the office of the Trustee. The Indentures are subject to and
governed by the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Section references contained herein are applicable to each of the
Indentures. The following summaries of certain provisions of the Indentures
do not purport to be complete, and where reference is made to particular
provisions of the Indentures, such provisions, including definitions of
certain terms, are incorporated by reference as a part of such summaries or
terms, which are qualified in their entirety by such reference. The
Indentures are substantially identical except for provisions relating to
subordination.
General
None of the Indentures limits the amount of Debt Securities
which may be issued thereunder. Each Indenture provides that Debt Securities
issuable thereunder may be issued up to the aggregate principal amount which
may be authorized from time to time by the Company. Reference is made to the
Prospectus Supplement for the following terms of the Debt Securities (to the
extent such terms are applicable to such Debt Securities) in respect of which
this Prospectus is being delivered (the "Offered Debt Securities"): (i) the
designation, aggregate principal amount and authorized denominations of the
Offered Debt Securities; (ii) the date or dates on which the Offered Debt
Securities will mature; (iii) the rate or rates per annum at which the Offered
Debt Securities will bear interest and the method of calculating such rates,
if any; (iv) the dates on which any such interest will be payable and the
record dates for any such interest payments; (v) any mandatory or optional
redemption terms or prepayment, conversion, sinking fund or exchangeability
provisions; (vi) the place where the principal of and interest on the Offered
Debt Securities will be payable; (vii) if other than denominations of $1,000
or multiples thereof, the denominations in which the Offered Debt Securities
will be issuable; (viii) whether the Offered Debt Securities shall be issued
in the form of Global Securities (as defined below) or certificates; (ix)
additional provisions, if any, relating to the defeasance of the Offered Debt
Securities; (x) the currency or currencies, if other than the currency of the
United States, in which payment of the principal of and interest on the
Offered Debt Securities will be payable; (xi) whether the Offered Debt
Securities will be issuable in registered form or bearer form ("Bearer
Securities") or both and, if Bearer Securities are issuable, any restrictions
applicable to the exchange of one form for another and the offer, sale and
delivery of Bearer Securities; (xii) any applicable United States federal
income tax consequences, including whether and under what circumstances the
Company will pay additional amounts on Offered Debt Securities held by a
person who is not a U.S. Person (as defined in each Prospectus Supplement
relating to any particular series of Debt Securities offered thereby) in
respect of any tax, assessment or governmental charge withheld or deducted
and, if so, whether the Company will have the option to redeem such Offered
Debt Securities rather than pay such additional amounts; (xiii) the dates on
which premium, if any, will be payable; (xiv) the right of the Company, if
any, to defer payment of interest and the maximum length of such deferral
period; (xv) any listing on a securities exchange; (xvi) the initial public
offering price; and (xvii) other specific terms, including any additional
events of default or covenants provided for with respect to the Offered Debt
Securities.
As described in each Prospectus Supplement relating to any
particular series of Debt Securities offered thereby, the Indenture under
which such Debt Securities are issued may contain covenants limiting: (i) the
incurrence of debt by the Company; (ii) the incurrence of debt by subsidiaries
of the Company; (iii) the making of certain payments by the Company and its
subsidiaries; (iv) subsidiary mergers; (v) business activities of the Company
and its subsidiaries; (vi) the issuance of preferred stock of subsidiaries;
(vii) asset dispositions; (viii) transactions with affiliates; (ix) liens; and
(x) mergers and consolidations involving the Company.
Book-Entry System
If so specified in any accompanying Prospectus Supplement
relating to Debt Securities, Debt Securities of any series may be issued under
a book-entry system in the form of one or more global securities (each, a
"Global Security"). Each Global Security will be deposited with, or on behalf
of, a depositary, which, unless otherwise specified in the accompanying
Prospectus Supplement, will be The Depository Trust Company, New York, New
York (the "Depositary"). The Global Securities will be registered in the name
of the Depositary or its nominee.
The Depositary has advised the Company that the Depositary is a
limited purpose trust company organized under the laws of the State of New
York, a "banking organization" within the meaning of the New York banking law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations, some of which (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers, and trust companies that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.
Upon the issuance of a Global Security in registered form, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Debt Securities represented by such
Global Security to the accounts of participants. The accounts to be credited
will be designated by the underwriters, dealers, or agents, if any, or by the
Company, if such Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in the Global Security will be limited to
participants or persons that may hold interests through participants.
Ownership of beneficial interests by participants in the Global Security will
be shown on, and the transfer of that ownership interest will be effected only
through, records maintained by such participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the
ability to transfer beneficial interests in a Global Security.
So long as the Depositary or its nominee is the owner of record
of a Global Security, the Depositary or such nominee, as the case may be, will
be considered the sole owner or holder of the Debt Securities represented by
such Global Security for all purposes under the Indenture under which such
Debt Securities are issued. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have the Debt Security
represented by such Global Security registered in their names, and will not
receive or be entitled to receive physical delivery of such Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture under which such Debt Securities are issued. Accordingly, each
person owning a beneficial interest in a Global Security must rely on the
procedures of the Depositary and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder of record under the applicable Indenture
pursuant to which the Debt Securities relating to such Global Security are
issued. The Company understands that under existing industry practices, if
the Company requests any action of holders or if any owner of a beneficial
interest in a Global Security desires to give or take any action which a
holder is entitled to give or take under the applicable Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instruction of beneficial owners holding
through them.
Payments of principal of, premium, if any, and interest on Debt
Securities represented by a Global Security registered in the name of the
Depositary or its nominee will be made to such Depositary or such nominee, as
the case may be, as the registered owner of such Global Security. None of the
Company, the Trustee or any other agent of the Company or agent of the Trustee
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
such Global Security or for maintaining, supervising, or reviewing any records
relating to such beneficial ownership interests.
The Company has been advised by the Depositary that the
Depositary will credit participants, accounts with payments of principal,
premium, if any, or interest on the payment date thereof in amounts
proportionate to their respective beneficial interests in the principal amount
of the Global Security as shown on the records of the Depositary. The Company
expects that payments by participants to owners of beneficial interests in the
Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the
responsibility of such participants.
A Global Security may not be transferred except as a whole by
the Depositary to a nominee or successor of the Depositary or by a nominee of
the Depositary to another nominee of the Depositary. A Global Security
representing all but not part of an offering of Offered Debt Securities hereby
is exchangeable for Debt Securities in definitive form of like tenor and terms
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as depositary for such Global Security or if at any time the
Depositary is no longer eligible to be or in good standing as a clearing
agency registered under the Exchange Act, and in either case, a successor
depositary is not appointed by the Company within 90 days of receipt by the
Company of such notice or of the Company becoming aware of such ineligibility,
or (ii) the Company in its sole discretion at any time determines not to have
all of the Debt Securities represented in an offering of Offered Debt
Securities by a Global Security and notifies the Trustee thereof. A Global
Security exchangeable pursuant to the preceding sentence shall be exchangeable
for Debt Securities registered in such names and in such authorized
denominations as the Depositary for such Global Security shall direct. The
Debt Securities of a series may also be issued in the form of one or more
bearer global Debt Securities (a "Bearer Global Security") that will be
deposited with a common depositary for Euro-clear and CEDEL, or with a nominee
for such depositary identified in the Prospectus Supplement relating to such
series. The specific terms and procedures, including the specific terms of
the depositary arrangement, with respect to any portion of a series of Debt
Securities to be represented by a Bearer Global Security will be described in
the Prospectus Supplement relating to such series.
Senior Debt Securities
The payment of principal of, premium, if any, and interest on
the Senior Debt Securities will, to the extent and in the manner set forth in
the Senior Debt Indenture, rank pari passu with all unsecured and
unsubordinated debt of the Company.
Subordination of Senior Subordinated Debt Securities
The payment of principal of, premium, if any, and interest on
the Senior Subordinated Debt Securities will, to the extent and in the manner
set forth in the Senior Subordinated Debt Indenture, be subordinated in right
of payment to the prior payment in full, in cash equivalents, of all Senior
Debt.
Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, receivership, reorganization,
assignment for the benefit of creditors, marshaling of assets and liabilities
or any bankruptcy, insolvency or similar proceedings of the Company, the
holders of all Senior Debt will first be entitled to receive payment in full
of all amounts due or to become due thereon before the holders of the Senior
Subordinated Debt Securities will be entitled to receive any payment in
respect of the principal of, premium, if any, or interest on the Senior
Subordinated Debt Securities.
No payments on account of principal, premium, if any, or
interest in respect of the Senior Subordinated Debt Securities may be made by
the Company if there shall have occurred and be continuing a default in any
payment with respect to Senior Debt. In addition, during the continuance of
any other event of default (other than a payment default) with respect to
Designated Senior 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 Debt or from an agent of
such holders, no payments on account of principal, premium, if any, or
interest in respect of the Senior Subordinated Debt Securities may be made by
the Company for a period (the "Payment Blockage Period") commencing on the
date of delivery of such notice and ending 179 days thereafter (unless such
Payment Blockage Period shall be terminated by written notice to the Trustee
from the holders of such Designated Senior 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
Senior Subordinated Debt Securities 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 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 Debt, unless such event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
By reason of such subordination, in the event of insolvency,
funds that would otherwise be payable to holders will be paid to the holders
of Senior Debt to the extent necessary to pay the Senior Debt in full, and the
Company may be unable to meet fully its obligations with respect to the Senior
Subordinated Debt Securities.
"Debt" is defined to mean, 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.
"Designated Senior Debt" is defined to mean (i) Debt under the
Credit Agreement dated as of August 2, 1996 (the "Credit Agreement") among the
Company, the Banks named on the signature pages thereof and the Morgan
Guaranty Trust Company of New York, as agent for the banks, as such Credit
Agreement has been and may be amended, restated, supplemented or otherwise
modified from time to time and (ii) Debt constituting Senior Debt which, at
the time of its determination, (A) has an aggregate principal amount of at
least $30 million and (B) is specifically designated as "Designated Senior
Debt" by the Company.
"Senior Debt" is defined to mean 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 the Senior Subordinated Debt
and Subordinated Debt; provided that Senior Debt shall not include (i) the
Company's 9 3/4% Senior Subordinated Notes Due 2000 and the Company's 10
1/4% Senior Subordinated Notes due 2006 which rank pari passu with the
Senior Subordinated Debt Securities, (ii) Debt of the Company to any
affiliate, (iii) 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, (iv) any other Debt of the Company which by the terms of
the instrument creating or evidencing the same are specifically designated
as not being senior in right of payment to the Senior Subordinated Debt
Securities and (v) redeemable stock of the Company.
Subordination of Junior Subordinated Debt Securities
The payment of principal of, premium, if any, and interest on
the Junior Subordinated Debt Securities will, to the extent and in the manner
set forth in the Junior Subordinated Debt Indenture, be subordinated in right
of payment to the prior payment in full, in cash or cash equivalents, of all
Senior and Subordinated Debt of the Company.
Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, receivership, reorganization,
assignment for the benefit of creditors, marshaling of assets and liabilities
or any bankruptcy, insolvency or similar proceedings of the Company, the
holders of all Senior and Subordinated Debt will first be entitled to
receive payment in full of all amounts due or to become due thereon before
the holders of the Junior Subordinated Debt Securities will be entitled to
receive any payment in respect of the principal of, premium, if any, or
interest on the Junior Subordinated Debt Securities.
No payments on account of principal, premium, if any, or
interest in respect of the Junior Subordinated Debt Securities may be made by
the Company if there shall have occurred and be continuing a default in any
payment with respect to Senior and Subordinated Debt. 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 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 may be made by the Company
during a Payment Blockage Period in respect of such Junior Subordinated
Debt Securities (unless 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 Junior Subordinated
Debt Securities 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.
By reason of such subordination, in the event of insolvency,
funds that would otherwise be payable to holders of Junior Subordinated Debt
Securities will be paid to the holders of Senior and Subordinated Debt of the
Company to the extent necessary to pay such Debt in full, and the Company
may be unable to meet fully its obligations with respect to the Junior
Subordinated Debt Securities.
"Designated Senior and Subordinated Debt" is defined to mean
(i) Debt under the 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 as "Designated Senior and Subordinated Debt"
by the Company.
"Senior and Subordinated Debt" is defined to mean 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 the
Junior Subordinated Debt Indenture; provided that such Senior and
Subordinated Debt shall not include (i) Debt of the Company 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 are specifically designated
as not being senior in right of payment to the Junior Subordinated Debt
Securities, and in particular the Junior Subordinated Debt Securities shall
rank pari passu with all other debt securities and guarantees issued to an
AES Trust or any other 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.
Events of Default
An Event of Default, as defined in each of the Indentures and
applicable to Debt Securities issued under such Indenture, will occur with
respect to the Debt Securities of any series issued under such Indenture if:
(i) the Company defaults in the payment of principal of (or premium, if any,
on) any Debt Security of such series issued under such Indenture when the same
becomes due and payable at maturity, upon acceleration, redemption, mandatory
repurchase, or otherwise; (ii) the Company defaults in the payment of interest
on any Debt Security of such series issued under such Indenture when the same
becomes due and payable, and such default continues for a period of 30 days;
(iii) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in such Indenture with respect to the
Debt Securities of any series issued under such Indenture and such default or
breach continues for a period of 30 consecutive days after written notice by
the Trustee or by the holders (as defined in the Indenture) of 25% or more in
aggregate principal amount of the Debt Securities of all series issued under
such Indenture; (iv) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any of its
subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, (B) appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator, or
similar official of the Company or any of its subsidiaries or for all or
substantially all of the property and assets of the Company or any of its
subsidiaries or (C) the winding up or liquidation of the affairs of the
Company or any of its subsidiaries and, in each case, such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; (v)
the Company or any of its subsidiaries (A) commences a voluntary case under
any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official of the Company or any of its subsidiaries
or for all or substantially all of the property and assets of the Company
or any of its subsidiaries or (C) effects any general assignment for the
benefit of creditors; and (vi) any other Events of Default set forth in the
applicable Prospectus Supplement occur.
If an Event of Default (other than an Event of Default
specified in clause (iv) or (v) above that occurs with respect to the Company)
occurs with respect to the Debt Securities of any series issued under an
Indenture, and if such Event of Default is continuing under such Indenture,
then, and in each and every such case, except for any series of Debt
Securities issued under such Indenture the principal of which shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of the Debt Securities of any such
series issued under such Indenture (each such series voting as a separate
class) by written notice to the Company (and to the Trustee if such notice is
given by the holders (the "Acceleration Notice")), may, and the Trustee at the
request of such holders shall, declare the principal of, premium, if any, and
accrued interest on the Debt Securities of such series to be immediately due
and payable. Upon a declaration of acceleration, such principal of, premium,
if any, and accrued interest shall be immediately due and payable. If an
Event of Default specified in clause (iv) or (v) above occurs with respect to
the Company, the principal of, premium, if any, and accrued interest on the
Debt Securities then outstanding under each of the Indentures shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any holder. The holders of at least a majority
in principal amount of the outstanding Debt Securities of any series under an
Indenture may, by written notice to the Company and to the Trustee, waive all
past defaults with respect to Debt Securities of such series and rescind and
annul a declaration of acceleration with respect to Debt Securities of such
series and its consequences if (i) all existing Events of Default applicable
to Debt Securities of such series, other than the nonpayment of the principal
of, premium, if any, and interest on the Debt Securities that have become due
solely by such declaration of acceleration, have been cured or waived and (ii)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. For information as to the waiver of defaults, see
"--Modification and Waiver."
The holders of at least a majority in aggregate principal
amount of the outstanding Debt Securities of any series under an Indenture may
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. However, the Trustee may refuse to follow any direction that
conflicts with law or the applicable Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of holders of such series of Debt Securities
not joining in the giving of such direction and may take any other action it
deems proper that is not inconsistent with any such direction received from
holders of Debt Securities of such series. A holder may not pursue any remedy
with respect to the applicable Indenture or the Debt Securities of any series
issued under such Indenture unless: (i) the holder gives the Trustee written
notice of a continuing Event of Default; (ii) the holders of at least 25% in
aggregate principal amount of outstanding Debt Securities of such series make
a written request to the Trustee to pursue the remedy; (iii) such holder or
holders offer the Trustee indemnity satisfactory to the Trustee against any
costs, liability or expense; (iv) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series do not give
the Trustee a direction that is inconsistent with the request. However, such
limitations do not apply to the right of any holder of a Debt Security to
receive payment of the principal of, premium, if any, or interest on, such
Debt Security or to bring suit for the enforcement of any such payment, on or
after the due date expressed in the Debt Securities, which right shall not be
impaired or affected without the consent of the holder.
Each of the Indentures requires that certain officers of the
Company certify, on or before a date not more than four months after the end
of each fiscal year, that to the best of such officers, knowledge, the Company
has fulfilled all its obligations under such Indenture. The Company is also
obligated to notify the Trustee of any default or defaults in the performance
of any covenants or agreements under any of the Indentures.
Modification and Waiver
Each of the Indentures provides that the Company and the
Trustee may amend or supplement such Indenture or the Debt Securities of any
series issued under such Indenture without notice to or the consent of any
holder: (i) to cure any ambiguity, defect, or inconsistency in such Indenture;
provided that such amendments or supplements shall not adversely affect the
interests of the holders in any material respect; (ii) to comply with Article
5 of such Indenture; (iii) to comply with any requirements of the Commission
in connection with the qualification of such Indenture under the Trust
Indenture Act of 1939, as amended; (iv) to evidence and provide for the
acceptance of appointment with respect to the Debt Securities of any or all
series issued under such Indenture by a successor Trustee; (v) to establish
the form or forms of Debt Securities of any series issued under such Indenture
or of the coupons pertaining to such Debt Securities as permitted by such
Indenture; (vi) to provide for uncertificated Debt Securities and to make all
appropriate changes for such purpose; and (vii) to make any change that does
not materially and adversely affect the rights of any holder.
Each of the Indentures also provides that modifications and
amendments of such Indenture may be made by the Company and the Trustee with
the consent of the holders of not less than a majority in aggregate principal
amount of the outstanding Debt Securities of each series issued under such
Indenture affected thereby (each series voting as a separate class); provided,
however, that no such modification or amendment may, without the consent of
each holder affected thereby, (i) change the stated maturity of the principal
of, or any sinking fund obligation or any installment of interest on, any Debt
Security issued under such Indenture, (ii) reduce the principal amount of, or
premium, if any, or interest on, any Debt Security issued under such
Indenture, (iii) reduce the above-stated percentage of outstanding Debt
Securities issued under such Indenture the consent of whose holders is
necessary to modify or amend such Indenture with respect to the Debt
Securities of any series issued under such Indenture, (iv) reduce the
percentage or aggregate principal amount of outstanding Debt Securities of any
series issued under the Indenture the consent of whose holders is necessary
for waiver of compliance with certain provisions of such Indenture or for
waiver of certain defaults. A supplemental indenture which changes or
eliminates any covenant or other provision of an Indenture which has expressly
been included solely for the benefit of one or more particular series of Debt
Securities issued under such Indenture, or which modifies the rights of
holders of Debt Securities of such series with respect to such covenant or
provision, shall be deemed not to affect the rights under the applicable
Indenture of the holders of Debt Securities of any other series issued under
such Indenture or of the coupons appertaining to such Debt Securities. It
shall not be necessary for the consent of the holders under this section of an
Indenture to approve the particular form of any proposed amendment,
supplement, or waiver, but it shall be sufficient if such consent approves the
substance thereof. After an amendment, supplement, or waiver under this
section of an Indenture becomes effective, the Company shall give to the
holders affected thereby a notice briefly describing the amendment,
supplement, or waiver. The Company will mail supplemental indentures to
holders upon request. Any failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture or waiver.
Restriction on Mergers, Consolidations and Sales of Assets
Pursuant to the Indentures, the Company may not consolidate
with, merge with or into, or transfer all or substantially all of its assets
(as an entirety or substantially an entirety in one transaction or a series of
related transactions), to any Person (as defined in the Indentures) unless:
(i) the Company shall be the continuing Person, or the Person (if other than
the Company) formed by such consolidation or into which the Company is merged
or to which properties and assets of the Company are transferred shall be a
solvent corporation organized and existing under the laws of the United States
or any State thereof or the District of Columbia and shall expressly assume in
writing all the obligations of the Company under the Notes, (ii) immediately
after giving effect to such transaction no Event of Default or event or
condition which through the giving of notice or lapse of time or both would
become an Event of Default shall have occurred and be continuing and (iii)
such other conditions as may be established in connection with the issuance of
the applicable Debt Securities.
Defeasance and Discharge
Each of the Indentures provides that the Company shall be
deemed to have paid and shall be discharged from any and all obligations in
respect of the Debt Securities of any series issued under such Indenture on
the 123rd day after the deposit referred to below has been made, and the
provisions of such Indenture will no longer be in effect with respect to the
Debt Securities of such series issued thereunder (except for, among other
matters, certain obligations to register the transfer or exchange of the Debt
Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, to maintain paying agencies and to hold monies for
payment in trust) if, among other things, (A) the Company has deposited with
the Trustee, in trust, money and/or U.S. Government Obligations that through
the payment of interest and principal in respect thereof, in accordance with
their terms will provide money in an amount sufficient to pay the principal
of, premium, if any, and accrued interest on the applicable Debt Securities,
on the due date thereof or earlier redemption (irrevocably provided for under
arrangements satisfactory to the Trustee), as the case may be, in accordance
with the terms of such Indenture and the applicable Debt Securities, (B) the
Company has delivered to the Trustee (i) either (x) an opinion of counsel to
the effect that holders will not recognize income, gain or loss for federal
income tax purposes as a result of the Company's exercise of its option under
this "Defeasance" provision 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, which
opinion of counsel must be based upon a ruling of the Internal Revenue Service
to the same effect unless there has been a change in applicable federal income
tax law or related treasury regulations after the date of such Indenture that
a ruling is no longer required or (y) a ruling directed to the Trustee
received from the Internal Revenue Service to the same effect as the
aforementioned opinion of counsel and (ii) an opinion of counsel to the effect
that the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and after the passage of 123 days following the deposit,
the trust fund will not be subject to the effect of Section 547 of the U.S.
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law, (C)
immediately after giving effect to such deposit on a pro forma basis, no Event
of Default, or event that after the giving of notice or lapse of time or both
would become an Event of Default, shall have occurred and be continuing on the
date of such deposit or during the period ending on the 123rd day after the
date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which the Company is a party or by which the Company is bound, (D) the
Company is not prohibited from making payments in respect of the applicable
Debt Securities by the subordination provisions contained in such Indenture
and (E) if at such time the applicable Debt Securities are listed on a
national securities exchange, the Company has delivered to the Trustee an
opinion of counsel to the effect that such Debt Securities will not be
delisted as a result of such deposit, defeasance and discharge.
As more fully described in the Prospectus Supplement, each of
the Indentures also provides for defeasance of certain covenants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
AES may issue Stock Purchase Contracts, representing contracts obligating
holders to purchase from the Company, and the Company to sell to the holders,
a specified number of shares of Common Stock at a future date or dates. The
price per share of Common Stock may be fixed at the time the Stock Purchase
Contracts are issued or may be determined by reference to a specific formula
set forth in the Stock Purchase Contracts. The Stock Purchase Contracts may
be issued separately or as a part of units ("Stock Purchase Units") consisting
of a Stock Purchase Contract and Debt Securities or debt obligations of third
parties, including U.S. Treasury securities, securing the holders' obligations
to purchase the Common Stock under the Stock Purchase Contracts. The Stock
Purchase Contracts may require AES to make periodic payments to the holders of
the Stock Purchase Units or vice versa, and such payments may be unsecured or
prefunded on some basis. The Stock Purchase Contracts may require holders to
secure their obligations thereunder in a specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not purport to be complete and will be qualified in its
entirety by reference to the Stock Purchase Contracts, and, if applicable,
collateral arrangements and depositary arrangements, relating to such Stock
Purchase Contracts or Stock Purchase Units.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in any of three
ways (or in any combination thereof): (i) through underwriters or dealers;
(ii) directly to a limited number of purchasers or to a single purchaser; or
(iii) through agents. The Prospectus Supplement with respect to any Offered
Securities will set forth the terms of the offering of such Offered
Securities, including the name or names of any underwriters, dealers or agents
and the respective amounts of such Offered Securities underwritten or
purchased by each of them, the initial public offering price of such Offered
Securities and the proceeds to the Company from such sale, any discounts,
commissions or other items constituting compensation from the Company and any
discounts, commissions or concessions allowed or reallowed or paid to dealers
and any securities exchanges on which such Offered Securities may be listed.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any Offered Securities,
such Offered Securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Such Offered Securities may be
either offered to the public through underwriting syndicates represented by
managing underwriters, or directly by underwriters. Unless otherwise set
forth in the Prospectus Supplement, the obligations of the underwriters to
purchase such Offered Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all of such
Offered Securities if any are purchased.
Offered Securities may be sold directly by the Company or
through agents designated by the Company from time to time. Any agent
involved in the offer or sale of Offered Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters, dealers or agents to solicit offers by certain
purchasers to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements
entered into with the Company to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL MATTERS
The legality of the Securities offered hereby will be passed
upon for the Company by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements incorporated in this
Prospectus by reference from the Company's Registration Statement on Form S-3
filed on June 12, 1996, and the consolidated financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated by reference herein, and such consolidated financial
statements and consolidated financial statement schedules have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of Light Servicos de Electricidade S.A.
incorporated in this Prospectus by reference, from the Form 8-K of the AES
Corporation dated May 30, 1996, for the years ended December 31, 1995 and
1994 have been audited by Deloitte Touche Tohmatsu, Rio de Janeiro, Brazil,
independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting
and auditing.
======================================== ====================================
No person has been authorized to give
any information or to make any
representations,other than those $750,000,000
contained or incorporated by reference
in this Prospectus or any Prospectus
Supplement, in connection with any
offering contemplated hereby, and, if The AES Corporation
given or made, such information or
representations must not be relied upon Debt Securities
as having been authorized by the company, Common Stock
any underwriter, agent or dealer. Preferred Stock
Neither the delivery of this Prospectus Stock Purchase Contracts
or any Prospectus Supplement nor any Stock Purchase Units
sale made hereunder or thereunder
shall under any circumstances create
any implication that there has been no
change in the affairs of the Company
since the date hereof or thereof.
Neither this Prospectus nor any __________
Prospectus Supplement shall constitute PROSPECTUS
an offer to sell or a solicitation of an __________
offer to buy any securities by
anyone in any jurisdiction in which
such offer or solicitation is not
authorized or in which the person
making such offer or solicitation is not
qualified to do so or to any person
to whom it is unlawful to make such
offer or solicitation.
Table of Contents
Page
----
Available Information............... 1
Incorporation of Certain Information
by Reference...................... 1
Use of Proceeds..................... 2
Ratios of Earnings to Fixed Charges. 2
The Company......................... 3
Risk Factors........................ 4
Description of Capital Stock........ 10
Description of Debt Securities...... 14
Description of Stock Purchase
Contracts and Stock Purchase
Units.............................. 22
Plan of Distribution................. 23
Legal Matters........................ 23
Experts.............................. 23 , 1996
======================================== ====================================
SUBJECT TO COMPLETION, DATED NOVEMBER 18, 1996
PROSPECTUS
[LOGO]
The AES Corporation
$750,000,000
Junior Subordinated Debt Securities
AES Trust I
AES Trust II
AES Trust III
Preferred Trust Securities guaranteed to the extent set forth herein by The
AES Corporation
The AES Corporation (the "Company" or "AES") may from time to time offer,
together or separately unsecured junior subordinated securities (the "Junior
Subordinated Debt Trust Securities") consisting of debentures, notes or other
evidences of indebtedness in one or more series and in amounts, at prices and
on terms to be determined at or prior to the time of any such offering. The
Junior Subordinated Debt Trust Securities when issued will be unsecured
obligations of the Company. The Company's obligations under the Junior
Subordinated Debt Trust Securities will be subordinate and junior in right of
payment to all Senior and Subordinated Debt (as defined herein) of the
Company.
See "Risk Factors" Beginning On Page 4 For A Discussion of Certain
Factors That Should Be Considered By Prospective Investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AES Trust I, AES Trust II and AES Trust III (collectively, the "AES
Trusts"), each a statutory business trust formed under the laws of the
State of Delaware, may offer and sell, from time to time, preferred trust
securities representing undivided beneficial interests in the assets of the
respective AES Trust (the "Preferred Securities" and, together with the
Junior Subordinated Debt Trust Securities, the "Securities"). The
Preferred Securities may be offered in amounts, at prices and on terms to
be determined at or prior to the time of any such offering. The payment of
periodic cash distributions ("distributions") with respect to Preferred
Securities of each of the AES Trusts out of moneys held by the Property
Trustee (as defined herein) of each of the AES Trusts, and payments on
liquidation of each AES Trust and on redemption of Preferred Securities of
such AES Trust, will be guaranteed by the Company as and to the extent
described herein (each such guarantee, a "Preferred Securities Guarantee").
See "Description of the Preferred Securities Guarantees." The Company's
obligation under each Preferred Securities Guarantee is an unsecured
obligation of the Company and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Company, including the Junior
Subordinated Debt Trust Securities, except those made pari passu or
subordinate by their terms, and (ii) senior to all capital stock now or
hereafter issued by the Company and to any guarantee now or hereafter
entered into by the Company in respect of any of its capital stock. Junior
Subordinated Debt Trust Securities may be issued and sold from time to time
in one or more series by the Company to an AES Trust, or a trustee of such
trust, in connection with the investment of the proceeds from the offering
of Preferred Securities and Common Securities (as defined herein) of such
AES Trust. The Junior Subordinated Debt Trust Securities purchased by an
AES Trust may be subsequently distributed pro rata to holders of Preferred
Securities and Common Securities in connection with the dissolution of such
AES Trust, upon the occurrence of certain events as may be described in an
accompanying Prospectus Supplement.
Specific terms of the Junior Subordinated Debt Trust Securities and
Preferred Securities in respect of which this Prospectus is being delivered
(the "Offered Securities") will be set forth in a Prospectus Supplement
with respect to such Offered Securities, which will describe, without
limitation and where applicable, the following: (i) in the case of Junior
Subordinated Debt Trust Securities, the specific designation, aggregate
principal amount, authorized denomination, maturity, premium, if any,
exchangeability, redemption, conversion, prepayment or sinking fund
provisions, if any, interest rate (which may be fixed or variable), if any,
method, if any, of calculating interest payments, and dates for payment
thereof, dates on which premium, if any, will be payable, the right of the
Company, if any, to defer payment of interest on the Junior Subordinated
Debt Trust Securities and the maximum length of such deferral period, the
public offering price, any listing on a securities exchange and other
specific terms of the offering; and (ii) in the case of Preferred
Securities, the specific designation, number of securities, liquidation
amount per security, initial public offering price, and any listing on a
securities exchange, distribution rate (or method of calculation thereof),
dates on which distributions shall be payable and dates from which
distributions shall accrue, voting rights (if any), terms for any
conversion or exchange into other securities, any redemption or sinking
fund provisions, any other rights, preferences, privileges, limitations or
restrictions relating to the Preferred Securities and the terms upon which
the proceeds of the sale of the Preferred Securities shall be used to
purchase a specific series of Junior Subordinated Debt Trust Securities of
the Company. Unless otherwise indicated in the Prospectus Supplement, the
Company does not intend to list any of the Offered Securities on a national
securities exchange.
Any Prospectus Supplement relating to any series of Offered Securities
will contain information concerning certain United States federal income tax
considerations, if applicable, to the Offered Securities. By separate
prospectus, the form of which is included in the Registration Statement of
which this Prospectus is a part, the Company may offer from time to time debt
securities or preferred stock. The aggregate initial public offering price of
the securities to be offered by this Prospectus and such other prospectus
shall not exceed $750,000,000.
The Offered Securities may be offered directly, through agents designated
from time to time, through dealers or through underwriters. Such agents or
underwriters may act alone or with other agents or underwriters. See "Plan
of Distribution." Any such agents, dealers or underwriters will be set forth
in a Prospectus Supplement. If an agent of the Company and/or any AES Trust,
or a dealer or underwriter is involved in the offering of the Offered
Securities, the agent's commission, dealer's purchase price, underwriter's
discount and net proceeds to the Company, as the case may be, will be set
forth in, or may be calculated from, the Prospectus Supplement. Any
underwriters, dealers or agents participating in the offering may be deemed
"underwriters" within the meaning of the Securities Act of 1933.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is November , 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OF
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
AVAILABLE INFORMATION
The AES Corporation is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy and information
statements and other information with the Securities and Exchange Commission
(the "Commission"). These reports, proxy and information statements and other
information may be inspected without charge and copied at the public reference
facilities maintained by the Commission at its principal offices at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such materials also can be obtained at prescribed
rates from the Public Reference Section of the Commission at the principal
offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be inspected at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities offered hereby (including
all amendments and supplements thereto, the "Registration Statement"). This
Prospectus, which forms a part of the Registration Statement, does not contain
all the information set forth in the Registration Statement and the exhibits
filed thereto, certain parts of which have been omitted in accordance with the
rules and regulations of the Commission. Statements contained herein
concerning the provisions of any documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto can be inspected and copied at
the public reference facilities and regional and other offices referred to
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference
thereto and makes a part hereof the following documents, heretofore filed with
the Commission pursuant to the Exchange Act: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995; (ii) the Company's
Quarterly Report on Form 10-Q for the quarters ended September 30, 1996, June
30, 1996 and March 31, 1996, (iii) the Company's Current Reports on Form
8-K filed on July 1, 1996, June 12, 1996, May 30, 1996, February 26, 1996
and February 6, 1996 (iv) the description of the Common Stock contained in
the Company's Registration Statement on Form 8-A (File No.0-19281),
filed on October 10, 1996 and (v) the Company's Registration Statement on
Form S-3 filed on June 12, 1996.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to termination of the offering being made hereby shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the respective dates of the filing of such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is
a part to the extent that a statement contained herein or in any subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein, modifies or supersedes such earlier statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus or such Registration
Statement.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus has been delivered, upon written or
oral request of any such person, a copy of any and all of the documents
referred to above which have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents which are not specifically
incorporated by reference into such documents. Requests for such copies
should be directed to William R. Luraschi, General Counsel and Secretary, The
AES Corporation, 1001 North 19th Street, Arlington, Virginia 22209, telephone
(703) 522-1315.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus
Supplement, proceeds from the sale of the Junior Subordinated Debt Trust
Securities will be used by the Company for general corporate purposes and
initially may be temporarily invested in short-term securities.
Each AES Trust will use all proceeds received from the sale of
its Trust Securities to purchase Junior Subordinated Debt Trust Securities
from the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------------------------------------ -------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges .. 1.31 1.37 1.63 2.08 2.18 2.04
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes
and minority interest, plus fixed charges, less capitalized interest, less
excess of earnings over dividends of less-than-fifty-percent-owned
companies. Fixed charges consist of interest (including capitalized
interest) on all indebtedness, amortization of debt discount and expense
and that portion of rental expense which the Company believes to be
representative of an interest factor. A statement setting forth the
computation of the above ratios of earnings to fixed charges is on file as
an exhibit to the Registration Statement of which this Prospectus is a
part.
During the period from January 1, 1991 until September 30, 1996, no
shares of Preferred Stock were issued or outstanding, and during that
period the Company did not pay any Preferred Stock dividends.
THE COMPANY
With a presence in over 35 countries, The AES Corporation is a
global power company committed to supplying electricity to customers
world-wide in a socially responsible way. The Company, based in Arlington,
Virginia, markets power principally from electric generating facilities that
it develops, owns and operates. AES was one of the original entrants in the
independent power market and today is one of the world's largest independent
power companies, based on net equity ownership of generating capacity (in
megawatts) in operation or under construction.
Over the last six years, the Company has experienced
significant growth. This growth has resulted primarily from the development
and construction of new plants ("greenfield development") and also from the
acquisition of existing plants, primarily through competitively bid
privatization initiatives outside the United States.
In part, the Company's strategy in helping meet the world's
need for electricity is to participate in competitive power generation markets
as they develop either by greenfield development or by acquiring and operating
existing facilities in these markets.
Other elements of the Company's strategy include:
bullet Supplying energy to customers at the lowest cost possible,
taking into account factors such as reliability and environmental
performance.
bullet Constructing or acquiring projects of a relatively large
size (generally larger than 100 megawatts).
bullet Entering into power sales contracts with electric utilities
or other customers with credit strength.
The Company also strives for operating excellence as a key
element of its strategy, which it believes it accomplishes by minimizing
organizational layers and maximizing company-wide participation in
decision-making. AES has attempted to create an operating environment that
results in safe, clean and reliable electricity generation. Because of this
emphasis, the Company prefers to operate all facilities which it develops or
acquires; however, there can be no assurance that the Company will have
operating control of all of its facilities in the future.
The Company, a corporation organized under the laws of
Delaware, was formed in 1981. The principal office of the Company is located
at 1001 North 19th Street, Arlington, Virginia 22209, and its telephone number
is (703) 522-1315.
RISK FACTORS
Purchasers of the Securities should read this entire Prospectus
carefully. Ownership of the Securities involves certain risks. The following
factors should be considered carefully in evaluating AES and its business
before purchasing the Securities offered by this Prospectus.
Leverage and Subordination. The Company and its subsidiaries
had approximately $2.1 billion of outstanding indebtedness at September 30,
1996. As a result of the Company's level of debt, the Company might be
significantly limited in its ability to meet its debt service obligations, to
finance the acquisition and development of additional projects, to compete
effectively or to operate successfully under adverse economic conditions. As
of September 30, 1996, the Company had a consolidated ratio of total debt to
total book capitalization (including current debt) of approximately 75%.
The Junior Subordinated Debt Trust Securities will be
subordinated to all Senior and Senior Subordinated Debt including, but not
limited to, the Company's current $425 million credit facility debt. As of
September 30, 1996, the Company had approximately $656 million in aggregate
principal amount of Senior and Senior Subordinated Debt.
Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, receivership, reorganization,
assignment for the benefit of creditors, marshaling of assets and liabilities
or any bankruptcy, insolvency or similar proceedings of the Company, the
holders of Senior and Senior Subordinated Debt will first be entitled to
receive payment in full of all amounts due or to become due under all
Senior and Subordinated Debt before the holders of the Junior Subordinated
Debt Trust Securities will be entitled to receive any payment in respect
of the principal of, premium, if any, or interest on such Junior
Subordinated Debt Trust Securities. No payments on account of principal,
premium, if any, or interest in respect of the Junior Subordinated Debt
Trust Securities may be made if there shall have occurred and be
continuing a default in any payment under any Senior and Senior
Subordinated Debt or during certain periods when an event of default under
certain Senior and Subordinated Debt permits the lenders thereunder to
accelerate the maturing of such Senior and Senior Subordinated Debt. See
"Description of Junior Subordinated Debt Trust Securities--Subordination."
The Preferred Securities will rank subordinate and junior in right of
payment to all other liabilities of the Company, including the Junior
Subordinated Debt Trust Securities, except those made pari passu by their
terms and (ii) senior to all capital stock now or hereafter issued by the
Company and to any guarantee now or hereafter entered into by the Company
in respect of any of its capital stock. See "Description of the Preferred
Securities Guarantees--Status of the Preferred Securities Guarantees."
The Junior Subordinated Debt Trust Securities will be
effectively subordinated to the indebtedness and other obligations (including
trade payables) of the Company's subsidiaries. At September 30, 1996, the
indebtedness and obligations of the Company's subsidiaries, aggregated
approximately $1.5 billion. The ability of the Company to pay principal of,
premium, if any, and interest on the Junior Subordinated Debt Trust Securities
will be dependent upon the receipt of funds from its subsidiaries by way of
dividends, fees, interest, loans or otherwise. There are no terms in the
Junior Subordinated Debt Trust Securities, the Preferred Securities or the
Preferred Securities Guarantee that limit the Company's or its subsidiaries'
ability to incur additional indebtedness. Most of the Company's subsidiaries
with interests in power generation facilities currently have in place
arrangements that restrict their ability to make distributions to the Company
by way of dividends, fees, interest, loans or otherwise. The Company's
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Junior
Subordinated Debt Trust Securities or the Preferred Securities or to make any
funds available therefor, whether by dividends, loans or other payments, and
do not guarantee the payment of interest on or principal of the Junior
Subordinated Debt Trust Securities or the Preferred Securities. Any right of
the Company to receive any assets of any of its subsidiaries upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshaling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings of the Company (and the
consequent right of the holders of the Junior Subordinated Debt Trust
Securities and the Preferred Securities to participate in the distribution of,
or to realize proceeds from, those assets) will be effectively subordinated to
the claims of any such subsidiary's creditors (including trade creditors and
holders of debt issued by such subsidiary). The Company currently conducts
substantially all of its operations through its subsidiaries. See
"Description of the Preferred Securities Guarantees--Status of the Preferred
Securities Guarantees" and "Description of the Junior Subordinated Debt
Securities--Subordination."
Ability of AES to Make Distributions. The ability of the AES
Trusts to make distributions and other payments on the Preferred Securities is
solely dependent upon the Company making interest and other payments on the
Junior Subordinated Debt Trust Securities deposited as trust assets as and
when required. If the Company were not to make distributions or other
payments on the Junior Subordinated Debt Trust Securities for any reason,
including as a result of the Company's election to defer the payment of
interest on the Junior Subordinated Debt Trust Securities by extending the
interest period on the Junior Subordinated Debt Trust Securities, the AES
Trusts will not make payments on the Trust Securities (as defined herein). In
such an event, holders of the Preferred Securities would not be able to rely
on the Preferred Securities Guarantee since distributions and other payments
on the Preferred Securities are subject to such Guarantee only if and to the
extent that the Company has made a payment to the Property Trustee (as defined
herein) of interest or principal on the Junior Subordinated Debt Trust
Securities deposited in the Trust as trust assets. Instead, holders of
Preferred Securities would rely on the enforcement by the Property Trustee of
its rights as registered holder of the Junior Subordinated Debt Trust
Securities against the Company pursuant to the terms of the Indenture (as
defined herein). However, if the Trust's failure to make distributions on the
Preferred Securities is a consequence of the Company's exercise of its right
to extend the interest payment period for the Junior Subordinated Debt Trust
Securities, the Property Trustee will have no right to enforce the payment of
distributions on the Preferred Securities until an Event of Default (as
defined herein) under the Declaration (as defined herein) shall have occurred.
The Declaration provides that the Company shall pay for all
debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the AES Trusts, including any taxes and all costs
and expenses with respect thereto, to which the AES Trusts may become subject,
except for United States withholding taxes. No assurance can be given that
the Company will have sufficient resources to enable it to pay such debts,
obligations, costs and expenses on behalf of the AES Trusts.
Option to Extend Interest Payment Period; Tax Impact of
Extension. So long as the Company shall not be in default in the payment of
interest on the Junior Subordinated Debt Trust Securities, the Company has the
right under the Indenture to defer payments of interest on the Junior
Subordinated Debt Trust Securities by extending the interest payment period
from time to time on the Junior Subordinated Debt Trust Securities for an
extension period not exceeding 20 consecutive quarterly interest periods (an
"Extension Period"), during which no interest shall be due and payable. In
such an event, quarterly distributions on the Preferred Securities would not
be made by the applicable AES Trust during any such Extension Period. If the
Company exercises the right to extend an interest payment period, the Company
may not during such Extension Period declare or pay dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock; provided that (i) the Company
will be permitted to pay accrued dividends upon the exchange or redemption of
any series of preferred stock of the Company as may be outstanding from time
to time, in accordance with the terms of such stock and (ii) the foregoing
will not apply to stock dividends paid by the Company. Under the Amended and
Restated Certificate of Incorporation the Company is authorized to issue up to
1,000,000 shares of preferred stock. As of September 30, 1996, no shares of
the Company's preferred stock were outstanding. The Company may from time to
time offer shares of its preferred stock to the public.
Prior to the termination of any Extension Period, the Company
may further extend such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
20 consecutive quarterly interest periods. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. The
Company may also prepay at any time all or any portion of the interest accrued
during an Extension Period. Consequently, there could be multiple Extension
Periods of varying lengths throughout the term of the Junior Subordinated Debt
Trust Securities, not to exceed 20 consecutive quarters or to cause any
extension beyond the maturity of the Junior Subordinated Debt Trust
Securities. See any accompanying Prospectus Supplement relating to Junior
Subordinated Debt Trust Securities.
Because the Company has the right to extend the interest
payment period for an Extension Period of up to 20 consecutive quarterly
interest periods on various occasions, the Junior Subordinated Debt Trust
Securities will be treated as issued with "original issue discount" for United
States federal income tax purposes. As a result, holders of Preferred
Securities will be required to include their pro rata share of original issue
discount in gross income as it accrues for United States federal income tax
purposes in advance of the receipt of cash. Generally, all of a
securityholder's taxable interest income with respect to the Junior
Subordinated Debt Trust Securities will be accounted for as "original issue
discount" and actual distributions of stated interest will not be separately
reported as taxable income. See any accompanying Prospectus Supplement
relating to Junior Subordinated Debt Trust Securities.
Special Event Redemption or Distribution. Upon the occurrence
and during the continuation of a Tax Event or Investment Company Event (each
as defined herein), which may occur at any time, the applicable AES Trust
shall, unless the Junior Subordinated Debt Trust Securities are redeemed in
the limited circumstances described below, be dissolved with the result that
Junior Subordinated Debt Trust Securities having an aggregate principal amount
equal to the aggregate stated liquidation amount of, and bearing accrued and
unpaid distributions on, the Preferred Securities and Common Securities would
be distributed on a Pro Rata Basis (as defined herein under "The AES Trusts")
to the holders of the Preferred Securities and Common Securities in
liquidation of such Trust. In the case of a Tax Event, in certain
circumstances, the Company shall have the right to redeem at any time the
Junior Subordinated Debt Trust Securities in whole or in part, in which event
the applicable AES Trust will redeem Preferred Securities and Common
Securities on a Pro Rata Basis to the same extent as the Junior Subordinated
Debt Trust Securities are redeemed. There can be no assurance as to the
market prices for Preferred Securities or the Junior Subordinated Debt Trust
Securities which may be distributed in exchange for Preferred Securities if a
dissolution and liquidation of the applicable AES Trust were to occur.
Accordingly, the Preferred Securities that an investor may purchase, or the
Junior Subordinated Debt Trust Securities that the investor may receive on
dissolution and liquidation of the applicable AES Trust, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby. Because holders of Preferred Securities may
receive Junior Subordinated Debt Trust Securities upon the occurrence of a
Special Event (as defined herein), prospective purchasers of Preferred
Securities are also making an investment decision with regard to the Junior
Subordinated Debt Trust Securities and should carefully review all the
information regarding the Junior Subordinated Debt Trust Securities contained
in any accompanying Prospectus Supplement relating to Junior Subordinated Debt
Trust Securities.
If enacted in their present form, certain legislative proposals
in the Revenue Reconciliation Bill of 1996 (the "Bill") would prevent the
Company from deducting interest on the Junior Subordinated Debt Trust
Securities. The Bill as proposed would be effective generally for instruments
issued on or after December 7, 1995. However, on March 29, 1996, the Chairmen
of the Senate Finance and House Ways and Means Committees issued a joint
statement to the effect that it was their intention that the effective date of
the President's legislative proposals, if adopted, will be no earlier than the
date of appropriate Congressional action.
There can be no assurance, however, that current or future
federal legislative proposals if enacted would not prevent the Company from
deducting interest on the Junior Subordinated Debt Trust Securities. This
would constitute a Tax Event and could result in the distribution of any
Junior Subordinated Debt Trust Securities to holders of the Preferred
Securities or, in certain circumstances, the redemption of such securities by
the Company and the distribution of the resulting cash in redemption of the
Preferred Securities. See any accompanying Prospectus Supplement relating to
Junior Subordinated Debt Trust Securities.
"Tax Event" means that the Regular Trustees (as defined herein)
shall have obtained an opinion of a nationally recognized independent tax
counsel experienced in such matters (a "Dissolution Tax Opinion") to the
effect that on or after the date of any accompanying Prospectus Supplement
relating to Junior Subordinated Debt Trust Securities 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 the date of such Prospectus
Supplement, there is more than an insubstantial risk that (i) the applicable
AES Trust is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to income accrued or received on the
Junior Subordinated Debt Trust Securities, (ii) the applicable AES Trust is,
or will be within 90 days of the date thereof, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by the Company to the applicable AES Trust on the Junior
Subordinated Debt Trust Securities is not, or within 90 days of the date
thereof will not be, deductible by the Company for United States federal income
tax purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of nationally recognized independent counsel
experienced in practice under the Investment Company Act of 1940, as amended
(the "1940 Act"), that as a result of the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that an
AES Trust is or will be considered an "investment company" which is required
to be registered under the 1940 Act, which Change in 1940 Act Law becomes
effective on or after the date of any accompanying Prospectus Supplement
relating to Junior Subordinated Debt Trust Securities.
"Special Event" means a Tax Event or an Investment Company
Event.
Limiting Voting Rights. Holders of Preferred Securities will
have limited voting rights, but will not be able to appoint, remove or
replace, or to increase or decrease the number of, Trustees, which rights are
vested exclusively in the Common Securities (as defined herein under "The AES
Trusts").
Trading Prices of Preferred Securities. The Preferred
Securities constitute a new issue of securities with no established trading
market. The Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the
underlying Junior Subordinated Debt Trust Securities. A holder who disposes
of his Preferred Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest on the Junior
Subordinated Debt Trust Securities through the date of disposition in income
as ordinary income, and to add such amount to his adjusted tax basis in his
pro rata share of the underlying Junior Subordinated Debt Trust Securities
deemed disposed of. Accordingly, such a holder will recognize a capital loss
to the extent the selling price (which may not fully reflect the value of
accrued but unpaid interest) is less than the holders adjusted tax basis
(which will include accrued but unpaid interest). Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See any accompanying Prospectus
Supplement relating to Junior Subordinated Debt Trust Securities.
Potential Market Volatility During Extension Period. As
described above, the Company has the right to extend an interest payment
period on the Junior Subordinated Debt Trust Securities from time to time
for a period not exceeding 20 consecutive quarterly interest periods. If
the Company determines to extend an interest payment period, or if the
Company thereafter extends an Extension Period or prepays interest accrued
during an Extension Period as described above, the market price of the
Preferred Securities is likely to be affected. In addition, as a result of
such rights, the market price of the Preferred Securities (which represent
an undivided interest in Junior Subordinated Debt Trust Securities) may be
more volatile than other securities on which original issue discount
accrues that do not have such rights. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, may not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. See any accompanying Prospectus Supplement relating
to Junior Subordinated Debt Trust Securities.
No Prior Public Market--Possible Price Volatility of the
Securities. Prior to the offering, there has been no public market for the
Securities. There can be no assurance that an active trading market for the
Securities will develop or be sustained. If such a market were to develop,
the Securities, could trade at prices that may be higher or lower than their
offering price depending upon many factors, including prevailing interest
rates, the Company's operating results and the markets for similar securities.
Historically, the market for non-investment grade debt has demonstrated
substantial volatility in the prices of securities similar to the Securities.
There can be no assurance that the future market for the Securities will not
be subject to similar volatility. Accordingly, no assurance can be given as
to the liquidity of the Securities.
Doing Business Outside the United States. The Company's
involvement in the development of new projects and the acquisition of existing
plants in locations outside the United States is increasing and most of the
Company's current development and acquisition activities are for projects and
plants outside the United States. The Company, through subsidiaries and joint
ventures, has ownership interests in 27 power plants outside the United States
in operation or under construction. Five of such power plants are located in
Argentina; four in Brazil; two in England; two in Northern Ireland; two in
Pakistan; eight in the People's Republic of China; three in Hungary; and one
in Kazakhstan.
The financing, development and operation of projects outside
the United States entail significant political and financial uncertainties
(including, without limitation, uncertainties associated with first-time
privatization efforts in the countries involved, currency exchange rate
fluctuations, currency repatriation restrictions, currency convertibility,
political instability, civil unrest, and expropriation) and other structuring
issues that have the potential to cause substantial delays in respect of or
material impairment of the value of the project being developed or operated,
which AES may not be capable of fully insuring or hedging against. The
ability to obtain financing on a commercially acceptable non-recourse basis in
developing nations may also require higher investments by the Company than
historically have been the case. In addition, financing in countries with
less than investment grade sovereign credit ratings may also require
substantial participation by multilateral financing agencies. There can be no
assurance that such financing can be obtained when needed.
The uncertainty of the legal environment in certain countries
in which the Company, its subsidiaries and its affiliates are or in the future
may be developing, constructing or operating could make it more difficult for
the Company to enforce its respective rights under agreements relating to such
projects. In addition, the laws and regulations of certain countries may
limit the Company's ability to hold a majority interest in some of the projects
that it may develop or acquire. International projects owned by the Company
may, in certain cases, be expropriated by applicable governments. Although
AES may have legal recourse in enforcing its rights under agreements and
recovering damages for breaches thereof, there can be no assurance that any
such legal proceedings will be successful.
Competition. The global power production market is
characterized by numerous strong and capable competitors, many of whom may
have extensive and diversified developmental or operating experience
(including both domestic and international experience) and financial resources
similar to or greater than the Company. Further, in recent years, the power
production industry has been characterized by strong and increasing
competition with respect to both obtaining power sales agreements and
acquiring existing power generation assets. In certain markets, these factors
have caused reductions in prices contained in new power sales agreements and,
in many cases, have caused higher acquisition prices for existing assets
through competitive bidding practices. The evolution of competitive
electricity markets and the development of highly efficient gas-fired power
plants have also caused, or are anticipated to cause, price pressure in
certain power markets where the Company sells or intends to sell power. There
can be no assurance that the foregoing competitive factors will not have a
material adverse effect on the Company.
Development Uncertainties. The majority of the projects that
AES develops are large and complex and the completion of any such project is
subject to substantial risks. Development can require the Company to expend
significant sums for preliminary engineering, permitting, legal and other
expenses in preparation for competitive bids which the Company may not win or
before it can be determined whether a project is feasible, economically
attractive or capable of being financed. Successful development and
construction is contingent upon, among other things, negotiation on terms
satisfactory to the Company of engineering, construction, fuel supply and
power sales contracts with other project participants, receipt of required
governmental permits and consents and timely implementation and satisfactory
completion of construction. There can be no assurance that AES will be able
to obtain new power sales contracts, overcome local opposition, if any, obtain
the necessary site agreements, fuel supply and ash disposal agreements,
construction contracts, steam sales contracts, licenses and certifications,
environmental and other permits and financing commitments necessary for the
successful development of its projects. There can be no assurance that
development efforts on any particular project, or the Company's efforts
generally, will be successful. If these development efforts are not
successful, the Company may abandon a project under development. At the time
of abandonment, the Company would expense all capitalized development costs
incurred in connection therewith and could incur additional losses associated
with any related contingent liabilities. The future growth of the Company is
dependent, in part, upon the demand for significant amounts of additional
electrical generating capacity and its ability to obtain contracts to supply
portions of this capacity. Any material unremedied delay in, or
unsatisfactory completion of, construction of the Company's projects could,
under certain circumstances, have an adverse effect on the Company's
ability to meet its obligations, including the payment of principal of,
premium, if any and interest on Debt Securities. The Company also is faced
with certain development uncertainties arising out of doing business
outside of the United States. See "--Doing Business Outside the United
States."
Uncertainty of Access to Capital for Future Projects. Each of
AES's projects under development and those independent power facilities it may
seek to acquire may require substantial capital investment. Continued access
to capital with acceptable terms is necessary to assure the success of future
projects and acquisitions. AES has primarily utilized project financing loans
to fund the capital expenditures associated with constructing and acquiring
its electric power plants and related assets. Project financing borrowings
have been substantially non-recourse to other subsidiaries and affiliates and
to AES as the parent company and are generally secured by the capital stock,
physical assets, contracts and cash flow of the related project subsidiary or
affiliate. The Company intends to continue to seek, where possible, such
non-recourse project financing in connection with the assets which the Company
or its affiliates may develop, construct or acquire. However, depending on
market conditions and the unique characteristics of individual projects, the
Company's traditional providers of project financing, particularly
multinational commercial banks, may seek higher borrowing spreads and
increased equity contributions.
Furthermore, because of the reluctance of commercial lending
institutions to provide non-recourse project financing (including financial
guarantees) in certain less developed economies, the Company, in such
locations, has and will continue to seek direct or indirect (through credit
support or guarantees) project financing from a limited number of multilateral
or bilateral international financial institutions or agencies. As a
precondition to making such project financing available, these institutions
may also require governmental guarantees of certain project and sovereign
related risks. Depending on the policies of specific governments, such
guarantees may not be offered and as a result, AES may determine that
sufficient financing will ultimately not be available to fund the related
project.
In addition to the project financing loans, if available, AES
provides a portion, or in certain instances all, of the remaining long-term
financing required to fund development, construction, or acquisition. These
investments have generally taken the form of equity investments or loans,
which are subordinated to the project financing loans. The funds for these
investments have been provided by cash flows from operations and by the
proceeds from borrowings under short-term credit facilities, and issuances of
senior subordinated notes, convertible debentures and common stock of the
Company.
The Company's ability to arrange for financing on either a
fully recourse or a substantially non-recourse basis and the costs of such
capital are dependent on numerous factors, including general economic and
capital market conditions, the availability of bank credit, investor
confidence in the Company, the continued success of current projects and
provisions of tax and securities laws which are conducive to raising capital
in this manner. Should future access to capital not be available, AES may
decide not to build new plants or acquire existing facilities. While a
decision not to build new plants or acquire existing facilities would not
affect the results of operations of AES on its currently operating facilities
or facilities under construction, such a decision would affect the future
growth of AES.
Dependence on Utility Customers and Certain Projects. The
nature of most of AES's power projects is such that each facility generally
relies on one power sales contract with a single customer for the majority, if
not all, of its revenues over the life of the power sales contract. During
1995, four customers, including Connecticut Light & Power Company, a
subsidiary of Northeast Utilities, accounted for 73% of the Company's
revenues. The prolonged failure of any one utility customer to fulfill its
contractual obligations could have a substantial negative impact on AES's
primary source of revenues. AES has sought to reduce this risk in part by
entering into power sales contracts with utilities or other customers of
strong credit quality and by locating its plants in different geographic areas
in order to mitigate the effects of regional economic downturns.
Four of the Company's plants collectively represented
approximately 61% of AES's consolidated total assets at December 31, 1995 and
generated approximately 80% of AES's consolidated total revenues for the year
ended December 31, 1995.
In October 1996, Moody's Investor Service and Standard & Poor's
revised their ratings of the senior unsecured long-term debt of Connecticut
Light & Power Company from Baa3/BBB- to Ba1/BB+.
Regulatory Uncertainty. AES's cogeneration operations are
subject to the provisions of various laws and regulations, including the
Public Utility Regulatory Policies Act of 1978, as amended ("PURPA") and the
Public Utility Holding Company Act, as amended ("PUHCA"). PURPA provides to
qualifying facilities ("QFs") certain exemptions from substantial federal and
state legislation, including regulation as public utilities. PUHCA regulates
public utility holding companies and their subsidiaries. AES is not and will
not be subject to regulation as a holding company under PUHCA as long as the
domestic power plants it owns are QFs under PURPA. QF status is conditioned
on meeting certain criteria, and would be jeopardized, for example, by the
loss of a steam customer. The Company believes that, upon the occurrence of
an event that would threaten the QF status of one of its domestic plants, it
would be able to react in a manner that would avoid the loss of QF status
(such as by replacing the steam customer). In the event the Company were
unable to avoid the loss of such status for one of its plants, to avoid public
utility holding company status, AES could apply to the Federal Energy
Regulatory Commission ("FERC") to obtain status as an Exempt Wholesale
Generator ("EWG"), or could restructure the ownership of the project
subsidiary. EWGs, however, are subject to broader regulation by FERC and may
be subject to state public utility commissions regulation regarding non-rate
matters. In addition, any restructuring of a project subsidiary could result
in, among other things, a reduced financial interest in such subsidiary, which
could result in a gain or loss on the sale of the interest in such subsidiary,
the removal of such subsidiary from the consolidated income tax group or the
consolidated financial statements of the Company, or an increase or decrease
in the results of operations of the Company.
The United States Congress is considering proposed legislation
which would repeal PURPA entirely, or at least repeal the obligation of
utilities to purchase from QFs. There is strong support for grandfathering
existing QF contracts if such legislation is passed, and also support for
requiring utilities to conduct competitive bidding for new electric generation
if the PURPA purchase obligation is eliminated. Various bills have also
proposed repeal of PUHCA. Repeal of PUHCA would allow both independents and
vertically integrated utilities to acquire retail utilities in the United
States that are geographically widespread, as opposed to the current
limitations of PUHCA which require that retail electric systems be capable of
physical integration. In addition, registered holding companies would be free
to acquire non-utility businesses, which they may not do now, with certain
limited exceptions. In the event of a PUHCA repeal, competition for
independent power generators from vertically integrated utilities would likely
increase. Repeal of PURPA and/or PUHCA may or may not be part of
comprehensive legislation to restructure the electric utility industry, allow
retail competition, and deregulate most electric rates. The effect of any such
repeal cannot be predicted, although any such repeal could have a material
adverse effect on the Company.
Electric Utility Industry Restructuring Proposals. The FERC
and many state utility commissions are currently studying a number of
proposals to restructure the electric utility industry in the United States.
Such restructuring would permit utility customers to choose their utility
supplier in a competitive electric energy market. The FERC issued a final rule
in April 1996 which requires utilities to offer wholesale customers and
suppliers open access on utility transmission lines, on a comparable basis to
the utilities' own use of the lines. The final rule is subject to rehearing
and may become the subject of court litigation. Many utilities have already
filed "open access" tariffs. The utilities contend that they should recover
from departing customers their fixed costs that will be "stranded" by the
ability of their wholesale customers (and perhaps eventually, their retail
customers) to choose new electric power suppliers. The FERC final rule
endorses the recovery of legitimate and verifiable "stranded costs." These may
include the costs utilities are required to pay under many QF contracts which
the utilities view as excessive when compared with current market prices.
Many utilities are therefore seeking ways to lower these contract prices or
rescind the contracts altogether, out of concern that their shareholders will
be required to bear all or part of such "stranded" costs. Some utilities have
engaged in litigation against QFs to achieve these ends.
In addition, future United States electric rates may be
deregulated in a restructured United States electric utility industry and
increased competition may result in lower rates and less profit for United
States electricity sellers. Falling electricity prices and uncertainty as to
the future structure of the industry is inhibiting United States utilities
from entering into long-term power purchase contracts. The effect of any such
restructuring on the Company cannot be predicted, although any such
restructuring could have a material adverse effect on the Company.
Litigation and Regulatory Proceedings. From time to time,
the Company and its affiliates are parties to litigation and
regulatory proceedings. Investors should review the descriptions of
such matters contained in the Company's Annual, Quarterly and Current
Reports filed with the Commission and incorporated by reference herein.
There can be no assurances that the outcome of such matters will not have a
material adverse effect on the Company's consolidated financial position.
Business Subject to Stringent Environmental Regulations. AES's
activities are subject to stringent environmental regulation by federal,
state, local and foreign governmental authorities. For example, the Clean Air
Act Amendments of 1990 impose more stringent standards than those previously
in effect, and require states to impose permit fees on certain emissions.
Congress and other foreign governmental authorities also may consider
proposals to restrict or tax certain emissions. These proposals, if adopted,
could impose additional costs on the operation of AES's power plants. There
can be no assurance that AES would be able to recover all or any increased
costs from its customers or that its business, financial condition or results
of operations would not be materially and adversely affected by future changes
in domestic or foreign environmental laws and regulations. The Company has
made and will continue to make capital and other expenditures to comply with
environmental laws and regulations. There can be no assurance that such
expenditures will not have a material adverse effect on the Company's
financial condition or results of operations.
Control by Existing Stockholders. As of September 30, 1996,
AES's two founders, Roger W. Sant and Dennis W. Bakke, and their immediate
families together owned beneficially approximately 26% of AES's outstanding
Common Stock. As a result of their ownership interests, Messrs. Sant and
Bakke may be able to significantly influence or exert control over the affairs
of AES, including the election of the Company's directors. As of September
30, 1996, all of AES's officers and directors and their immediate families
together owned beneficially approximately 35% of AES's outstanding Common
Stock. To the extent that they decide to vote together, these stockholders
would be able to significantly influence or control the election of AES's
directors, the management and policies of AES and any action requiring
stockholder approval, including significant corporate transactions.
Adherence to AES's Principles--Possible Impact on Results of
Operations. A core part of AES's corporate culture is a commitment to "shared
principles": to act with integrity, to be fair, to have fun and to be socially
responsible. The Company seeks to adhere to these principles not as a means
to achieve economic success, but because adherence is a worthwhile goal in and
of itself. However, if the Company perceives a conflict between these
principles and profits, the Company will try to adhere to its principles--even
though doing so might result in diminished or foregone opportunities or
financial benefits.
THE AES TRUSTS
Each of the AES Trust I, AES Trust II and AES Trust III is a
statutory business trust formed on November 1, 1996 under the Delaware
Business Trust Act (the "Business Trust Act") pursuant to a separate
declaration of trust among the Trustees (as defined herein) of such AES
Trust and the Company and the filing of a certificate of trust with the
Secretary of State of the State of Delaware. Such declaration will be
amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, as of the
date the Preferred Securities of such AES Trust are initially issued. Each
Declaration will be qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
This description summarizes the material terms of the
Declarations and is qualified in its entirety by reference to the form of
Declaration, which has been filed as an exhibit to the Registration Statement
of which this Prospectus is a part, and the Trust Indenture Act.
Trust Securities
Upon issuance of any Preferred Securities by an AES Trust, the
holders thereof will own all of the issued and outstanding Preferred
Securities of such AES Trust. The Company will acquire securities
representing common undivided beneficial interests in the assets of each AES
Trust (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") in an amount equal to at least 3% of the total capital
of such AES Trust and will own, directly or indirectly, all of the issued and
outstanding Common Securities of each AES Trust. The Preferred Securities and
the Common Securities will rank pari passu with each other and will have
equivalent terms; provided that (i) if a Declaration Event of Default (as
defined herein under "--Events of Default") under the Declaration of an AES
Trust occurs and is continuing, the holders of Preferred Securities of such
AES Trust will have a priority over holders of the Common Securities of such
AES Trust with respect to payments in respect of distributions and payments
upon liquidation, redemption and maturity and (ii) holders of Common
Securities have the exclusive right (subject to the terms of the Declaration)
to appoint, remove or replace the Trustees and to increase or decrease the
number of Trustees. Each AES Trust exists for the purpose of (a) issuing its
Preferred Securities, (b) issuing its Common Securities to the Company, (c)
investing the gross proceeds from the sale of the Trust Securities in Junior
Subordinated Debt Trust Securities of the Company and (d) engaging in only
such other activities as are necessary, convenient or incidental thereto. The
rights of the holders of the Preferred Securities, including economic rights,
rights to information and voting rights, are set forth in the applicable
Declaration, the Business Trust Act and the Trust Indenture Act.
Powers and Duties of Trustees
The number of trustees (the "Trustees") of each AES Trust shall
initially be five. Three of such Trustees (the "Regulator Trustees") are
individuals who are employees or officers of the Company. The fourth such
trustee will be The First National Bank of Chicago, which is unaffiliated with
the Company and which will serve as the property trustee (the "Property
Trustee") and act as the indenture trustee for purposes of the Trust Indenture
Act. The fifth such trustee is First Chicago Delaware Inc. that has its
principal place of business in the State of Delaware (the "Delaware Trustee").
Pursuant to each Declaration, legal title to the Junior Subordinated Debt
Trust Securities purchased by an AES Trust will be held by the Property
Trustee for the benefit of the holders of the Trust Securities of such AES
Trust, and the Property Trustee will have the power to exercise all rights,
powers and privileges under the Indenture (as defined under "Description of
the Junior Subordinated Debt Trust Securities") with respect to the Junior
Subordinated Debt Trust Securities. In addition, the Property Trustee will
maintain exclusive control of a segregated non-interest bearing bank account
(the "Property Account") to hold all payments in respect of the Junior
Subordinated Debt Trust Securities purchased by an AES Trust for the benefit
of the holders of Trust Securities. The Property Trustee will promptly make
distributions to the holders of the Trust Securities out of funds from the
Property Account. The Preferred Securities Guarantees are separately
qualified under the Trust Indenture Act and will be held by The First National
Bank of Chicago, acting in its capacity as indenture trustee with respect
thereto, for the benefit of the holders of the applicable Preferred
Securities. As used in this Prospectus and any accompanying Prospectus
Supplement, the term "Property Trustee" with respect to an AES Trust refers to
The First National Bank of Chicago acting either in its capacity as a Trustee
under the relevant Declaration and the holder of legal title to the Junior
Subordinated Debt Trust Securities purchased by that Trust or in its capacity
as indenture trustee under, and the holder of, the applicable Preferred
Securities Guarantee, as the context may require. The Company, as the direct
or indirect owner of all of the Common Securities of each AES Trust, will have
the exclusive right (subject to the terms of the related Declaration) to
appoint, remove or replace Trustees and to increase or decrease the number of
Trustees, provided that the number of Trustees shall be, except under
certain circumstances, at least five and the majority of Trustees shall be
Regular Trustees. The term of an AES Trust will be set forth in the
Prospectus Supplement, but may terminate earlier as provided in such
Declaration.
The duties and obligations of the Trustees of an AES Trust
shall be governed by the Declaration of such AES Trust, the Business Trust
Act and the Trust Indenture Act. Under its Declaration, each AES Trust
shall not, and the Trustees shall cause such AES Trust not to, engage in
any activity other than in connection with the purposes of such AES Trust
or other than as required or authorized by the related Declaration. In
particular, each AES Trust shall not and the Trustees shall cause each AES
Trust not to (a) invest any proceeds received by such AES Trust from
holding the Junior Subordinated Debt Trust Securities purchased by such AES
Trust but shall promptly distribute from the Property Account all such
proceeds to holders of Trust Securities pursuant to the terms of the
related Declaration and of the Trust Securities; (b) acquire any assets
other than as expressly provided in the related Declaration; (c) possess
Trust property for other than a Trust purpose; (d) make any loans, other
than loans represented by the Junior Subordinated Debt Trust Securities;
(e) possess any power or otherwise act in such a way as to vary the assets
of such AES Trust or the terms of its Trust Securities in any way
whatsoever; (f) issue any securities or other evidences of beneficial
ownership of, or beneficial interests in, such AES Trust other than its
Trust Securities; (g) incur any indebtedness for borrowed money or (h)(i)
direct the time, method and place of exercising any trust or power
conferred upon the Indenture Trustee (as defined under "Description of the
Junior Subordinated Debt Trust Securities") with respect to the Junior
Subordinated Debt Trust Securities deposited in that AES Trust as trust
assets or upon the Property Trustee of that AES Trust with respect to its
Preferred Securities, (ii) waive any past default that is waivable under
the Indenture or the Declaration, (iii) exercise any right to rescind or
annul any declaration that the principal of all of the Junior Subordinated
Debt Trust Securities deposited in that AES Trust as trust assets shall be
due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or such Junior Subordinated Debt Trust
Securities, in each case where such consent shall be required, unless in
the case of this clause (h) the Property Trustee shall have received an
unqualified opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that such action will
not cause such AES Trust to be classified for United States federal income
tax purposes as an association taxable as a corporation or a partnership
and that such AES Trust will continue to be classified as a grantor trust
for United States federal income tax purposes.
Books and Records
The books and records of each AES Trust will be maintained at
the principal office of such AES Trust and will be open for inspection by a
holder of Preferred Securities of such AES Trust or his representative for any
purpose reasonably related to his interest in such AES Trust during normal
business hours. Each holder of Preferred Securities will be furnished
annually with unaudited financial statements of the applicable AES Trust as
soon as available after the end of such AES Trust's fiscal year.
Voting
Holders of Preferred Securities will have limited voting
rights, but will not be able to appoint, remove or replace, or to increase or
decrease the number of, Trustees, which rights are vested exclusively in the
Common Securities.
The Property Trustee
The Property Trustee, for the benefit of the holders of the
Trust Securities of an AES Trust, is authorized under each Declaration to
exercise all rights under the Indenture with respect to the Junior
Subordinated Debt Trust Securities deposited in such AES Trust as trust
assets, including its rights as the holder of such Junior Subordinated Debt
Trust Securities to enforce the Company's obligations under such Junior
Subordinated Debt Trust Securities upon the occurrence of an Indenture Event
of Default (as defined herein under "Description of the Junior Subordinated
Debt Trust Securities--Indenture Events of Default"). The Property Trustee
shall also be authorized to enforce the rights of holders of Preferred
Securities of an AES Trust under the related Preferred Securities Guarantee.
If any AES Trust's failure to make distributions on the Preferred Securities
of an AES Trust is a consequence of the Company's exercise of any right under
the terms of the Junior Subordinated Debt Trust Securities deposited in such
AES Trust as trust assets to extend the interest payment period for such
Junior Subordinated Debt Trust Securities, the Property Trustee will have no
right to enforce the payment of distributions on such Preferred Securities
until a Declaration Event of Default shall have occurred. Holders of at least
a majority in liquidation amount of the Preferred Securities held by an AES
Trust will have the right to direct the Property Trustee for that AES Trust
with respect to certain matters under the Declaration for that AES Trust and
the related preferred Securities Guarantee. If the Property Trustee fails to
enforce its rights under the Indenture or fails to enforce the Preferred
Securities Guarantee, to the extent permitted by applicable law, any holder of
Preferred Securities may, after a period of 30 days has elapsed from such
Holder's written request to the Property Trustee to enforce such risks
institute a legal proceeding against the Company to enforce such rights or
the Preferred Securities Guarantee, as the case may be. In addition, the
holders of at least 25% in aggregate liquidation preference of the
outstanding Preferred Securities would have the right to directly institute
proceedings for enforcement of payments to such holders of principal of, or
premium, if any, or interest on the Junior Subordinated Debt Trust
Securities having a principal amount equal to the aggregate liquidation
preference of the Preferred Securities of such holders (a "Direct Action").
In connection with such Direct Action, the Company will be subrogated to
the rights of such holder of Preferred Securities under the Declaration to
the extent of any payment made by the Company to such holders of Preferred
Securities in such Direct Action.
Distributions
Pursuant to each Declaration, distributions on the Preferred
Securities of an AES Trust must be paid on the dates payable to the extent
that the Property Trustee for that AES Trust has cash on hand in the
applicable Property Account to permit such payment. The funds available for
distribution to the holders of the Preferred Securities of an AES Trust will
be limited to payments received by the Property Trustee in respect of the
Junior Subordinated Debt Trust Securities that are deposited in the AES Trust
as trust assets. If the Company does not make interest payments on the Junior
Subordinated Debt Trust Securities deposited in an AES Trust as trust assets,
the Property Trustee will not make distributions on the Preferred Securities
of such AES Trust. Under the Declaration, if and to the extent the Company
does make interest payments on the Junior Subordinated Debt Trust Securities
deposited in an AES Trust as trust assets, the Property Trustee is obligated
to make distributions on the Trust Securities of such AES Trust on a Pro Rata
Basis (as defined below). The payment of distributions on the Preferred
Securities of an AES Trust is guaranteed by AES on a subordinated basis as and
to the extent set forth under "Description of the Preferred Securities
Guarantee." A Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the applicable Preferred Securities,
but the Preferred Securities Guarantee covers distributions and other payments
on the applicable Preferred Securities only if and to the extent that the
Company has made a payment to the Property Trustee of interest or principal on
the Junior Subordinated Debt Trust Securities deposited in the AES Trust as
trust assets. As used in this Prospectus, the term "Pro Rata Basis" shall
mean pro rata to each holder of Trust Securities of an AES Trust according to
the aggregate liquidation amount of the Trust Securities of such AES Trust
held by the relevant holder in relation to the aggregate liquidation amount of
all Trust Securities of such AES Trust outstanding unless, in relation to a
payment, a Declaration Event of Default under the Declaration has occurred and
is continuing, in which case any funds available to make such payment shall be
paid first to each holder of the Preferred Securities of such AES Trust pro
rata according to the aggregate liquidation amount of the Preferred Securities
held by the relevant holder in relation to the aggregate liquidation amount of
all the Preferred Securities of such AES Trust outstanding, and only after
satisfaction of all amounts owed to the holders of such Preferred Securities,
to each holder of Common Securities of such AES Trust pro rata according to
the aggregate liquidation amount of such Common Securities held by the
relevant holder in relation to the aggregate liquidation amount of all Common
Securities of such AES Trust outstanding.
Events of Default
If an Indenture Event of Default occurs and is continuing with
respect to Junior Subordinated Debt Trust Securities deposited in an AES Trust
as trust assets, an Event of Default under the Declaration (a "Declaration
Event of Default") of such AES Trust will occur and be continuing with respect
to any outstanding Trust Securities of such AES Trust. In such event, each
Declaration provides that the holders of Common Securities of such AES Trust
will be deemed to have waived any such Declaration Event of Default with
respect to the Common Securities until all Declaration Events of Default with
respect to the Preferred Securities of such AES Trust have been cured or
waived. Until all such Declaration Events of Default with respect to the
Preferred Securities of such AES Trust have been so cured or waived, the
Property Trustee will be deemed to be acting solely on behalf of the holders
of the Preferred Securities of such AES Trust and only the holders of such
Preferred Securities will have the right to direct the Property Trustee with
respect to certain matters under such Declaration and consequently under the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities of such AES Trust is waived by the holders of the
Preferred Securities of such AES Trust as provided in the Declaration, the
holders of Common Securities pursuant to such Declaration have agreed that
such waiver also constitutes a waiver of such Declaration Event of Default
with respect to the Common Securities for all purposes under the Declaration
without any further act, vote or consent of the holders of the Common
Securities.
Record Holders
Each Declaration provides that the Trustees of such AES Trust
may treat the person in whose name a Certificate representing its Preferred
Securities is registered on the books and records of such AES Trust as the
sole holder thereof and of the Preferred Securities represented thereby for
purposes of receiving distributions and for all other purposes and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such certificate or in the Preferred Securities represented
thereby on the part of any person, whether or not such AES Trust shall have
actual or other notice thereof. Preferred Securities will be issued in fully
registered form. Unless otherwise specified in a Prospectus Supplement,
Preferred Securities will be represented by a global certificate registered on
the books and records of such AES Trust in the name of a depositary (the
"Depositary") named in an accompanying Prospectus Supplement or its nominee.
Under each Declaration:
(i)such AES Trust and the Trustees thereof shall be entitled to
deal with the Depositary (or any successor depositary) for all purposes,
including the payment of distributions and receiving approvals, votes or
consents under the related Declaration, and except as set forth in the related
Declaration with respect to the Property Trustee, shall have no obligation to
persons owning a beneficial interest in Preferred Securities ("Preferred
Security Beneficial Owners") registered in the name of and held by the
Depositary or its nominee; and
(ii)the rights of Preferred Security Beneficial Owners shall be
exercised only through the Depositary (or any successor depositary) and shall
be limited to those established by law and agreements between such Preferred
Security Beneficial Owners and the Depositary and/or its participants. With
respect to Preferred Securities registered in the name of and held by the
Depositary or its nominee, all notices and other communications required under
each Declaration shall be given to, and all distributions on such Preferred
Securities shall be given or made to, the Depositary (or its successor).
The specific terms of the depositary arrangement with respect
to the Preferred Securities will be disclosed in the applicable Prospectus
Supplement.
Debts and Obligations
In each Declaration, the Company has agreed to pay for all
debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the applicable AES Trust, including the fees and
expenses of its Trustees and any taxes and all costs and expenses with respect
thereto, to which such AES Trust may become subject, except for United States
withholding taxes. The foregoing obligations of the Company under each
Declaration are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any
such Creditor may enforce such obligations of the Company directly against the
Company and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against any AES Trust or any other
person before proceeding against the Company. The Company has agreed in each
Declaration to execute such additional agreements as may be necessary or
desirable in order to give full effect to the foregoing.
DESCRIPTION OF THE PREFERRED SECURITIES
Each AES Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each AES Trust authorizes the Regular
Trustees of such AES Trust to issue on behalf of such AES Trust one series of
Preferred Securities. Each Declaration will be qualified as an indenture
under the Trust Indenture Act. The Preferred Securities will have such terms,
including distributions, redemption, voting, liquidation rights and such other
preferred, deferred or other special rights or such restrictions as shall be
set forth in the related Declaration or made part of such Declaration by the
Trust Indenture Act. Reference is made to the Prospectus Supplement relating
to the Preferred Securities of an AES Trust for specific terms, including (i)
the specific designation of such Preferred Securities, (ii) the number of
Preferred Securities issued by such AES Trust, (iii) the annual distribution
rate (or method of calculation thereof) for Preferred Securities issued by
such AES Trust, the date or dates upon which such distributions shall be
payable and the record date or dates for the payment of such distributions,
(iv) whether distributions on Preferred Securities issued by such AES Trust
shall be cumulative, and, in the case of Preferred Securities having such
cumulative distribution rights, the date or dates or method of determining the
date or dates from which distribution on Preferred Securities issued by such
AES Trust shall be cumulative, (v) the amount or amounts which shall be paid
out of the assets of such AES Trust to the holders of Preferred Securities of
such AES Trust upon voluntary or involuntary dissolution, winding-up or
termination of such AES Trust, (vi) the obligation or right, if any, of such
AES Trust to purchase or redeem Preferred Securities issued by such AES Trust
and the price or prices at which, the period or periods within which and the
terms and conditions upon which Preferred Securities issued by such AES Trust
shall or may be purchased or redeemed, in whole or in part, pursuant to such
obligation or right, (vii) the voting rights, if any, of Preferred Securities
issued by such AES Trust in addition to those required by law, including the
number of votes per Preferred Security and any requirement for the approval by
the holders of Preferred Securities, or of Preferred Securities issued by one
or more AES Trusts, or of both, as a condition to specified actions or
amendments to the Declaration of such AES Trust, (viii) terms for any
conversion or exchange into other securities and (ix) any other relevant
rights, preferences, privileges, limitations or restrictions of Preferred
Securities issued by such AES Trust consistent with the Declaration of such
AES Trust or with applicable law. All Preferred Securities offered hereby
will be guaranteed by the Company as and to the extent set forth below under
"Description of the Preferred Securities Guarantees." Certain United States
federal income tax considerations applicable to any offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each
AES Trust will issue one series of Common Securities. The Declaration of each
AES Trust authorizes the Regular Trustees of such trust to issue on behalf of
such AES Trust one series of Common Securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
shall be set forth therein. The terms of the Common Securities issued by an
AES Trust will be substantially identical to the terms of the Preferred
Securities issued by such AES Trust and the Common Securities will rank pari
passu, and payments will be made thereon on a Pro Rata Basis with the
Preferred Securities except that if a Declaration Event of Default occurs
and is continuing, the rights of the holders of such Common Securities to
payment in respect of distributions and payments upon liquidation,
redemption and maturity will be subordinated to the rights of the holders
of such Preferred Securities. Except in certain limited circumstances, the
Common Securities issued by an AES Trust will also carry the right to vote
and to appoint, remove or replace any of the Trustees of that AES Trust.
All of the Common Securities of an AES Trust will be directly or indirectly
owned by the Company.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the
Preferred Securities Guarantees that will be executed and delivered by the
Company for the benefit of the holders from time to time of Preferred
Securities. Each Preferred Security Guarantee will be separately qualified
under the Trust Indenture Act and will be held by The First National Bank of
Chicago, acting in its capacity as indenture trustee with respect thereto, for
the benefit of holders of the Preferred Securities of the applicable AES
Trust. The terms of each Preferred Securities Guarantee will be those set
forth in such Preferred Securities Guarantee and those made part of such
Guarantee by the Trust Indenture Act. This description summarizes the
material terms of the Preferred Securities Guarantees and is qualified in its
entirety by reference to the form of Preferred Securities Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, and the Trust Indenture Act. Section and Article references used
herein are references to the provisions of the form of Preferred Securities
Guarantee.
General
Pursuant to each Preferred Securities Guarantee, the Company
will irrevocably and unconditionally agree, to the extent set forth therein,
to pay in full, to the holders of the Preferred Securities issued by an AES
Trust, the Guarantee Payments (as defined herein) (without duplication of
amounts theretofore paid by such AES Trust), to the extent not paid by such
AES Trust, regardless of any defense, right of set-off or counterclaim that
such AES Trust may have or assert. The following payments or distributions
with respect to Preferred Securities issued by an AES Trust to the extent not
paid or made by such AES Trust (the "Guarantee Payments"), will be subject to
the Preferred Securities Guarantee (without duplication): (i) any accrued and
unpaid distributions on such Preferred Securities, and the redemption price,
including all accrued and unpaid distributions to the date of redemption, with
respect to any Preferred Securities called for redemption by such AES Trust
but if and only to the extent that in each case the Company has made a payment
to the related Property Trustee of interest or principal on the Junior
Subordinated Debt Trust Securities deposited in such AES Trust as trust assets
and (ii) upon a voluntary or involuntary dissolution, winding-up or
termination of such AES Trust (other than in connection with the distribution
of such Junior Subordinated Debt Trust Securities to the holders of Preferred
Securities or the redemption of all of the Preferred Securities upon the
maturity or redemption of such Junior Subordinated Debt Trust Securities) the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to
the extent such AES Trust has funds available therefor or (b) the amount of
assets of such AES Trust remaining available for distribution to holders of
such Preferred Securities in liquidation of such AES Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Company to the holders of Preferred Securities or
by causing the applicable AES Trust to pay such amounts to such holders.
The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the applicable Preferred Securities,
but the Preferred Securities Guarantee covers distributions and other payments
on such Preferred Securities only if and to the extent that the Company has
made a payment to the Property Trustee of interest or principal on the Junior
Subordinated Debt Trust Securities deposited in the applicable AES Trust as
trust assets. If the Company does not make interest or principal payments on
the Junior Subordinated Debt Trust Securities deposited in the applicable AES
Trust as trust assets, the Property Trustee will not make distributions of the
Preferred Securities of such AES Trust and the AES Trust will not have funds
available therefor.
The Company's obligations under the Declaration for each Trust,
the Preferred Securities Guarantee issued with respect to Preferred Securities
issued by that Trust, the Junior Subordinated Debt Trust Securities purchased
by that Trust and the related Indenture (as defined below) in the aggregate
will provide a full and unconditional guarantee on a subordinated basis by the
Company of payments due on the Preferred Securities issued by that Trust.
Certain Covenants of the Company
In each Preferred Securities Guarantee, the Company will
covenant that, so long as any Preferred Securities issued by the applicable
AES Trust remain outstanding, the Company will not (A) 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 payment with respect thereto or (B) make any
payment of interest, premium (if any) or principal on any debt securities
issued by the Company which rank pari passu with or junior to the Junior
Subordinated Debt Trust Securities, if at such time (i) the Company shall be
in default with respect to its Guarantee Payments or other payment obligations
under the Preferred Securities Guarantee, (ii) there shall have occurred any
Declaration Event of Default under the related Declaration or (iii) in the
event that Junior Subordinated Debt Trust Securities are issued to an AES
Trust in connection with the issuance of Trust Securities by such AES Trust,
the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Trust Securities by extending the
interest payment period as provided in the terms of the Junior Subordinated
Debt Trust Securities and such period, or any extension thereof, is
continuing: provided that (a) the Company will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion of
Preferred Stock of the Company as may be outstanding from time to time, in
each case in accordance with the terms of such stock and (ii) the foregoing
will not apply to stock dividends paid by the Company. In addition, so long
as any Preferred Securities remain outstanding, the Company has agreed (i) to
remain the sole direct or indirect owner of all of the outstanding Common
Securities issued by the applicable AES Trust and shall not cause or permit
the Common Securities to be transferred except to the extent permitted by the
related Declaration; provided that any permitted successor of the Company
under the Indenture may succeed to the Company's ownership of the Common
Securities issued by the applicable AES Trust and (ii) to use reasonable
efforts to cause such AES Trust to continue to be treated as a grantor trust
for United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debt Trust Securities.
Amendments and Assignment
Except with respect to any changes that do not adversely affect
the rights of holders of Preferred Securities (in which case no consent will
be required), each Preferred Securities Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in liquidation amount
of the outstanding Preferred Securities issued by the applicable AES Trust.
The manner of obtaining any such approval of holders of such Preferred
Securities will be set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Preferred Securities Guarantee shall
bind the successors, assignees, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Preferred
Securities of the applicable AES Trust then outstanding. Except in connection
with a consolidation, merger or sale involving the Company that is permitted
under the Indenture, the Company may not assign its obligations under any
Preferred Securities Guarantee.
Termination of the Preferred Securities Guarantees
Each Preferred Securities Guarantee will terminate and be of no
further force and effect as to the Preferred Securities issued by the
applicable AES Trust upon full payment of the redemption price of all
Preferred Securities of such AES Trust, or upon distribution of the Junior
Subordinated Debt Trust Securities to the holders of the Preferred Securities
of such AES Trust in exchange for all of the Preferred Securities issued by
such AES Trust, or upon full payment of the amounts payable upon liquidation
of such AES Trust. Notwithstanding the foregoing, each Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities issued by the applicable
AES Trust must restore payment of any sums paid under such Preferred
Securities or such Guarantee.
Status of the Preferred Securities Guarantees
The Company's obligations under each Preferred Securities
Guarantee to make the Guarantee Payments will constitute an unsecured
obligation of the Company and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Company, including the Junior
Subordinated Debt Trust Securities, except those made pari passu or
subordinate by their terms, and (ii) senior to all capital stock now or
hereafter issued by the Company and to any guarantee nor or hereafter entered
into by the Company in respect of any of its capital stock. The Company's
obligations under each Preferred Securities Guarantee will rank pari passu
with each other Preferred Securities Guarantee. Because the Company is a
holding company, the Company's obligations under each Preferred Securities
Guarantee are also effectively subordinated to all existing and future
liabilities, including trade payables, of the Company's subsidiaries, except
to the extent that the Company is a creditor of the subsidiaries recognized as
such. Each Declaration provides that each holder of Preferred Securities
issued by the applicable AES Trust by acceptance thereof agrees to the
subordination provisions and other terms of the related Preferred Securities
Guarantee.
Each Preferred Securities Guarantee will constitute a guarantee
of payment and not of collection (that is, the guaranteed party may institute
a legal proceeding directly against the guarantor to enforce its rights under
the guarantee without first instituting a legal proceeding against any other
person or entity). Each Preferred Securities Guarantee will be deposited with
The First National Bank of Chicago, as indenture trustee, to be held for the
benefit of the holders of the Preferred Securities issued by the applicable
AES Trust. The First National Bank of Chicago shall enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities
issued by the applicable AES Trust. The holders of not less than a majority
in aggregate liquidation amount of the Preferred Securities issued by the
applicable AES Trust have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the related
Preferred Securities Guarantee, including the giving of directions to The
First National Bank of Chicago . If The First National Bank of Chicago fails
to enforce such Preferred Securities Guarantee as above provided, any holder
of Preferred Securities issued by the applicable AES Trust may institute a
legal proceeding directly against the Company to enforce its rights under such
Preferred Securities Guarantee, without first instituting a legal proceeding
against the applicable AES Trust or any other person or entity.
Miscellaneous
The Company will be required to provide annually to The First
National Bank of Chicago a statement as to the performance by the Company of
certain of its obligations under the Preferred Securities Guarantees and as to
any default in such performance. The Company is required to file annually
with The First National Bank of Chicago an officer's certificate as to the
Company's compliance with all conditions under Preferred Securities
Guarantees.
The First National Bank of Chicago, prior to the occurrence of
a default, undertakes to perform only such duties as are specifically set
forth in the applicable Preferred Securities Guarantee and, after default with
respect to a Preferred Securities Guarantee, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provision, The First National Bank of Chicago is
under no obligation to exercise any of the powers vested in it by a Preferred
Securities Guarantee at the request of any holder of Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
Governing Law
The Guarantees will be governed by, and construed in accordance
with, the laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT TRUST SECURITIES
Junior Subordinated Debt Trust Securities may be issued from
time to time in one or more series under an Indenture (the "Indenture")
between the Company and The First National Bank of Chicago, as trustee (the
"Indenture Trustee"). The form of Junior Subordinated Debt Trust Securities
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The following description summarizes the
material terms of the Indenture, and is qualified in its entirety by reference
to the Indenture and the Trust Indenture Act. Whenever particular provisions
or defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section and article
references used herein are references to provisions of the Indenture.
General
The Junior Subordinated Debt Trust Securities will be
unsecured, junior subordinated obligation of the Company. The Indenture does
not limit the amount of additional indebtedness the Company or any of its
subsidiaries may incur. Since the Company is a holding company, the Company's
rights and the rights of its creditors, including the holders of Junior
Subordinated Debt Securities, to participate in the assets of any subsidiary
upon the latter's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent that the Company
may itself be a creditor with recognized claims against the subsidiary.
The Indenture does not limit the aggregate principal amount of
indebtedness which may be issued thereunder and provides that Junior
Subordinated Debt Trust Securities may be issued thereunder from time to time
in one or more series. The Junior Subordinated Debt Trust Securities are
issuable in one or more series pursuant to an indenture supplemental to the
Indenture.
In the event Junior Subordinated Debt Trust Securities are
issued to an AES Trust or a Trustee of such trust in connection with the
issuance of Trust Securities by such AES Trust, such Junior Subordinated Debt
Trust Securities subsequently may be distributed pro rata to the holders of
such Trust Securities in connection with the dissolution of such AES Trust
upon the occurrence of certain events described in the Prospectus Supplement
relating to such Trust Securities. Only one series of Junior Subordinated
Debt Trust Securities will be issued to an AES Trust or a trustee of such
trust in connection with the issuance of Trust Securities by such AES Trust.
Reference is made to the Prospectus Supplement which will
accompany this Prospectus for the following terms of the series of Junior
Subordinated Debt Trust Securities being offered thereby (to the extent such
terms are applicable to the Junior Subordinated Debt Trust Securities): (i)
the specific designation of such Junior Subordinated Debt Trust Securities,
aggregate principal amount, purchase price and premium, if any; (ii) any limit
on the aggregate principal amount of such Junior Subordinated Debt Trust
Securities; (iii) the date or dates on which the principal of such Junior
Subordinated Debt Trust Securities is payable and the right, to extend or
defer such date or dates; (iv) the rate or rates at which such Junior
Subordinated Debt Trust Securities will bear interest or the method of
calculating such rate or rates, if any; (v) 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 dates for the determination of holders to whom interest is payable
on any such interest payment dates; (vi) the right, if any, to extend the
interest payment periods and the duration of such extension; (vii) the period
or periods within which, the price or prices at which, and the terms and
conditions upon which, such Junior Subordinated Debt Trust Securities may be
redeemed, in whole or in part, at the option of the Company; (viii) the
obligation, if any of the Company to redeem or purchase such Junior
Subordinated Debt Trust Securities pursuant to any sinking fund or analogous
provisions or at the option of the holder thereof and the period or periods
for which, the price or prices at which, and the terms and conditions upon
which, such Junior Subordinated Debt Trust Securities shall be redeemed or
purchased, in whole or part, pursuant to such obligation; (ix) any
exchangeability, conversion or prepayment provisions of the Junior
Subordinated Debt Trust Securities; (x) any applicable United States federal
income tax consequences, including whether and under what circumstances the
Company will pay additional amounts on the Junior Subordinated Debt Trust
Securities held by a person who is not a U.S. person in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether the
Company will have the option to redeem such Junior Subordinated Debt Trust
Securities rather than pay such additional amounts; (xi) the form of such
Junior Subordinated Debt Trust Securities; (xii) if other than denominations
of $25 or any integral multiple thereof, the denominations in which such
Junior Subordinated Debt Trust Securities shall be issuable; (xiii) any and
all other terms with respect to such series, including any modification of or
additions to the events of default or covenants provided for with respect to
such series, including any modification of or additions to the events of
default or covenants provided for with respect to the Junior Subordinated Debt
Trust Securities, and any terms which may be required by or advisable under
applicable laws or regulations not inconsistent with the Indenture; and (xiv)
whether such Junior Subordinated Debt Trust Securities are issuable as a
global security, and in such case, the identity of the depositary. (Section
2.01)
Unless otherwise indicated in the Prospectus Supplement
relating thereto, the Junior Subordinated Debt Trust Securities will be issued
in United States dollars in fully registered form without coupons in
denominations of $25 or integral multiples thereof. Junior Subordinated Debt
Trust Securities may be presented for exchange and Junior Subordinated Debt
Trust Securities in registered form may be presented for transfer in the
manner, at the places and subject to the restrictions set forth in the Junior
Subordinated Debt Trust Securities and the Prospectus Supplement. Such
services will be provided without charge, other than any tax or other
governmental charge payable in connection therewith, but subject to the
limitations provided in the Junior Subordinated Debt Trust Securities. Junior
Subordinated Debt Trust Securities in bearer form and the coupons, if any,
appertaining thereto will be transferable by delivery.
Junior Subordinated Debt Trust Securities may bear interest at
a fixed rate or a floating rate. Junior Subordinated Debt Trust Securities
bearing no interest or interest at a rate that at the time of issuance is
below the prevailing market rate will be sold at a discount below their stated
principal amount. Special United States federal income tax considerations
applicable to any such discounted Junior Subordinated Debt Trust Securities or
to certain Junior Subordinated Debt Trust Securities issued at par which are
treated as having been issued at a discount for United States federal income
tax purposes will be described in the relevant Prospectus Supplement.
Certain Covenants of the Company Applicable to the Junior Subordinated Debt
Securities
If Junior Subordinated Debt Trust Securities are issued to an
AES Trust in connection with the issuance of Trust Securities by such AES
Trust, the Company will covenant in the Indenture that, so long as the
Preferred Securities issued by the applicable AES Trust 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 payment with respect
to, any of its common stock or preferred stock or make any guarantee payment
with respect thereto if at such time (i) the Company shall be in default with
respect to its Guarantee Payments or other payment obligations under the
related Preferred Securities Guarantee, (ii) there shall have occurred any
Indenture Event of Default with respect to the Junior Subordinated Debt Trust
Securities or (iii) in the event that Junior Subordinated Debt Trust
Securities are issued to an AES Trust in connection with the issuance of Trust
Securities by such AES Trust, the Company shall have given notice of its
election to defer payments of interest on such Junior Subordinated Debt Trust
Securities by extending the interest payment period as provided in the terms
of such Junior Subordinated Debt Trust Securities and such period, or any
extension thereof, is continuing; provided that (x) the Company will be
permitted to pay accrued dividends (and cash in lieu of fractional shares)
upon the conversion of any Preferred Stock of the Company as may be
outstanding from time to time, in each case in accordance with the terms of
such stock and (y) the foregoing will not apply to any stock dividends paid
by the Company. In addition, if Junior Subordinated Debt Trust Securities
are issued to an AES Trust in connection with the issuance of Trust
Securities by such AES Trust, for so long as the Preferred Securities
issued by the applicable AES Trust remain outstanding, the Company has
agreed (i) to remain the sole direct or indirect owner of all of the
outstanding Common Securities issued by the applicable AES Trust and not to
cause or permit the Common Securities to be transferred except to the
extent permitted by the related Declaration; provided that any permitted
successor of the Company under the Indenture may succeed to the Company's
ownership of the Common Securities issued by the applicable AES Trust, (ii)
to comply fully with all of its obligations and agreements contained in the
related Declaration and (iii) not to take any action which would cause the
applicable AES Trust to cease to be treated as a grantor trust for United
States federal income tax purposes, except in connection with a
distribution of Junior Subordinated Debt Trust Securities.
Subordination
The payment of principal of, premium, if any, and interest on
the Junior Subordinated Trust Securities will, to the extent and in the manner
set forth in the Indenture, be subordinated in right of payment to the prior
payment in full, in cash or cash equivalents, of all Senior and
Subordinated Debt of the Company.
Upon any payment or distribution of assets 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, the
holders of all Senior and Subordinated Debt will first be entitled to
receive payment in full of all amounts due or to become due thereon before
the holders of the Junior Subordinated Debt Trust Securities will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on the Junior Subordinated Debt Trust Securities.
No payments on account of principal, premium, if any, or
interest in respect of the Junior Subordinated Debt Trust Securities may be
made by the Company if there shall have occurred and be continuing a default
in any payment with respect to Senior and Subordinated Debt or during
certain periods when an event of default under certain Senior and
Subordinated Debt permits the lenders thereunder to accelerate the maturity
of such Senior and Subordinated Debt. 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 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 Junior
Subordinated Debt Trust Securities may be made by the Company during a
period (the "Payment Blockage Period") commencing on the date of delivery
of such notice and ending 179 days thereafter (unless 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 Junior Subordinated Debt Trust Securities 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.
By reason of such subordination, in the event of insolvency,
funds that would otherwise be payable to holders of Junior Subordinated Debt
Trust Securities will be paid to the holders of Senior and Subordinated Debt
of the Company to the extent necessary to pay such Debt in full, and the
Company may be unable to meet fully its obligations with respect to the
Junior Subordinated Debt Trust Securities.
"Debt" is defined to mean, 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.
"Designated Senior and Subordinated Debt" is defined to mean
(i) Debt under the Credit Agreement dated as of May 20, 1996 (the "Credit
Agreement") among the Company, the Banks named on the signature pages
thereof and the Morgan Guaranty Trust Company of New York, as agent for the
banks, as such Credit Agreement has been and may be amended, restated,
supplemented or otherwise modified from time to time 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.
"Senior and Subordinated Debt" is defined to mean 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 the
Indenture; provided that such Senior and Subordinated Debt shall not
include (i) Debt of the Company 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 are specifically designated as not being senior in
right of payment to the Junior Subordinated Debt Trust Securities, and in
particular the Junior Subordinated Debt Trust Securities 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.
Indenture Events of Default
The Indenture provides that any one or more of the following
described events, which has occurred and is continuing, constitutes an
"Indenture Event of Default" with respect to each series of Junior
Subordinated Debt Securities:
(a) failure for 30 days to pay interest on the Junior
Subordinated Debt Trust Securities of such series when due; provided that a
valid extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose;
(b) failure to pay principal of or premium, if any, on the Junior
Subordinated Debt Trust Securities of such series when due whether at
maturity, upon redemption, by declaration or otherwise;
(c) failure to observe or perform any other covenant contained in
the Indenture with respect to such series for 90 days after written notice to
the Company from the Indenture Trustee or the holders of at least 25% in
principal amount of the outstanding Junior Subordinated Debt Trust Securities
of such series; or
(d) certain events in bankruptcy, insolvency or reorganization of
the Company.
In each and every such case, unless the principal of all the
Junior Subordinated Debt Trust Securities of that series shall have already
become due and payable, either the Indenture Trustee or the holders of not
less than 25% in aggregate principal amount of the Junior Subordinated Debt
Trust Securities of that series then outstanding, by notice in writing to the
Company (and to the Indenture Trustee if given by such holders), may declare
the principal of all the Junior Subordinated Debt Trust Securities 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. (Section 6.01)
The holders of a majority in aggregate outstanding principal
amount of the Junior Subordinated Debt Trust Securities of that series have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee. (Section 6.06) The
Indenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Debt Trust Securities of that
series may declare the principal due and payable immediately upon an Indenture
Event of Default with respect to such series, but the holders of a majority in
aggregate outstanding principal amount of Junior Subordinated Debt Trust
Securities of such series may annul such declaration and waive the default if
the default has been cured and a sum sufficient to pay all matured
installments of interest and principal otherwise than by acceleration and any
premium has been deposited with the Indenture Trustee. (Sections 6.01 and
6.06)
The holders of a majority in aggregate outstanding principal
amount of the Junior Subordinated Debt Trust Securities of that series may, on
behalf of the holders of all the Junior Subordinated Debt Trust Securities of
that series, waive any past default, except a default in the payment of
principal, premium, if any, or interest (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
otherwise than by acceleration and any premium has been deposited with the
Indenture Trustee) or a call for redemption of Junior Subordinated Debt Trust
Securities. (Section 6.06) The Company is required to file annually with the
Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants under the Indenture. (Section
5.03)
If Junior Subordinated Debt Trust Securities are issued to an
AES Trust in connection with the issuance of Trust Securities of such AES
Trust, then under the applicable Declaration an Indenture Event of Default
with respect to such series of Junior Subordinated Debt Trust Securities will
constitute a Declaration Event of Default.
Modification of the Indenture
The Indenture contains provisions permitting the Company and
the Indenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the outstanding Junior Subordinated Debt Trust
Securities of each series affected, to modify the Indenture or any
supplemental indenture affecting the rights of the holders of such Junior
Subordinated Debt Securities; provided that no such modification may, without
the consent of the holder of each outstanding Junior Subordinated Debt Trust
Security affected thereby, (i) extend the fixed maturity of any Junior
Subordinated Debt Trust Securities of any series, reduce the principal amount
thereof, reduce the rate or extent the time of payment of interest thereon,
reduce any premium payable upon the redemption thereof, without the consent of
the holder of each Junior Subordinated Debt Trust Security so affected or (ii)
reduce the percentage of Junior Subordinated Debt Trust Securities, the
holders of which are required to consent to any such modification, without the
consent of the holders of each Junior Subordinated Debt Trust Security then
outstanding and affected thereby. (Section 9.02)
Book-Entry and Settlement
If any Junior Subordinated Debt Trust Securities of a series
are represented by one or more global securities (each, a "Global Security"),
the applicable Prospectus Supplement will describe the circumstances, if any,
under which beneficial owners of interests in any such Global Security may
exchange such interests for Junior Subordinated Debt Trust Securities of such
series and of like tenor and principal amount in any authorized form and
denomination. Principal of and any premium and interest on a Global Security
will be payable in the manner described in the applicable Prospectus
Supplement.
The specific terms of the depositary arrangement with respect
to any portion of a series of Junior Subordinated Debt Trust Securities to be
represented by a Global Security will be described in the applicable Prospectus
Supplement.
Consolidation, Merger and Sale
The Indenture will provide that the Company may 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 may not permit any person
to merge into or consolidate with the Company unless (i) either the Company
will be the resulting or surviving entity or any successor or purchaser is a
corporation organized under the laws of the United States of America, any State
or the District of Columbia, and any such successor or purchaser expressly
assumes the Company's obligations under the Indenture and (ii) immediately
after giving effect to the transaction no Event of Default shall have occurred
and be continuing. (Section 10.01)
Defeasance and Discharge
Under the terms of the Indenture, the Company will be
discharged from any and all obligations in respect of the Junior Subordinated
Debt Trust Securities of a series (except in each case for certain obligations
to register the transfer or exchange of such Junior Subordinated Debt Trust
Securities, replace stolen, lost or mutilated Junior Subordinated Debt Trust
Securities of that series, maintain paying agencies and hold moneys for
payment in trust) if (i) the Company irrevocably deposits with the Indenture
Trustee cash or U.S. Government Obligations, as trust funds in an amount
certified to be sufficient to pay at maturity (or upon redemption) the
principal of, premium, if any, and interest on all outstanding Junior
Subordinated Debt Trust Securities of such series; (ii) 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; (iii) the Company delivers to the Indenture Trustee an opinion of
counsel to the effect that the holders of the Junior Subordinated Debt Trust
Securities of such series will not recognize income, gain or loss for United
States federal income tax purposes as a result of such defeasance and that
defeasance will not otherwise alter holders' United States federal income tax
treatment of principal, premium and interest payments on such Junior
Subordinated Debt Trust Securities of such series (such opinion must be based
on a ruling of the Internal Revenue Service or a change in United States
federal income tax law occurring after the date of such Junior Subordinated
Debt Trust Securities Indenture, since such a result would not occur under
current tax law); (iv) the Company has delivered to the Indenture Trustee an
Officer's Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the defeasance contemplated by
such provision have been complied with; and (v) no event or condition shall
exist that, pursuant to the subordination provisions applicable to such
series, would prevent the Company from making payments of principal of,
premium, if any, and interest on the Junior Subordinated Debt Trust Securities
of such series at the date of the irrevocable deposit referred to above.
(Section 11.01)
Governing Law
The Indenture and the Junior Subordinated Debt Trust Securities
will be governed by the laws of the State of New York. (Section 13.05)
Information Concerning the Indenture Trustee
The Indenture Trustee, prior to default, undertakes to perform
only such duties as are specifically set forth in the Indenture and, after
default, shall exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. (Section 7.01) Subject to
such provision, the Indenture Trustee is under no obligation to exercise any
of the powers vested in it by the Junior Subordinated Debt Trust Securities
Indenture at the request of any holder of Junior Subordinated Debt Trust
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities that might be incurred thereby. (Section
7.02) The Indenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its
duties if the Trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it. (Section 7.01)
The Company and its subsidiaries maintain ordinary banking and
trust relationships with The First National Bank of Chicago and its affiliates.
Miscellaneous
The Company will have the right at all times to assign any of
its rights or obligations under the 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, the Indenture will be binding
upon and inure to the benefit of the parties thereto and their respective
successors and assigns. The Indenture provides that it may not otherwise be
assigned by the parties thereto other than by the Company to a successor or
purchaser pursuant to a consolidation, merger or sale permitted by the
Indenture. (Section 13.11)
PLAN OF DISTRIBUTION
The Company may sell any series of Junior Subordinated Debt
Trust Securities and the AES Trusts may sell the Preferred Securities being
offered hereby in any of three ways (or in any combination thereof): (i)
through underwriters or dealers; (ii) directly to a limited number of
purchasers or to a single purchaser; or (iii) through agents. The Prospectus
Supplement with respect to any Offered Securities will set forth the terms of
the offering of such Offered Securities, including the name or names of any
underwriters, dealers or agents and the respective amounts of such Offered
Securities underwritten or purchased by each of them, the initial public
offering price of such Offered Securities and the proceeds to the Company from
such sale, any discounts, commissions or other items constituting compensation
from the Company and any discounts, commissions or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such
Offered Securities may be listed. Any public offering price and any discounts
or concessions allowed or reallowed or paid to dealers may be changed from
time to time.
If underwriters are used in the sale of any Offered Securities,
such Offered Securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Such Offered Securities may be
either offered to the public through underwriting syndicates represented by
managing underwriters, or directly by underwriters. Unless otherwise set
forth in the Prospectus Supplement, the obligations of the underwriters to
purchase such Offered Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all of such
Offered Securities if any are purchased.
Offered Securities may be sold directly by the Company or
through agents designated by the Company from time to time. Any agent
involved in the offer or sale of Offered Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters, dealers or agents to solicit offers by certain
purchasers to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements
entered into with the Company to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus
Supplement, certain matters of Delaware law relating to the validity of the
Preferred Securities will be passed upon by Richards, Layton & Finger,
Wilmington. The legality of the Junior Subordinated Debt Trust Securities
and the Preferred Securities offered hereby will be passed upon for the
Company by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements incorporated in this
Prospectus by reference from the Company's Registration Statement on Form S-3
filed on June 12, 1996, and the consolidated financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated by reference herein and such consolidated financial
statements and consolidated financial statement schedules have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of Light Servicos de Electicidade
S.A., from Form 8-K of the AES Corporation dated May 30, 1996, incorporated
in this Prospectus by reference, for the years ended December 31, 1995 and
1994 have been audited by Deloitte Touche Tohmatsu, Rio de Janeiro, Brazil,
independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting
and auditing.
======================================== ====================================
No person has been authorized to give any
information or to make any representations,
other than those contained or incorporated by
reference in this Prospectus or any Prospectus $750,000,000
Supplement, in connection with any offering
contemplated hereby, and, if given or made, The AES Corporation
such information or representations must not be
relied upon as having been authorized by the Junior Subordinated
company, any underwriter, agent or dealer. Debt Securities
Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sale made AES TRUST I
hereunder or thereunder shall under any AES TRUST II
circumstances create any implication that there AES TRUST III
has been no change in the affairs of the
Company since the date hereof or thereof. Preferred Securities
Neither this Prospectus nor any Prospectus
Supplement shall constitute an offer to ----------
sell or a solicitation of an offer to PROSPECTUS
buy any securities by anyone in any ----------
jurisdiction in which such offer
or solicitation is not authorized or in
which the person making such offer or
solicitation is not qualified to do so
or to any person to whom it is
unlawful to make such offer or
solicitation.
Table of Contents
Page
----
Available Information................. 1
Incorporation of Certain Information
by Reference....................... 1
Use of Proceeds...................... 2
Ratios of Earnings to Fixed Charges.. 2
The Company.......................... 3
Risk Factors......................... 4
The AES Trusts....................... 12
Description of Preferred Securities.. 17
Description of Preferred Securities
Guarantees......................... 18
Description of Junior Subordinated
Debt Trust Securities.............. 21
Plan of Distribution................. 28
Legal Matters........................ 28
Experts.............................. 29 , 1996
======================================== ====================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the expenses in connection with
the issuance and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are
estimates, except the SEC registration fee.
SEC Registration filing fee..................... $225,273
Printing and engraving expenses................. $ 75,000
Blue sky fees and expenses (including counsel).. $ 7,500
Legal fees and expenses......................... $125,000
Fees of accountants............................. $ 75,000
Fees of trustee................................. $ 10,000
________
Total.......................................... $517,773
========
Item 15. Indemnification of Directors and Officers
Under the Company's By-Laws, and in accordance with Section 145
of the Delaware General Corporation Law ("GCL"), the Company shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than any action or suit by or
in the right of the Company to procure a judgment in its favor, which is
hereinafter referred to as a "derivative action") by reason of the fact that
such person is or was a director, officer or employee of the Company, or is or
was serving in such capacity or as an agent at the request of the Company for
another entity, to the full extent authorized by Delaware law, against
expenses (including, but not limited to, attorneys' fees), judgments, fines
and amounts actually and reasonably incurred in connection with the defense or
settlement of such action, suit or proceeding if such person acted in good
faith and in a manner the person reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe was unlawful. Agents of the
Company may be similarly indemnified, at the discretion of the Board of
Directors.
Under Section 145 of the GCL, a similar standard of care is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with
the defense or settlement of such an action and then, where the person is
adjudged to be liable to the Company, only if and to the extent that the Court
of Chancery of the State of Delaware or the court in which such action was
brought determines that such person is fairly and reasonably entitled to such
indemnity and only for such expenses as the court shall deem proper.
Pursuant to Company's By-Laws, a person eligible for
indemnification may have the expenses incurred in connection with any matter
described above paid in advance of a final disposition by the Company.
However, such advances will only be made upon the delivery of an undertaking
by or on behalf of the indemnified person to repay all amounts so advanced if
it is ultimately determined that such person is not entitled to
indemnification.
In addition, under the Company's By-Laws, the Company may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company or of another corporation
against any liability asserted against and incurred by such person in such
capacity, or arising out of the person's status as such whether or not the
Company would have the power or the obligation to indemnify such person
against such liability under the provisions of the Company's By-Laws.
Item 16. Exhibits.
Exhibits Description of Exhibit
- -------- ----------------------
1.1 Form of Underwriting Agreement (Debt Securities)
1.2 Form of Underwriting Agreement (Common Stock and Preferred Stock)
1.3 Form of Underwriting Agreement (Stock Purchase Contracts and Stock
Purchase Units)
1.4 Form of Underwriting Agreement (Preferred Securities)
4.1 Form of Senior Debt Securities Indenture between the Company and
The First National Bank of Chicago+
4.2 Senior Subordinated Debt Securities Indenture dated as of
July 1, 1996 between the Company and The First National
Bank of Chicago+
4.3 Form of Junior Subordinated Debt Securities Indenture between the
Company and The First National Bank of Chicago+
4.4 Form of Junior Subordinated Debt Trust Securities Indenture
between the Company and The First National Bank of Chicago+
4.5 Declaration of Trust of AES Trust I+
4.6 Certificate of Trust of AES Trust I+
4.7 Declaration of Trust of AES Trust II+
4.8 Certificate of Trust of AES Trust II+
4.9 Form of Amended and Restated Declaration of Trust for each of AES
Trust I, AES Trust II and AES Trust III+
4.10 Form of Preferred Security (included in Exhibit 4.9)+
4.11 Form of Supplemental Indenture to be used in connection with
issuance of Junior Subordinated Debt Trust Securities and
Preferred Securities+
4.12 Form of Junior Subordinated Debt Trust Security (included in
Exhibit 4.11)+
4.13 Form of Preferred Securities Guarantee with respect to Preferred
Securities+
4.14 Declaration of Trust of AES Trust III
4.15 Certificate of Trust of AES Trust III
4.16 Form of Purchase Contract Agreement
4.17 Form of Pledge Agreement
5.1 Opinion of Davis Polk & Wardwell++
5.2 Opinion of Delaware counsel++
12.1 Statement re: Computation of ratio of earnings to fixed charges+
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Deloitte Touche Tohmatsu*
23.3 Consent of Davis Polk & Wardwell (included in Exhibit 5.1)++
23.4 Consent of Delaware counsel (included in Exhibit 5.2)++
24.1 Powers of Attorney for the Company
24.2 Powers of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of AES Trust I and AES Trust II
(included in Exhibits 4.5 and 4.7)+
24.3 Power of Attorney for the Company as sponsor, to sign the
Registration Statement on behalf of AES Trust III (included in
Exhibit 4.15)
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee,
under the Senior Debt Securities Indenture+
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee,
under the Senior Subordinated Debt Securities Indenture+
25.3 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee,
under the Junior Subordinated Debt Securities Indenture+
25.4 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Junior Subordinated Debt Trust Securities
Indenture+
25.5 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities of AES Trust I+
25.6 Statement of Eligibility under The Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities of AES Trust II+
25.7 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee,
under the Preferred Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust I+
25.8 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Preferred Securities Guarantee of the Company
with respect to the Preferred Securities of AES Trust II+
25.9 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First national Bank of Chicago, as Trustee,
with respect to the Preferred Securities of AES Trust III
25.10 Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The First National Bank of Chicago, as Trustee,
under the Preferred Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust III.
25.11 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee, with
respect to the Junior Subordinated Debt Trust Securities
Indenture+
___________
++ To be filed by amendment.
+ Previously filed
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that the undertakings set
forth in paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrar of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that is has reasonable grounds to believe that it meets
all of the requirements for filing on Forms S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Arlington, State of
Virginia on November 18, 1996.
THE AES CORPORATION
By: /s/ Dennis W. Bakke
-----------------------------
Dennis W. Bakke
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities indicated on November 18, 1996.
Signature Title Date
--------- ----- ----
* Chairman of the Board November 18, 1996
- ------------------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief November 18, 1996
- ------------------------------ Executive Officer and
Dennis W. Bakke Director (Principal
Executive Officer)
* Director November 18, 1996
- ------------------------------
Vicki-Ann Assevero
* Director November 18, 1996
- ------------------------------
Dr. Alice F. Emerson
* Director November 18, 1996
- ------------------------------
Robert F. Hemphill, Jr.
* Director November 18, 1996
- ------------------------------
Frank Jungers
* Director November 18, 1996
- ------------------------------
Dr. Henry R. Linden
* Director November 18, 1996
- ------------------------------
Russell E. Train
* Director November 18, 1996
- ------------------------------
Thomas I. Unterberg
* Director November 18, 1996
- ------------------------------
Robert H. Waterman, Jr.
/s/ Barry J. Sharp Vice President and November 18, 1996
- ------------------------------ Chief Financial
Barry J. Sharp Officer (Principal
Financial and
Accounting Officer)
*By: /s/ Barry J. Sharp November 18, 1996
---------------------------
Barry J. Sharp
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AES
Trust I and AES Trust II each certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Forms S-3 and
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Arlington, State of Virginia on November 18, 1996.
AES TRUST I
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
AES TRUST II
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
AES TRUST III
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
EXHIBIT INDEX
Sequentially
Exhibits Description of Exhibit Numbered Page
- -------- ---------------------- -------------
1.1 Form of Underwriting Agreement (Debt Securities)
1.2 Form of Underwriting Agreement (Common Stock and
Preferred Stock)
1.3 Form of Underwriting Agreement (Stock Purchase
Contracts and Stock Purchase Units)
1.4 Form of Underwriting Agreement (Preferred
Securities)
4.1 Form of Senior Debt Securities Indenture between
the Company and The First National Bank of Chicago+
4.2 Senior Subordinated Debt Securities Indenture
dated as of July 1, 1996 between the Company
and The First National Bank of Chicago+
4.3 Form of Junior Subordinated Debt Securities Indenture
between the Company and The First National
Bank of Chicago+
4.4 Form of Junior Subordinated Debt Trust Securities
Indenture between the Company and The First
National Bank of Chicago+
4.5 Declaration of Trust of AES Trust I+
4.6 Certificate of Trust of AES Trust I+
4.7 Declaration of Trust of AES Trust II+
4.8 Certificate of Trust of AES Trust II+
4.9 Form of Amended and Restated Declaration of
Trust for each of AES Trust I, AES Trust II
and AES Trust III+
4.10 Form of Preferred Security (included in Exhibit 4.9)+
4.11 Form of Supplemental Indenture to be used in
connection with issuance of Junior Subordinated
Debt Trust Securities and Preferred Securities+
4.12 Form of Junior Subordinated Debt Trust Security
(included in Exhibit 4.11)+
4.13 Form of Preferred Securities Guarantee with
respect to Preferred Securities+
4.14 Declaration of Trust of AES Trust III
4.15 Certificate of Trust of AES Trust III
4.16 Form of Purchase Contract Agreement
4.17 Form of Pledge Agreement
5.1 Opinion of Davis Polk & Wardwell++
5.2 Opinion of Delaware counsel++
12.1 Statement re: Computation of ratio of earnings
to fixed charges+
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Deloitte Touche Tohmatsu*
23.3 Consent of Davis Polk & Wardwell (included
in Exhibit 5.1)++
23.4 Consent of Delaware counsel (included
in Exhibit 5.2)++
24.1 Powers of Attorney for the Company
24.2 Powers of Attorney for the Company as sponsor,
to sign the Registration Statement on behalf
of AES Trust I and AES Trust II (included in
Exhibits 4.5 and 4.7)+
24.3 Power of Attorney for the Company as sponsor, to
sign the Registration Statement on behalf of
AES Trust III (included in Exhibit 4.15)
25.1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, under the Senior
Debt Securities Indenture+
25.2 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, under the Senior
Subordinated Debt Securities Indenture+
25.3 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, under the Junior
Subordinated Debt Securities Indenture+
25.4 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Junior Subordinated Debt Trust Securities Indenture+
25.5 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Preferred Securities of AES Trust I+
25.6 Statement of Eligibility under The Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Preferred Securities of AES Trust II+
25.7 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, under the Preferred
Securities Guarantee of the Company with
respect to the Preferred Securities of AES Trust I+
25.8 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Preferred Securities Guarantee of the Company
with respect to the Preferred Securities of
AES Trust II+
25.9 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First national
Bank of Chicago, as Trustee, with respect to the
Preferred Securities of AES Trust III
25.10 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The First National Bank of
Chicago, as Trustee, under the Preferred Securities
Guarantee of the Company with respect to the
Preferred Securities of AES Trust III.
25.11 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee, with respect to the
Junior Subordinated Debt Trust Securities Indenture+
___________
++ To be filed by amendment.
+ Previously filed
EXHIBIT 1.1
[FORM OF DEBT SECURITIES
UNDERWRITING AGREEMENT]
$___________
THE AES CORPORATION
___% Senior Subordinated Notes Due ____
UNDERWRITING AGREEMENT
_______, 199_
Dear Sirs:
The AES Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell $__________ principal amount of its ___% Notes Due
____ (the "Notes"), to you as representatives of the several underwriters
named in Schedule I hereto (the "Underwriters"). The Notes are to be issued
pursuant to the provisions of an Indenture to be dated as of ______, 1996, as
supplemented by a supplemental indenture dated as of ______, 1996, (as
supplemented, the "Indenture") between the Company and The First National Bank
of Chicago, as Trustee.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Securities Act"), a registration statement on Form
S-3, including a prospectus, relating to $___________ principal amount of its
debt securities to be issued from time to time by the Company (the "Shelf
Securities"). The Company also has filed with, or proposes to file with, the
Commission pursuant to Rule 424 under the Securities Act a prospectus
supplement specifically relating to the Notes. The registration statement as
amended to the date of this Agreement is hereinafter referred to as the "Base
Registration Statement" and any registration statement filed pursuant to Rule
462(b) under the Securities Act relating to the Notes is herein referred to as
the "Additional Registration Statement", and, together with the Base
Registration Statement, the "Registration Statement". The related prospectus
covering the Shelf Securities in the form first used to confirm sales of the
Notes is hereinafter referred to as the "Basic Prospectus". The Basic
Prospectus as supplemented by the prospectus supplement specifically relating
to the Notes in the form first used to confirm sales of the Notes is
hereinafter referred to as the "Prospectus". Any reference in this Agreement
to the Registration Statement, the Basic Prospectus, any preliminary form of
Prospectus (a "preliminary prospectus") previously filed with the Commission
pursuant to Rule 424 or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act which were filed under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") on or before the date of this
Agreement or the date of the Basic Prospectus, any preliminary prospectus
or the Prospectus, as the case may be; and any reference to "amend",
"amendment" or "supplement" with respect to the Registration Statement, the
Basic Prospectus, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include any documents filed under the Exchange Act
after the date of this Agreement, or the date of the Basic Prospectus, any
preliminary prospectus or the Prospectus, as the case may be, which are
deemed to be incorporated by reference therein.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell and each
Underwriter agrees, severally and not jointly, to purchase from the Company
the principal amount of Notes set forth opposite the name of such Underwriter
in Schedule I hereto at ______% of the principal amount thereof (the "Purchase
Price").
3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose (i) to make a public offering of their
respective portions of the Notes as soon after the effective date of the
Registration Statement as in your judgment is advisable and (ii) initially to
offer the Notes upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Notes shall be made at 10:00 A.M., New York City time, on
______, 199_, or at such other time or such other date as the Underwriters and
the Company may agree upon in writing. The time and date of such payment are
referred to herein as the "Closing Date". As used herein, the term "Business
Day" means any day other than a day on which banks are permitted or required
to be closed in New York City.
The Notes shall be registered in such names and issued in such
denominations as you shall request in writing not later than two full business
days prior to the Closing Date. The Notes shall be made available to you for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date. The Notes shall be delivered to you on the
Closing Date with any transfer taxes thereon duly paid by the Company, for the
respective accounts of the several Underwriters, against payment of the
Purchase Price therefor by wire transfer in immediately available funds to the
account specified by the Company to the Underwriters (no later than noon the
Business Day prior to the Closing Date) at the office of Davis Polk &
Wardwell, counsel to the Company.
5. Agreements of the Company. The Company agrees with you:
(a) To file the Prospectus in a form approved by you with the
Commission within the time periods specified by Rule 424; and to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Notes; and to furnish copies of the Prospectus to the
Underwriters in New York City prior to 10:00 a.m., New York City
time, on the Business Day next succeeding the date of this Agreement
in such quantities as the Underwriters may reasonably request;
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement has been filed or becomes effective,
(ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Notes for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purposes, and (iv) of the happening of any
event during the period referred to in paragraph (e) below which
makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires the making of
any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading.
If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal or lifting of
such order at the earliest possible time.
(c) To furnish to you three signed copies of the Registration
Statement as first filed with the Commission and of each amendment to
it, including all exhibits thereto and documents incorporated by
reference therein, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits
thereto and documents incorporated by reference therein, as you may
reasonably request.
(d) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or
to which you shall reasonably object; and to prepare and file with
the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or supplement to the
Prospectus which may be necessary or advisable in connection with
the distribution of the Notes by you, and to use its best efforts
to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel for the Underwriters a prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish to each Underwriter and dealer as many copies of
the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if it is necessary to amend or supplement the
Prospectus to comply with any law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply
with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter
or dealers may reasonably request.
(g) Prior to any public offering of the Notes, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Notes for offer and sale by the
several Underwriters and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may request, to continue
such qualification in effect so long as required for distribution of
the Notes and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification.
(h) To mail and make generally available to its
securityholders as soon as reasonably practicable an earnings
statement covering a period of at least twelve months after the
effective date of the Registration Statement (but in no event
commencing later than 90 days after such date) which shall satisfy
the provisions of Section 11(a) of the Securities Act, and to advise
you in writing when such statement has been so made available.
(i) During the period of five years after the date of this
Agreement, or for such shorter period if the Notes no longer remain
outstanding, (i) to mail as soon as reasonably practicable after the
end of each fiscal year to the record holders of its Notes a
financial report of the Company and its subsidiaries on a
consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if required by Regulation S-X), all
such financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of
cash flows and a consolidated statement of shareholders' equity as
of the end of and for such fiscal year, together with comparable
information as of the end of and for the preceding year, certified
by independent certified public accountants, and (ii) to mail and
make generally available as soon as practicable after the end of
each quarterly period (except for the last quarterly period of
each fiscal year) to such holders, a consolidated balance sheet, a
consolidated statement of operations and a consolidated statement
of cash flows (and similar financial reports of all unconsolidated
subsidiaries, if required by Regulation S-X) as of the end of and
for such period, and for the period from the beginning of such
year to the close of such quarterly period, together with
comparable information for the corresponding periods of the
preceding year.
(j) During the period referred to in paragraph (i), to furnish
to you as soon as available a copy of each report or other publicly
available information of the Company mailed to the securityholders of
the Company or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as
you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident to the
performance of its obligations hereunder, including without limiting
the generality of the foregoing, all costs and expenses incident to
(i) the preparation, issuance, execution, authentication and delivery
of the Notes, including any expenses of the Trustee, (ii) the
preparation, printing, filing and distribution under the Securities
Act of the Registration Statement (including financial statements and
exhibits), each preliminary prospectus and all amendments and
supplements to any of them prior to or during the period specified in
paragraph (e), (iii) the printing and delivery of the Prospectus and
any Preliminary Prospectus and all amendments or supplements to it
during the period specified in paragraph (e), (iv) the printing and
delivery of this Agreement, the Indenture, Preliminary and
Supplemental Blue Sky Memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in
connection with the offering of the Notes (including in each case any
disbursements of counsel for the Underwriters relating to such
printing and delivery), (v) the registration or qualification of the
Notes for offer and sale under the securities or Blue Sky laws of the
several states (including in each case the fees and disbursements of
counsel for the Underwriters relating to such registration or
qualification and memoranda relating thereto), (vi) filings and
clearance with the National Association of Securities Dealers, Inc.
in connection with the offering, (vii) furnishing such copies of the
Registration Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in connection with
the offering or sale of the Notes by the Underwriters or by dealers
to whom Notes may be sold and (viii) the rating of the Notes
including, without limitation, fees payable to rating agencies in
connection therewith.
(l) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement
by the Company prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Notes.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge
of the Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply,
or will comply, as the case may be, in all material respects with the
Securities Act and the Trust Indenture Act of 1939, as amended, and
the rules and regulations of the Commission thereunder (collectively,
the "Trust Indenture Act"), and do not and will not, as of the
applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and the
Prospectus, as amended or supplemented at the Closing Date, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; except that the foregoing representations and
warranties shall not apply to (i) that part of the Registration
Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the
Trustee, and (ii) statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly
for use therein;
(b) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents are filed with the
Commission will conform in all material respects to the requirements
of the Exchange Act, as applicable, and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(c) The Company and each of its subsidiaries and each of its
affiliates which meets the criteria in the definition of "significant
subsidiary" pursuant to Rule 1-02(w) of Regulation S-X under the
Securities Act (each, a "Principal Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority required to carry on its business as it
is currently being conducted and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Principal Subsidiaries, taken as a whole.
(d) Except as set forth in the Registration Statement or on
Annex I hereto, all of the outstanding shares of capital stock of, or
other ownership interests in, the Principal Subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company or one of the Principal
Subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
(e) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to the Underwriters against payment therefor as provided by
this Agreement, will be entitled to the benefits of the Indenture,
and will be valid and binding obligations of the Company, enforceable
in accordance with their terms except as the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by equitable principles of general
applicability.
(f) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by equitable principles of
general applicability.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company (except as rights to indemnity and contribution hereunder may
be limited by applicable law).
(h) The Notes conform as to legal matters to the description
thereof contained in the Registration Statement and the Prospectus.
(i) The Company is not in violation of its Restated
Certificate of Incorporation or its By-laws and none of the Principal
Subsidiaries is in violation of its respective charter, or except for
any such violations which would not have a material adverse effect on
the Company and its subsidiaries taken as a whole, in violation of
its by-laws, nor is the Company or any of the Principal Subsidiaries,
except as set forth in the Registration Statement, in default in the
performance of any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of indebtedness or in
any other agreement, indenture or instrument to which the Company or
any of the Principal Subsidiaries is a party or by which it or any of
the Principal Subsidiaries or their respective property is bound
except for any such defaults which, individually or in the aggregate,
would not have a material adverse effect on the business, financial
condition or results of operations of the Company and the Principal
Subsidiaries, taken as a whole.
(j) The execution, delivery and performance of this Agreement,
the Indenture and the Notes and compliance by the Company with all
the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not require any
consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body
(except such as may be required under the Securities Act, the
Exchange Act, the Trust Indenture Act, or other securities or Blue
Sky laws) and will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or
by-laws of the Company or any of the Principal Subsidiaries or any
agreement, indenture or other instrument to which it or any of the
Principal Subsidiaries is a party or by which it or any of the
Principal Subsidiaries or their respective property is bound, or
violate or conflict with any laws, administrative regulations or
rulings or court decrees applicable to the Company, any of the
Principal Subsidiaries or their respective property (except state
securities or Blue Sky laws).
(k) Except as set forth in the Registration Statement, there
are no material legal or governmental proceedings pending to which
the Company or any of the Principal Subsidiaries is a party or to
which any of their respective property is the subject, and, to the
best of the Company's knowledge, no such proceedings are threatened
or contemplated. No contract or document of a character required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement is not so described
or filed as required.
(l) Except as set forth in the Registration Statement, neither
the Company nor any of the Principal Subsidiaries has violated any
U.S. federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable U.S. federal or
state wages and hours laws, or any provisions of the Employee
Retirement Income Security Act or the rules and regulations
promulgated thereunder, which in each case could result in any
material adverse change in the business, financial condition or
results of operations of the Company and the Principal Subsidiaries,
taken as a whole.
(m) Except as set forth in the Registration Statement, the
Company and each of the Principal Subsidiaries has good and
marketable title, free and clear of all liens, claims, encumbrances
and restrictions which are required to be described in the
Registration Statement except liens for taxes not yet due and
payable, to all property and assets described in the Registration
Statement as being owned by it. All leases to which the Company or
any of the Principal Subsidiaries is a party are valid and binding
and no default by the Company or any such Principal Subsidiary, or,
to the best of the Company's knowledge, by any other party to any
such leases, has occurred or is continuing thereunder, which could
result in any material adverse change in the business, financial
condition or results of operations of the Company and the Principal
Subsidiaries taken as a whole, and the Company and the Principal
Subsidiaries enjoy peaceful and undisturbed possession under all such
leases to which any of them is a party as lessee with such exceptions
as do not materially interfere with the use made by the Company or
such Principal Subsidiary.
(n) Deloitte & Touche are independent public accountants with
respect to the Company as required by the Securities Act.
(o) The financial statements, together with related schedules
and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and
statements of cash flow of the Company and its subsidiaries on the
basis stated in the Registration Statement at the respective dates
and for the respective periods to which they apply; such statements
and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), in all material respects, present fairly the
information purported to be shown thereby at the respective dates or
for the respective periods to which they apply and have been prepared
on a basis consistent with such financial statements and the books
and records of the Company.
(p) Each of the Company and the Principal Subsidiaries has
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities ("permits") which are required to have been
obtained by it prior to the date hereof and which are material to the
ownership or leasing and operation of or construction of its
respective properties and to the conduct of its business in the
manner described in the Prospectus, except for any such permits, the
failure of which to have, individually or in the aggregate, would not
have a material adverse effect on the business, financial condition
or results of operations of the Company and the Principal
Subsidiaries, taken as a whole, and subject to such qualifications
as may be set forth in the Registration Statement; each of the
Company and the Principal Subsidiaries has fulfilled and performed
all of its material obligations with respect to such permits required
to have been fulfilled and performed prior to the date hereof and no
event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or result in any other
material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Registration Statement; and, except as described in the Registration
Statement, such permits do not materially interfere with the use or
operation of the electric power generation facilities of the
Principal Subsidiaries as currently used or operated or as
contemplated to be used or operated.
(q) Each of the AES Beaver Valley, the AES Deepwater, the AES
Placerita, the AES Shady Point, the AES Barbers Point and the AES
Thames facilities (each as defined in the Registration Statement) is
a "qualifying cogeneration facility" under the Federal Power Act
("FPA"), as amended by Section 201 of the Public Utility Regulatory
Policies Act of 1978 ("PURPA") and the FERC's regulations promulgated
thereunder, and each such facility's current use, operation and
ownership are consistent with such facility's status as a "qualifying
cogeneration facility".
(r) Neither the Company nor any of the Principal Subsidiaries
is (i) subject to regulation as a "holding company" or a "subsidiary
company" of a holding company or a "public utility company" under
Section 2(a) of the Public Utility Holding Company Act of 1935
("PUHCA"), except that the Company and its subsidiary in the United
Kingdom, Applied Energy Services Electric Limited, are exempt holding
companies under Section 3(a)(5) of PUHCA by order of the Commission,
(ii) subject to regulation under the FPA, other than as contemplated
by 18 C.F.R. Section 292.601(c), or (iii) except as described in the
Registration Statement (other than contained in the exhibits
thereto), subject to regulation by any state law with respect to
rates or the financial or organizational regulation of electric
utilities.
(s) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(t) Except as set forth in the Registration Statement, each of
the Company, each Principal Subsidiary, and any other subsidiary or
entity which the Company may be deemed to operate (together with the
Principal Subsidiaries, the "Subsidiaries") is in compliance with all
applicable foreign, federal, state and local environmental
(including, without limitation, the Comprehensive Environmental
Response, Compensation & Liability Act of 1980, as amended), safety
or similar law, rule and regulation, and there are no costs or
liabilities associated with any such law, rule or regulation, except
for any such noncompliances, costs or liabilities which, individually
or in the aggregate, would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Subsidiaries, taken as a whole.
(u) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (other
than that part of the Registration Statement that constitutes the Form T-1) or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or judgments purchased Notes, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Notes to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages, liabilities or judgments.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against
the Company, such Underwriter shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of all
fees and expenses. Any Underwriter or any such controlling person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
employment of such counsel has been specifically authorized in writing by the
Company, (ii) the Company has failed to assume the defense and employ counsel
or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the Company
(in which case the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person, it being
understood, however, that the Company shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be designated in
writing by __________________ and that all such fees and expenses shall be
reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of
this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 10 business days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Company to each
Underwriter but only with reference to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through
you expressly for use in the Registration Statement, the Prospectus, any
preliminary prospectus or any amendment or supplement thereto. In case any
action shall be brought against the Company, any of its directors, any such
officer or any person controlling the Company based on the Registration
Statement, the Prospectus or any preliminary prospectus or any amendment or
supplement thereto and in respect of which indemnity may be sought against any
Underwriter, the Underwriter shall have the rights and duties given to the
Company (except that if the Company shall have assumed the defense thereof,
such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and the
Company, its directors, any such officers and any person controlling the
Company shall have the rights and duties given to the Underwriter, by Section
7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received
by the Company, and the total underwriting discounts and commissions received
by the Underwriters, bear to the total price to the public of the Notes, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Notes underwritten by it
and distributed to the public was offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7(d) are several in proportion to the respective principal amount
of Notes purchased by each of the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.
(b) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending before or,
to the best of the Company's knowledge, contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have been
any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally
recognized statistical rating organization", as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) (i) Since the date of the latest balance sheet included in
the Registration Statement, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in
the ordinary course of business, of the Company and the Principal
Subsidiaries, taken as a whole, from that described in the
Registration Statement, (ii) since the date of the latest balance
sheet included in the Registration Statement there shall not have
been any material change, or any development involving a prospective
material adverse change, in the capital stock or in the long-term debt
of the Company from that set forth in the Registration Statement,
(iii) the Company shall have no liability or obligation, direct or
contingent, which is material to the Company and the Principal
Subsidiaries, taken as a whole, other than those reflected in the
Registration Statement and (iv) on the Closing Date you shall have
received a certificate dated the Closing Date, signed by such
executive officers of the Company as you may designate, and such
other certificates of executive officers and key personnel of the
Principal Subsidiaries as you may specify confirming the matters set
forth in paragraphs (a), (b), (c) and (d) of this Section 8.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of William R. Luraschi, General Counsel of AES, to the
effect that:
(i) the Company and each of the Principal Subsidiaries
has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation and has the corporate power and authority
required to carry on its business as it is currently being
conducted and to own its properties;
(ii) the Company and each of the Principal Subsidiaries
is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or
leasing of property requires such qualification, except
where the failure to be so qualified would not have a
material adverse effect on the Company and the Principal
Subsidiaries, taken as a whole;
(iii) except as set forth in the Registration Statement
or otherwise set forth on Annex I, all of the outstanding
shares of capital stock of, or other ownership interests in,
the Principal Subsidiaries have been duly and validly
authorized and issued and are fully paid and non-assessable,
and are owned of record, and to the knowledge of such
counsel, after due inquiry, beneficially, by the Company or
the Principal Subsidiary as set forth in such opinion; and
such counsel, after due inquiry, is not aware of any
security interest, claim, lien, encumbrance or adverse
interest of any nature on such shares or other ownership
interests except as set forth in the Registration Statement
or in Annex I;
(iv) the Company is not in violation of its Restated
Certificate of Incorporation or in violation of its By-laws and
none of the Principal Subsidiaries is in violation of its
respective charter or, except for any such violations which
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole, its by-laws;
(v) the execution, delivery and performance of this
Agreement, the Indenture and the Notes by the Company,
compliance by the Company with all the provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except such
as may be required under the Securities Act, the Exchange Act,
the Trust Indenture Act or other securities or Blue Sky laws)
and will not conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or
by-laws of the Company or any of the Principal Subsidiaries or
any agreement, indenture or other instrument known to such
counsel, to which the Company or any of the Principal
Subsidiaries is a party or by which the Company or any of the
Principal Subsidiaries or their respective properties are bound
that is material to the Company and its Principal Subsidiaries,
taken as a whole, or violate or conflict with any laws,
administrative regulations or rulings or court decrees known to
such counsel, after due inquiry, applicable to the Company or
any of the Principal Subsidiaries or their respective
properties;
(vi) such counsel does not know of any legal or
governmental proceeding pending or threatened to which the
Company or any of the Principal Subsidiaries is a party or to
which any of their respective property is subject which is
required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other
document which is required to be described in the Registration
Statement or the Prospectus or is required to be filed as an
exhibit to the Registration Statement which is not described or
filed as required;
(vii) each of the applicable Principal Subsidiaries has
obtained all permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits") which are
required to have been obtained by it prior to the date hereof
and which are material to the construction, ownership or
leasing and operation of each of the Principal Subsidiaries, as
the case may be, as contemplated by the Registration Statement,
except for any such permits, the failure to have obtained
which, individually or in the aggregate would not have a
material adverse effect on the business, financial condition or
results of operations of the Company and the Principal
Subsidiaries, taken as a whole, and subject to such
qualifications as may be set forth in the Registration
Statement, and all such permits are in full force and effect;
and such counsel has no reason to believe that any other
permits which may be material to the construction, ownership or
leasing and operation of such facilities will not be obtained
in due course;
(ix) each of the AES Beaver Valley, the AES Deepwater,
the AES Placerita, the AES Shady Point, the AES Barbers
Point and the AES Thames facilities is a "qualifying
cogeneration facility" under the FPA, as amended by Section
201 of PURPA and the FERC regulations promulgated
thereunder, and, to the best of such counsel's knowledge,
after due inquiry, each such facility's current use,
operation and ownership are consistent with such facility's
status as a "qualifying cogeneration facility";
(x) neither the Company nor any of the Principal
Subsidiaries is (i) subject to regulation as a "holding
company" or a "subsidiary company" of a holding company or an
"affiliate" of a subsidiary or holding company or a "public
utility company" under Section 2(a) of PUHCA, except that the
Company and its subsidiary in the United Kingdom, Applied
Energy Services Electric Limited, are exempt holding
companies under Section 3(a)(5) of PUHCA by order of the
Commission, (ii) subject to regulation under the FPA, other
than as contemplated by 18 C.F.R. Section 292.601(c), or
(iii) except as described in the Registration Statement,
subject to regulation under any state law with respect to
the rates or the financial or organizational regulation of
electric utilities; and
(xi) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Davis Polk & Wardwell, counsel for the Company, to
the effect that:
(i) the Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement,
will be entitled to the benefits of the Indenture and will
be valid and binding obligations of the Company enforceable
in accordance with their terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and by equitable
principles of general applicability;
(ii) this Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding
agreement of the Company (except as rights to indemnity and
contribution hereunder may be limited by applicable law);
(iii) the Indenture has been duly qualified under the
Trust Indenture Act, and has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement
of the Company, enforceable in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights
generally and be equitable principles of general applicability;
(iv) the Notes conform as to legal matters to the
description thereof contained in the Registration Statement and
the Prospectus;
(v) the Registration Statement has become effective under
the Securities Act (assuming compliance with clause (2) of Rule
462(b) in the case of the Additional Registration Statement)
and, to the best of such counsel's knowledge, no stop order
suspending its effectiveness has been issued and no proceedings
for that purpose are pending before or contemplated by the
Commission;
(vi) the statements under the captions "____________" in
the Prospectus, insofar as such statements constitute a summary
of the legal matters, documents or proceedings specifically
referred to therein, fairly present all the material
information called for with respect to such legal matters,
documents or proceedings;
(vii) except for the order of the Commission making the
Registration Statement effective and permits and similar
authorizations required under the securities or Blue Sky laws
of certain states, no consent, approval, authorization or other
order of any regulatory body, administrative agency or other
governmental body is legally required for the valid issuance
and sale of the Notes to the Underwriters as contemplated by
this Agreement or the public offering of the Notes contemplated
by the Prospectus; and
(viii) the Registration Statement and the Prospectus and
any supplement or amendment thereto (except for financial
statements and other financial and statistical information
therein as to which no opinion need be expressed) comply as to
form in all material respects with the Securities Act.
In addition, Davis Polk & Wardwell will deliver a separate
letter to the effect that such counsel has participated in
conferences with directors, officers and other representatives of the
Company and representatives of the independent public accountants for
the Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein and that part of the Registration Statement that
constitutes the Form T-1 as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed), contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading.
In rendering their opinions above, Davis Polk & Wardwell may
rely as to factual matters on such certificates of the Company's
officers or of governmental officials as they may deem relevant or
necessary for such opinions and as to matters governed by other than
federal or New York law or by the General Corporation Law of Delaware
on opinions of local counsel.
In addition, Mr. Luraschi will deliver a separate letter to
the effect that such counsel has participated in conferences with
directors, officers and other representatives of the Company and
representatives of the independent public accountants for the
Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein and that part of the Registration Statement that
constitutes the Form T-1 as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed), contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading.
In rendering the opinions above, Mr. Luraschi may rely as to
factual matters on such certificates of the Company's officers or of
governmental officials as he may deem relevant or necessary for such
opinions and as to matters governed by other than federal or New York
law or by the General Corporation Law of Delaware on opinions of
local counsel.
(g) You shall have received on the Closing Date an opinion,
dated the Closing Date, of ___________, counsel for the Underwriters,
as to the matters referred to in clauses (i), (ii), (iii), (vi) (but
only with respect to the statements under the captions "Description
of Notes" and "Underwriting") and (viii) of the foregoing paragraph
(f).
With respect to subparagraph (viii) of paragraph (f) above and
the final subparagraph of this paragraph (g), __________ may state
that their opinion and belief is based upon their participation in
the preparation of the Registration Statement and the Prospectus and
any amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the
contents thereof (including documents incorporated therein by
reference), but is without independent check or verification except
as specified.
In addition, Davis Polk & Wardwell will opine to the effect
that such counsel has participated in conferences with officers and
other representatives of the Company and representatives of the
independent public accountants for the Company, at which conferences
the contents of the Registration Statement and related matters were
discussed, and, although such counsel has not independently verified
and is not passing upon and assume no responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement, except as specified, no facts have come to
such counsel's attention which lead such counsel to believe that the
Registration Statement (other than any financial statements or other
financial or statistical information therein and that part of the
Registration Statement that constitutes the Form T-1 as to which no
opinion is expressed) at its effective date contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
contained therein not misleading, or that the Prospectus as of its
date or the Closing Date (other than any financial statements or
other financial or statistical information therein as to which no
opinion is expressed), contained any untrue statement of a material
fact or omitted to state any material fact necessary to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading.
(h) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Deloitte &
Touche, independent public accountants, with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Deloitte &
Touche on the date of this Agreement.
(i) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the
Company at or prior to the Closing Date.
9. Effective Date of Agreement and Termination. This
Agreement shall become effective upon the later of (i) execution of this
Agreement and (ii) when notification of the effectiveness of the Registration
Statement has been released by the Commission.
This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Company if any of the following
has occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any adverse change or
development involving a prospective adverse change in the condition, financial
or otherwise, of the Company, any Principal Subsidiary or the earnings,
affairs, or business prospects of the Company or any Principal Subsidiary,
whether or not arising in the ordinary course of business, which would, in
your reasonable judgment, make it impracticable to market the Notes on the
terms and in the manner contemplated in the Prospectus, (ii) any outbreak or
escalation of hostilities or other national or international calamity or
crisis or material change in economic conditions, if the effect of such
outbreak, escalation, calamity, crisis or change on the financial markets of
the United States or elsewhere would, in your reasonable judgment, make it
impracticable to market the Notes on the terms and in the manner contemplated
in the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market System or limitation on prices for securities on any
such exchange or National Market System, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your reasonable
judgment materially and adversely affects, or will materially and adversely
affect, the business or operations of the Company, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your reasonable judgment
has a material adverse effect on the financial markets in the United States.
If on the Closing Date any one or more of the Underwriters
shall fail or refuse to purchase the Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of Notes
which such defaulting Underwriter or Underwriters, as the case may be, agreed
but failed or refused to purchase is not more than one-tenth of the total
principal amount of Notes to be purchased by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion
which the principal amount of Notes set forth opposite its name in Schedule I
bears to the aggregate principal amount of Notes which all the non-defaulting
Underwriters, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Notes which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase on such date; provided that in no event shall the principal amount
of Notes which any Underwriter has agreed to purchase pursuant to Section 2
hereof be increased pursuant to this Section 9 by an amount in excess of
one-ninth of such principal amount of Notes without the written consent of
such Underwriter. If on the Closing Date any Underwriter or Underwriters
shall fail or refuse to purchase Notes and the aggregate principal amount of
Notes with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of Notes to be purchased on such date by all
Underwriters in the event of a default by a Underwriter and arrangements
satisfactory to you and the Company for purchase of such Notes are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and the Company. In
any such case which does not result in termination of this Agreement, either
you or the Company shall have the right to postpone the Closing Date but in no
event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
any such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to The
AES Corporation, 1001 N. 19th Street, Arlington, Virginia 22209, Attention:
General Counsel and (b) if to any Underwriter or to you, to you c/o
____________________________, Attention: Syndicate Department, or in any case
to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and directors and of the several Underwriters set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Notes, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Company, the officers or directors
of the Company or any controlling person of the Company, (ii) acceptance of the
Notes and payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the several Underwriters for all out-of-pocket expenses
(including the fees and disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Notes from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Underwriters.
Very truly yours,
THE AES CORPORATION
By:____________________________________
Acting severally on behalf of
itself and the several Underwriters
named above
By:__________________________________
SCHEDULE I
Principal Amount of Notes
Underwriters to be Purchased
------------ -------------------------
_____________
Total................................................. $
=============
Annex I
Principal Subsidiaries
Ownership Security
Name Interest Interest
---- --------- --------
[INSERT]
EXHIBIT 1.2
[FORM OF COMMON STOCK AND PREFERRED STOCK
UNDERWRITING AGREEMENT]
__________ Shares
THE AES CORPORATION
Common Stock and Preferred Stock
UNDERWRITING AGREEMENT
__________, 199_
Dear Sirs:
The AES Corporation, a Delaware corporation (the "Company") proposes
to issue and sell _________ shares of its [common stock, par value $0.01 per
share] shares of its [preferred stock, no par value] (together, the "Firm
Shares") to the several underwriters named in Schedule I hereto (the
"Underwriters"). The Company also proposes to issue and sell to the several
Underwriters not more than _______ additional shares of its common stock, par
value $0.01 per share and not more than _________ additional shares of its
preferred stock, no par value (together, the "Additional Shares") if requested
by the Underwriters as provided in Section 2 hereof. The Firm Shares and the
Additional Shares are herein collectively called the "Shares". The shares of
common stock and the shares of preferred stock of the Company to be
outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the Common Stock and the Preferred Stock,
respectively.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Securities Act"), a registration statement on Form
S-3, including a prospectus, relating to, among other things, certain debt
securities, Common Stock, par value $0.01 per share, and Preferred Stock, no
par value, of the Company to be issued from time to time by the Company (the
"Shelf Securities"). The Company also has filed with, or proposes to file
with, the Commission pursuant to Rule 424 under the Securities Act a
prospectus supplement specifically relating to the Securities. The
registration statement as amended to the date of this Agreement is hereinafter
referred to as the "Base Registration Statement" and any registration
statement filed pursuant to Rule 462(b) under the Securities Act relating to
the Notes is herein referred to as the "Additional Registration Statement",
and, together with the Base Registration Statement, the "Registration
Statement". The related prospectus covering the Shelf Securities in the form
first used to confirm sales of the Securities is hereinafter referred to as
the "Basic Prospectus". The Basic Prospectus as supplemented by the
prospectus supplement specifically relating to the Securities in the form
first used to confirm sales of the Securities is hereinafter referred to as the
"Prospectus". Any reference in this Agreement to the Registration Statement,
the Basic Prospectus, any preliminary form of Prospectus (a "preliminary
prospectus") previously filed with the Commission pursuant to Rule 424 or the
Prospectus shall be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the Securities Act
which were filed under the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Exchange Act") on or before the date of this Agreement or the date of the
Basic Prospectus, any preliminary prospectus or the Prospectus, as the case
may be; and any reference to "amend", "amendment" or "supplement" with respect
to the Registration Statement, the Basic Prospectus, any preliminary
prospectus or the Prospectus shall be deemed to refer to and include any
documents filed under the Exchange Act after the date of this Agreement, or
the date of the Basic Prospectus, any preliminary prospectus or the
Prospectus, as the case may be, which are deemed to be incorporated by
reference therein.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each
Underwriter agrees, severally and not jointly, to purchase from the Company at
a price per share of $______ (the "Purchase Price"), [plus accrued dividends,
if any, to the closing Date] the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to
issue and sell the Additional Shares and the Underwriters shall have the right
to purchase, severally and not jointly, up to _______ Additional Shares from
the Company at the Purchase Price [plus accrued dividends, if any, to the
closing Date]. Additional Shares may be purchased solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. The Underwriters may exercise their right to purchase Additional
Shares in whole or in part from time to time by giving written notice thereof
to the Company within 30 days after the date of this Agreement. You shall
give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof. The date
specified in any such notice shall be a business day (i) no earlier than the
Closing Date (as hereinafter defined), (ii) no later than ten business days
after such notice has been given and (iii) no earlier than two business days
after such notice has been given. If any Additional Shares are to be
purchased, each Underwriter, severally and not jointly, agrees to purchase
from the Company the number of Additional Shares (subject to such adjustments
to eliminate fractional shares as you may determine) which bears the same
proportion to the total number of Additional Shares to be purchased from the
Company as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I bears to the total number of Firm Shares.
[The Company hereby agrees not to offer, sell, contract to sell,
grant any option to purchase, or otherwise dispose of any Common Stock of the
Company or any securities convertible into or exercisable or exchangeable for
such Common Stock or in any other manner transfer all or a portion of the
economic consequences associated with the ownership of any such Common Stock,
except to the Underwriters pursuant to this Agreement, for a period of ___
days after the date of the Prospectus without the prior written consent of
____________________________.]
3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 10:00 A.M., New York City time,
on ______, 199_, or at such other time or such other date as the Underwriters
and the Company may agree upon in writing. The time and date of such payment
are referred to herein as the "Closing Date". As used herein, the term
"Business Day" means any day other than a day on which banks are permitted or
required to be closed in New York City.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "Option
Closing Date"). Any such Option Closing Date and the location of delivery of
and the form of payment for such Additional Shares may be varied by agreement
between you and the Company.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date or an Option Closing Date, as
the case may be. Such certificates shall be made available to you for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date or the applicable Option Closing Date, as the
case may be. Certificates in definitive form evidencing the Shares shall be
delivered to you on the Closing Date or the applicable Option Closing Date, as
the case may be, with any transfer taxes thereon duly paid by the Company, for
the respective accounts of the several Underwriters, against payment of the
Purchase Price therefor by wire transfer in immediately available funds to the
account specified by the Company to the Underwriters (no later than noon on
the Business Day prior to the Closing Date) at the office of Davis Polk &
Wardwell, counsel to the Company.
5. Agreements of the Company. The Company agrees with you:
(a) To file the Prospectus in a form approved by you with the
Commission within the time periods specified by Rule 424; and to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Shares; and to furnish copies of the Prospectus to the
Underwriters in New York City prior to 10:00 a.m., New York City
time, on the Business Day next succeeding the date of this Agreement
in such quantities as the Underwriters may reasonably request;
(b) To advise you promptly and, if requested by you, to confirm
such advice in writing, (i) when any post-effective amendment to the
Registration Statement has been filed or becomes effective, (ii) of
any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information, (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any
proceeding for such purposes, and (iv) of the happening of any event
during the period referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration Statement or
the Prospectus untrue or which requires the making of any additions
to or changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading. If at any time
the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make
every reasonable effort to obtain the withdrawal or lifting of such
order at the earliest possible time.
(c) To furnish to you three signed copies of the Registration
Statement as first filed with the Commission and of each amendment to
it, including all exhibits thereto and documents incorporated by
reference therein, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits
thereto and documents incorporated by reference therein, as you may
reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes
effective, or to make any amendment or supplement to the Prospectus
of which you shall not previously have been advised or to which you
shall reasonably object; and to prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the
Registration Statement or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the
Shares by you, and to use its best efforts to cause the same to
become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in
the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an
Underwriter or a dealer, to furnish to each Underwriter and dealer
as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as such Underwriter or dealer may
reasonably request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if it is necessary to amend or supplement the
Prospectus to comply with any law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply
with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter
or dealers may reasonably request.
(g) Prior to any public offering of the Shares, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Shares for offer and sale by the
several Underwriters and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may request, to continue
such qualification in effect so long as required for distribution of
the Shares and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification.
(h) To mail and make generally available to its securityholders
as soon as reasonably practicable an earnings statement covering a
period of at least twelve months after the effective date of the
Registration Statement (but in no event commencing later than 90 days
after such date) which shall satisfy the provisions of Section 11(a)
of the Act, and to advise you in writing when such statement has been
so made available.
(i) During the period of five years after the date of this
Agreement, or for such shorter period if the Shares no longer remain
outstanding, (i) to mail as soon as reasonably practicable after the
end of each fiscal year to the record holders of its Common Stock and
Preferred Stock a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report
of all unconsolidated subsidiaries, if required by Regulation S-X),
all such financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of
cash flows and a consolidated statement of shareholders' equity as of
the end of and for such fiscal year, together with comparable
information as of the end of and for the preceding year, certified by
independent certified public accountants, and (ii) to mail and make
generally available as soon as practicable after the end of each
quarterly period (except for the last quarterly period of each fiscal
year) to such holders, a consolidated balance sheet, a consolidated
statement of operations and a consolidated statement of cash flows
(and similar financial reports of all unconsolidated subsidiaries, if
required by Regulation S-X) as of the end of and for such period, and
for the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i), to furnish
to you as soon as available a copy of each report or other publicly
available information of the Company mailed to the securityholders of
the Company or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as
you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident to the
performance of its obligations hereunder, including without limiting
the generality of the foregoing, all costs and expenses incident to
(i) the preparation, issuance, and delivery of the certificates for
the Shares, (ii) the preparation, printing, filing and distribution
under the Act of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus and all
amendments and supplements to any of them prior to or during the
period specified in paragraph (e), (iii) the printing and delivery of
the Prospectus and any Preliminary Prospectus and all amendments or
supplements to it during the period specified in paragraph (e), (iv)
the printing and delivery of this Agreement, Preliminary and
Supplemental Blue Sky Memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in
connection with the offering of the Shares (including in each case
any disbursements of counsel for the Underwriters relating to such
printing and delivery), (v) the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of
the several states (including in each case the fees and disbursements
of counsel for the Underwriters relating to such registration or
qualification and memoranda relating thereto), (vi) filings and
clearance with the National Association of Securities Dealers, Inc.
in connection with the offering, (vii) furnishing such copies of the
Registration Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in connection with
the offering or sale of the Shares by the Underwriters or by dealers
to whom Shares may be sold and (viii) the rating of the Shares
including, without limitation, fees payable to rating agencies in
connection therewith.
(l) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement
by the Company prior to the Closing Date or any Option Closing Date,
as the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge
of the Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply,
or will comply, as the case may be, in all material respects with the
Securities Act and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the date of the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and the
Prospectus, as amended or supplemented at the Closing Date, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; except that the foregoing representations and
warranties shall not apply to statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the
Representatives expressly for use therein;
(b) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed in
all material respects to the requirements of the Exchange Act, and
none of such documents contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents are
filed with the Commission will conform in all material respects to
the requirements of the Exchange Act, as applicable, and will not
contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(c) The Company and each of its subsidiaries and each of its
affiliates which meets the criteria in the definition of "significant
subsidiary" pursuant to Rule 1-02(w) of Regulation S-X under the
Securities Act (each, a "Principal Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority required to carry on its business as it
is currently being conducted and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Principal Subsidiaries, taken as a whole.
(d) Except as set forth in the Registration Statement or on
Annex I hereto, all of the outstanding shares of capital stock of, or
other ownership interests in, the Principal Subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company or one of the Principal
Subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
(e) The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as provided by
this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject
to any preemptive or similar rights.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company (except as rights to indemnity and contribution hereunder may
be limited by applicable law).
(g) The authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Registration Statement and the Prospectus.
(h) The Company is not in violation of its Restated
Certificate of Incorporation or its By-laws and none of the Principal
Subsidiaries is in violation of its respective charter, or except for
any such violations which would not have a material adverse effect on
the Company and its subsidiaries taken as a whole, in violation of
its by-laws, nor is the Company or any of the Principal Subsidiaries,
except as set forth in the Registration Statement, in default in the
performance of any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of indebtedness or in
any other agreement, indenture or instrument to which the Company or
any of the Principal Subsidiaries is a party or by which it or any of
the Principal Subsidiaries or their respective property is bound
except for any such defaults which, individually or in the aggregate,
would not have a material adverse effect on the business, financial
condition or results of operations of the Company and the Principal
Subsidiaries, taken as a whole.
(i) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and thereof
and the consummation of the transactions contemplated hereby and
thereby will not require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency or
other governmental body (except such as may be required under the
Securities Act, the Exchange Act, or other securities or Blue Sky
laws) and will not conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or by-laws of
the Company or any of the Principal Subsidiaries or any agreement,
indenture or other instrument to which it or any of the Principal
Subsidiaries is a party or by which it or any of the Principal
Subsidiaries or their respective property is bound, or violate or
conflict with any laws, administrative regulations or rulings or
court decrees applicable to the Company, any of the Principal
Subsidiaries or their respective property (except state securities or
Blue Sky laws).
(j) Except as set forth in the Registration Statement, there
are no material legal or governmental proceedings pending to which
the Company or any of the Principal Subsidiaries is a party or to
which any of their respective property is the subject, and, to the
best of the Company's knowledge, no such proceedings are threatened
or contemplated. No contract or document of a character required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement is not so described
or filed as required.
(k) Except as set forth in the Registration Statement,
neither the Company nor any of the Principal Subsidiaries has
violated any U.S. federal or state law relating to discrimination in
the hiring, promotion or pay of employees nor any applicable U.S.
federal or state wages and hours laws, or any provisions of the
Employee Retirement Income Security Act or the rules and regulations
promulgated thereunder, which in each case could result in any
material adverse change in the business, financial condition or
results of operations of the Company and the Principal Subsidiaries,
taken as a whole.
(l) Except as set forth in the Registration Statement, the
Company and each of the Principal Subsidiaries has good and
marketable title, free and clear of all liens, claims, encumbrances
and restrictions which are required to be described in the
Registration Statement except liens for taxes not yet due and
payable, to all property and assets described in the Registration
Statement as being owned by it. All leases to which the Company or
any of the Principal Subsidiaries is a party are valid and binding
and no default by the Company or any such Principal Subsidiary, or,
to the best of the Company's knowledge, by any other party to any
such leases, has occurred or is continuing thereunder, which could
result in any material adverse change in the business, financial
condition or results of operations of the Company and the Principal
Subsidiaries taken as a whole, and the Company and the Principal
Subsidiaries enjoy peaceful and undisturbed possession under all such
leases to which any of them is a party as lessee with such exceptions
as do not materially interfere with the use made by the Company or
such Principal Subsidiary.
(m) Deloitte & Touche are independent public accountants with
respect to the Company as required by the Act.
(n) The financial statements, together with related schedules
and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and
statements of cash flow of the Company and its subsidiaries on the
basis stated in the Registration Statement at the respective dates
and for the respective periods to which they apply; such statements
and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), in all material respects, present fairly the
information purported to be shown thereby at the respective dates or
for the respective periods to which they apply and have been prepared
on a basis consistent with such financial statements and the books
and records of the Company.
(o) Each of the Company and the Principal Subsidiaries has
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities ("permits") which are required to have been
obtained by it prior to the date hereof and which are material to the
ownership or leasing and operation of or construction of its
respective properties and to the conduct of its business in the
manner described in the Prospectus, except for any such permits, the
failure of which to have, individually or in the aggregate, would not
have a material adverse effect on the business, financial condition
or results of operations of the Company and the Principal
Subsidiaries, taken as a whole, and subject to such qualifications
as may be set forth in the Registration Statement; each of the
Company and the Principal Subsidiaries has fulfilled and performed
all of its material obligations with respect to such permits required
to have been fulfilled and performed prior to the date hereof and no
event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or result in any other
material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Registration Statement; and, except as described in the Registration
Statement, such permits do not materially interfere with the use or
operation of the electric power generation facilities of the Principal
Subsidiaries as currently used or operated or as contemplated to be
used or operated.
(p) Each of the AES Beaver Valley, the AES Deepwater, the AES
Placerita, the AES Shady Point, the AES Barbers Point and the AES
Thames facilities (each as defined in the Registration Statement) is
a "qualifying cogeneration facility" under the Federal Power Act
("FPA"), as amended by Section 201 of the Public Utility Regulatory
Policies Act of 1978 ("PURPA") and the FERC's regulations promulgated
thereunder, and each such facility's current use, operation and
ownership are consistent with such facility's status as a "qualifying
cogeneration facility".
(q) Neither the Company nor any of the Principal Subsidiaries
is (i) subject to regulation as a "holding company" or a "subsidiary
company" of a holding company or a "public utility company" under
Section 2(a) of the Public Utility Holding Company Act of 1935
("PUHCA"), except that the Company and its subsidiary in the United
Kingdom, Applied Energy Services Electric Limited, are exempt holding
companies under Section 3(a)(5) of PUHCA by order of the Commission,
(ii) subject to regulation under the FPA, other than as contemplated
by 18 C.F.R. Section 292.601(c), or (iii) except as described in the
Registration Statement (other than contained in the exhibits
thereto), subject to regulation by any state law with respect to
rates or the financial or organizational regulation of electric
utilities.
(r) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(s) Except as set forth in the Registration Statement, each
of the Company, each Principal Subsidiary, and any other subsidiary
or entity which the Company may be deemed to operate (together with
the Principal Subsidiaries, the "Subsidiaries") is in compliance with
all applicable foreign, federal, state and local environmental
(including, without limitation, the Comprehensive Environmental
Response, Compensation & Liability Act of 1980, as amended), safety
or similar law, rule and regulation, and there are no costs or
liabilities associated with any such law, rule or regulation, except
for any such noncompliances, costs or liabilities which, individually
or in the aggregate, would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Subsidiaries, taken as a whole.
(t) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
7. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (other
than that part of the Registration Statement that constitutes the Form
T-1) or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished in writing to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
judgments purchased Notes, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such losses, claims, damages,
liabilities or judgments.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against
the Company, such Underwriter shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of all
fees and expenses. Any Underwriter or any such controlling person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
employment of such counsel has been specifically authorized in writing by the
Company, (ii) the Company has failed to assume the defense and employ counsel
or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the Company
(in which case the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person, it being
understood, however, that the Company shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be designated in
writing by __________________ and that all such fees and expenses shall be
reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of
this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 10 business days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Underwriter but
only with reference to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in
the Registration Statement, the Prospectus, any preliminary prospectus or any
amendment or supplement thereto. In case any action shall be brought against
the Company, any of its directors, any such officer or any person controlling
the Company based on the Registration Statement, the Prospectus or any
preliminary prospectus or any amendment or supplement thereto and in respect
of which indemnity may be sought against any Underwriter, the Underwriter
shall have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, such Underwriter shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof but the fees and expenses of such counsel shall be at the
expense of such Underwriter), and the Company, its directors, any such
officers and any person controlling the Company shall have the rights and
duties given to the Underwriter, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received
by the Company, and the total underwriting discounts and commissions received
by the Underwriters, bear to the total price to the public of the Shares, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and
distributed to the public was offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7(d) are several in
proportion to the respective number of Shares purchased by each of the
Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.
(b) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending before or,
to the best of the Company's knowledge, contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have been
any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally recognized
statistical rating organization", as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act.
(d)(i) Since the date of the latest balance sheet included in the
Registration Statement, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in
the ordinary course of business, of the Company and the Principal
Subsidiaries, taken as a whole, from that described in the
Registration Statement, (ii) since the date of the latest balance
sheet included in the Registration Statement there shall not have
been any material change, or any development involving a
prospective material adverse change, in the capital stock or in
the long-term debt of the Company from that set forth in the
Registration Statement, the Company shall have no liability or
obligation, direct or contingent, which is material to the Company
and the Principal Subsidiaries, taken as a whole, other than those
reflected in the Registration Statement and on the Closing Date
you shall have received a certificate dated the Closing Date,
signed by such executive officers of the Company as you may
designate, and such other certificates of executive officers and
key personnel of the Principal Subsidiaries as you may specify
confirming the matters set forth in paragraphs (a), (b), (c) and
(d) of this Section 8.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of William R. Luraschi, General Counsel of AES, to the
effect that:
(i) the Company and each of the Principal Subsidiaries
has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation and has the corporate power and authority
required to carry on its business as it is currently being
conducted and to own its properties;
(ii) the Company and each of the Principal Subsidiaries is
duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Company and the Principal Subsidiaries, taken as a whole;
(iii) except as set forth in the Registration Statement or
otherwise set forth on Annex I, all of the outstanding shares
of capital stock of, or other ownership interests in, the
Principal Subsidiaries have been duly and validly authorized
and issued and are fully paid and non-assessable, and are owned
of record, and to the knowledge of such counsel, after due
inquiry, beneficially, by the Company or the Principal
Subsidiary as set forth in such opinion; and such counsel,
after due inquiry, is not aware of any security interest,
claim, lien, encumbrance or adverse interest of any nature on
such shares or other ownership interests except as set forth in
the Registration Statement or in Annex I;
(iv) the Company is not in violation of its Restated
Certificate of Incorporation or in violation of its By-laws and
none of the Principal Subsidiaries is in violation of its
respective charter or, except for any such violations which
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole, its by-laws;
(v) the execution, delivery and performance of this
Agreement by the Company, compliance by the Company with all
the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not require
any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other
governmental body (except such as may be required under the
Securities Act, the Exchange Act or other securities or Blue
Sky laws) and will not conflict with or constitute a breach of
any of the terms or provisions of, or a default under, the
charter or by-laws of the Company or any of the Principal
Subsidiaries or any agreement, indenture or other instrument
known to such counsel, to which the Company or any of the
Principal Subsidiaries is a party or by which the Company or
any of the Principal Subsidiaries or their respective
properties are bound that is material to the Company and its
Principal Subsidiaries, taken as a whole, or violate or
conflict with any laws, administrative regulations or rulings
or court decrees known to such counsel, after due inquiry,
applicable to the Company or any of the Principal Subsidiaries
or their respective properties;
(vi) such counsel does not know of any legal or
governmental proceeding pending or threatened to which the
Company or any of the Principal Subsidiaries is a party or to
which any of their respective property is subject which is
required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other
document which is required to be described in the Registration
Statement or the Prospectus or is required to be filed as an
exhibit to the Registration Statement which is not described or
filed as required;
(vii) each of the applicable Principal Subsidiaries has
obtained all permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits") which are
required to have been obtained by it prior to the date hereof
and which are material to the construction, ownership or
leasing and operation of each of the Principal Subsidiaries, as
the case may be, as contemplated by the Registration Statement,
except for any such permits, the failure to have obtained
which, individually or in the aggregate would not have a
material adverse effect on the business, financial condition or
results of operations of the Company and the Principal
Subsidiaries, taken as a whole, and subject to such
qualifications as may be set forth in the Registration
Statement, and all such permits are in full force and effect;
and such counsel has no reason to believe that any other
permits which may be material to the construction, ownership or
leasing and operation of such facilities will not be obtained
in due course;
(viii) each of the AES Beaver Valley, the AES Deepwater,
the AES Placerita, the AES Shady Point, the AES Barbers Point
and the AES Thames facilities is a "qualifying cogeneration
facility" under the FPA, as amended by Section 201 of PURPA and
the FERC regulations promulgated thereunder, and, to the best
of such counsel's knowledge, after due inquiry, each such
facility's current use, operation and ownership are consistent
with such facility's status as a "qualifying cogeneration
facility";
(ix) neither the Company nor any of the Principal
Subsidiaries is (i) subject to regulation as a "holding
company" or a "subsidiary company" of a holding company or an
"affiliate" of a subsidiary or holding company or a "public
utility company" under Section 2(a) of PUHCA, except that the
Company and its subsidiary in the United Kingdom, Applied Energy
Services Electric Limited, are exempt holding companies under
Section 3(a)(5) of PUHCA by order of the Commission, (ii)
subject to regulation under the FPA, other than as contemplated
by 18 C.F.R. Section 292.601(c), or (iii) except as described
in the Registration Statement, subject to regulation under any
state law with respect to the rates or the financial or
organizational regulation of electric utilities; and
(x) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Davis Polk & Wardwell, counsel for the Company, to
the effect that:
(i) the Shares have been duly authorized and, when
issued and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be fully paid
and non-assessable, and the issuance of such Shares is not
subject to any preemptive or similar rights;
(ii) this Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding
agreement of the Company (except as rights to indemnity and
contribution hereunder may be limited by applicable law);
(iii) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Registration Statement and the Prospectus;
(iv) the Registration Statement has become effective
under the Act (assuming compliance with clause (2) of Rule
462(b) in the case of the Additional Registration Statement)
and, to the best of such counsel's knowledge, no stop order
suspending its effectiveness has been issued and no proceedings
for that purpose are pending before or contemplated by the
Commission;
(v) the statements under the captions "____________" in
the Prospectus, insofar as such statements constitute a summary
of the legal matters, documents or proceedings specifically
referred to therein, fairly present all the material
information called for with respect to such legal matters,
documents or proceedings;
(vi) except for the order of the Commission making the
Registration Statement effective and permits and similar
authorizations required under the securities or Blue Sky laws
of certain states, no consent, approval, authorization or other
order of any regulatory body, administrative agency or other
governmental body is legally required for the valid issuance
and sale of the Shares to the Underwriters as contemplated by
this Agreement or the public offering of the Shares
contemplated by the Prospectus; and
(vii) the Registration Statement and the Prospectus and
any supplement or amendment thereto (except for financial
statements and other financial and statistical information
therein as to which no opinion need be expressed) comply as to
form in all material respects with the Act.
In addition, Davis Polk & Wardwell will deliver a separate
letter to the effect that such counsel has participated in
conferences with directors, officers and other representatives of the
Company and representatives of the independent public accountants for
the Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical information
therein as to which no opinion is expressed), contained any untrue
statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein, in the light of
the circumstances under which they were made, not misleading.
In rendering their opinions above, Davis Polk & Wardwell may
rely as to factual matters on such certificates of the Company's
officers or of governmental officials as they may deem relevant or
necessary for such opinions and as to matters governed by other than
federal or New York law or by the General Corporation Law of Delaware
on opinions of local counsel.
In addition, Mr. Luraschi will deliver a separate letter to
the effect that such counsel has participated in conferences with
directors, officers and other representatives of the Company and
representatives of the independent public accountants for the
Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical information
therein as to which no opinion is expressed), contained any untrue
statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein, in the light of
the circumstances under which they were made, not misleading.
In rendering the opinions above, Mr. Luraschi may rely as to
factual matters on such certificates of the Company's officers or of
governmental officials as he may deem relevant or necessary for such
opinions and as to matters governed by other than federal or New York
law or by the General Corporation Law of Delaware on opinions of
local counsel.
(g) You shall have received on the Closing Date an opinion,
dated the Closing Date, of ___________, counsel for the Underwriters,
as to the matters referred to in clauses (i), (ii), (iii), (vi) (but
only with respect to the statements under the captions "Description
of Capital Stock" and "Underwriting") and (viii) of the foregoing
paragraph (f).
With respect to subparagraph (viii) of paragraph (f) above and
the final subparagraph of this paragraph (g), __________ may state
that their opinion and belief is based upon their participation in
the preparation of the Registration Statement and the Prospectus and
any amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the
contents thereof (including documents incorporated therein by
reference), but is without independent check or verification except
as specified.
In addition, Davis Polk & Wardwell will opine to the effect
that such counsel has participated in conferences with officers and
other representatives of the Company and representatives of the
independent public accountants for the Company, at which conferences
the contents of the Registration Statement and related matters were
discussed, and, although such counsel has not independently verified
and is not passing upon and assume no responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement, except as specified, no facts have come to
such counsel's attention which lead such counsel to believe that the
Registration Statement (other than any financial statements or other
financial or statistical information therein and that part of the as
to which no opinion is expressed) at its effective date contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements contained therein not misleading, or that the Prospectus
as of its date or the Closing Date (other than any financial
statements or other financial or statistical information therein as to
which no opinion is expressed), contained any untrue statement of a
material fact or omitted to state any material fact necessary to make
the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
(h) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Deloitte &
Touche, independent public accountants, with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Deloitte &
Touche on the date of this Agreement.
(i) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the
Company at or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional
Securities hereunder are subject to the delivery to you on the applicable
Option Closing Date of such documents as you may reasonably request with
respect to the good standing of the Company, the due authorization and
issuance of such Additional Securities and other matters related to the
issuance of such Additional Securities.
9. Effective Date of Agreement and Termination. This Agreement
shall become effective upon the later of (i) execution of this Agreement and
(ii) when notification of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any adverse change or
development involving a prospective adverse change in the condition, financial
or otherwise, of the Company, any Principal Subsidiary or the earnings,
affairs, or business prospects of the Company or any Principal Subsidiary,
whether or not arising in the ordinary course of business, which would, in
your reasonable judgment, make it impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus, (ii) any outbreak or
escalation of hostilities or other national or international calamity or
crisis or material change in economic conditions, if the effect of such
outbreak, escalation, calamity, crisis or change on the financial markets of
the United States or elsewhere would, in your reasonable judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market System or limitation on prices for securities on any
such exchange or National Market System, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your reasonable
judgment materially and adversely affects, or will materially and adversely
affect, the business or operations of the Company, (v) the declaration of a
banking moratorium by either federal or New York State authorities or (vi) the
taking of any action by any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your reasonable judgment
has a material adverse effect on the financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm
Shares set forth opposite its name in Schedule I bears to the total number of
Firm Shares which all the non-defaulting Underwriters, as the case may be,
have agreed to purchase, or in such other proportion as you may specify, to
purchase the Firm Shares or Additional Shares, as the case may be, which such
defaulting Underwriter or Underwriters, as the case may be, agreed but failed
or refused to purchase on such date; provided that in no event shall the
number of Firm Shares or Additional Shares, as the case may be, which any
Underwriter has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such number
of Firm Shares or Additional Shares, as the case may be, without the written
consent of such Underwriter. If on the Closing Date or on an Option Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Firm Shares, or Additional Shares, as the case may be, and the
aggregate number of Firm Shares or Additional Shares, as the case may be, with
respect to which such default occurs is more than one-tenth of the aggregate
number of Shares to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Company for purchase of such Shares
are not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, or the applicable Option Closing Date, as the case may be, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and the Prospectus or any other documents
or arrangements may be effected. Any action taken under this paragraph shall
not relieve any defaulting Underwriter from liability in respect of any
default of any such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to The AES
Corporation, 1001 N. 19th Street, Arlington, Virginia 22209, Attention:
General Counsel and (b) if to any Underwriter or to you, to you c/o
____________________________, Attention: Syndicate Department, or in any case
to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and directors and
of the several Underwriters set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Shares, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter
or by or on behalf of the Company, the officers or directors of the Company
or any controlling person of the Company, (ii) acceptance of the Shares and
payment for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the several Underwriters for all out-of-pocket expenses (including
the fees and disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
THE AES CORPORATION
By: _________________________________
Title:
Acting severally on behalf of
itself and the several Underwriters
named above
By: _________________________________
Title:
SCHEDULE I
Principal Amount of Firm Shares
Underwriters to be Purchased
------------ --------------------------------
------------------
Total........................... $
==================
Annex I
Principal Subsidiaries
Ownership Security
Name Interest Interest
---- ---------- --------
EXHIBIT 1.3
[FORM OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS AGREEMENT]
THE AES CORPORATION
Preferred Redeemable Increased Dividend Equity Securities, ___% PRIDES
(Stated Amount $___ per Security.)
PURCHASE AGREEMENT
_______, 199_
Dear Sirs:
The AES Corporation, a Delaware corporation (the "Company") and
the several Underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as the representatives (in such
capacity, such firms shall hereinafter be referred to as the
"Representatives") propose, subject to the terms and conditions stated herein,
to enter into the Purchase Contracts referred to in the Purchase Contract
Agreement dated as of _________ (the "Purchase Contract Agreement") between
the Company and _____________________, as Purchase Contract Agent (the
"Purchase Contract Agent"), relating to an aggregate of ____________
Preferred Redeemable Increased Dividend Securities, ___% PRIDES, Stated
Amount $______ per Security (the "PRIDES"). In connection therewith, the
Underwriters propose, subject to the terms and conditions stated herein, to
purchase at the direction of the Company, the underlying [Treasury Notes of
the United States Government] bearing interest at the rate of ___% per
annum and maturing on ____________ (the "Treasury Notes"), having an
aggregate principal amount of $______________. The Treasury Notes will be
pledged with _____________, as collateral agent for the Company (the
"Collateral Agent"), to secure the holders' obligation to purchase common
stock, $.01 par value, of the Company (the "Common Stock") under the
Purchase Contracts. The Company proposes to grant to the Underwriters an
option to enter into Purchase Contracts underlying up to ____________
additional PRIDES (the "Option Securities") and, in the event any such
additional Purchase Contracts are entered into, the Underwriters propose to
purchase, at the direction of the Company, the additional Treasury Notes
underlying such Option Securities, which would also be pledged to the
Collateral Agent. The aforesaid ____________ PRIDES (the "Initial
Securities") and all or any part of the Option Securities subject to the
over-allotment option described in Section 2(b) hereof are collectively
referred to herein as the "Securities". Capitalized terms used herein
without definition shall be used as defined in the Purchase Contract
Agreement.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Securities Act"), a registration statement on Form
S-3, including a prospectus, relating to, among other things, ___% Preferred
Redeemable Increased Dividend Equity Securities (the "Shelf Securities"). The
Company also has filed with, or proposes to file with, the Commission pursuant
to Rule 424 under the Securities Act a prospectus supplement specifically
relating to the Securities. The registration statement as amended to the date
of this Agreement is hereinafter referred to as the "Base Registration
Statement" and any registration statement filed pursuant to Rule 462(b) under
the Securities Act relating to the Securities is herein referred to as the
"Additional Registration Statement", and, together with the Base Registration
Statement, the "Registration Statement". The related prospectus covering the
Shelf Securities in the form first used to confirm sales of the Securities is
hereinafter referred to as the "Basic Prospectus". The Basic Prospectus as
supplemented by the prospectus supplement specifically relating to the
Securities in the form first used to confirm sales of the Security is
hereinafter referred to as the "Prospectus". Any reference in this Agreement
to the Registration Statement, the Basic Prospectus, any preliminary form of
Prospectus (a "preliminary prospectus") previously filed with the Commission
pursuant to Rule 424 or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act which were filed under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") on or before the date of this
Agreement or the date of the Basic Prospectus, any preliminary prospectus or
the Prospectus, as the case may be; and any reference to "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Basic
Prospectus, any preliminary prospectus or the Prospectus shall be deemed to
refer to and include any documents filed under the Exchange Act after the date
of this Agreement, or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be, which are deemed to be
incorporated by reference therein.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell and each
Underwriter agrees, severally and not jointly, to enter into the Purchase
Contracts underlying the number of Initial Securities set forth in Schedule I
hereto opposite the name of such Underwriter, plus any additional Purchase
contracts underlying the number of Initial Securities which such Underwriter
may become obligated to enter into pursuant to the provisions of Section (a)
hereof.
In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company hereby grants to the Underwriters, severally and not jointly, the
right to enter into, at their election, up to __________ additional Purchase
Contracts. The option hereby granted will expire automatically at the close
of business on the 30th calendar day after the date the Registration Statement
and any Rule 46(b) Registration Statement becomes effective, and may be
exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Underwriters to the
Company setting forth the aggregate number of additional Purchase Contracts to
be entered into and the time and date of delivery for the related Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall
be determined by the Underwriters but shall not be later than seven full
business days after the exercise of such option nor in any event before the
Closing Time, as hereinafter defined, unless otherwise agreed upon by the
Underwriters and the Company. If the option is exercised as to all or any
portion of the Option Securities, each of the Underwriters, acting severally
and not jointly, will enter into that proportion of the total number of
additional Purchase Contracts as to which such election has be exercised which
the number of Initial Securities set forth in Schedule I opposite the name of
such Underwriter bears to the total number of Initial Securities (subject in
each case to such adjustments as the Underwriters in their discretion shall
make to eliminate any fractional Purchase Contracts).
The Underwriters agree to purchase, at the direction of the
Company, the Treasury Notes underlying the Securities with respect to which
the Company and the Underwriters have entered into the Purchase Contracts.
The Treasury Notes will be pledged with the Collateral Agent to secure the
holders' obligations to purchase Common Stock under the Purchase Contracts.
Such pledge shall be effected by the transfer to the Collateral Agent by
Federal Reserve Bank-Wire of the Treasury Notes to be pledged at the Closing
Time and appropriate Date of Delivery, if any, in accordance with the Pledge
Agreement.
[The Company hereby agrees not to offer, sell contract to sell,
grant any option to purchase, or otherwise dispose of any Securities, Purchase
Contracts or Common Stock of the Company or any securities of the Company
similar to the Securities, Purchase Contracts or Common Stock or any security
convertible into or exercisable or exchangeable for Securities, Purchase
Contracts or Common Stock or in any other manner transfer all or a portion of
the economic consequences associated with the ownership of any Securities,
Purchase Contracts or Common Stock, except to the Underwriters pursuant to
this Agreement, for a period of _____ days after the date of the Prospectus
without the prior written consent of ____________________________________ .]
3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose (i) to make a public offering of their
respective portions of the Initial Securities as soon after the effective date
of the Registration Statement as in your judgment is advisable and (ii)
initially to offer the Initial Securities upon the terms set forth in the
Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Initial Securities shall be made at 10:00 A.M., New York City
time, on ______, 199_, or at such other time or such other date as the
Underwriters and the Company may agree upon in writing. The time and date of
such payment are referred to herein as the "Closing Date". As used herein,
the term "Business Day" means any day other than a day on which banks are
permitted or required to be closed in New York City.
Delivery to the Underwriters of and payment for any Option
Securities to be purchased by the Underwriters and payment of the related
Underwriters' Compensation shall be made at such place as you shall designate
at 10:00A.M., New York City time, on the date specified in the applicable
exercise notice given by you pursuant to Section 2 (an "Option Closing Date").
Any such Option Closing Date and the location of delivery of and the form of
payment for such Option Securities may be varied by agreement between you and
the Company.
Certificates for the Securities shall be registered in such
names and issued in such denominations as you shall request in writing not
later than two full business days prior to the Closing Date or an Option
Closing Date, as the case may be. Such certificates shall be made available
to you for inspection not later than 10A.M., New York City time, on the
business day next preceding the Closing Date or the applicable Option Closing
Date, as the case may be. Certificates in definitive form evidencing the
Securities shall be delivered to you on the Closing Date or the applicable
Option Closing Date, as the case may be with any transfer taxes thereon duly
paid by the Company, for the respective accounts of the several Underwriters,
against payment of the Purchase Price therefor by wire transfer in immediately
available funds to the account specified by the Company to the Underwriters
(no later than noon the Business Day prior to the Closing Date or the
applicable Option Closing Date, as the case may be) at the office of Davis
Polk & Wardwell, counsel to the Company.
5. Agreements of the Company. The Company agrees with you:
(a) To file the Prospectus in a form approved by you with the
Commission within the time periods specified by Rule 424; and to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Securities; and to furnish copies of the Prospectus to
the Underwriters in New York City prior to 10:00 a.m., New York City
time, on the Business Day next succeeding the date of this Agreement
in such quantities as the Underwriters may reasonably request.
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement has been filed or becomes effective,
(ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, and (iv) of the
happening of any event during the period referred to in paragraph (e)
below which makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which requires the
making of any additions to or changes in the Registration Statement
or the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the
Company will make every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(c) To furnish to you three signed copies of the Registration
Statement as first filed with the Commission and of each amendment to
it, including all exhibits thereto and documents incorporated by
reference therein, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits
thereto and documents incorporated by reference therein, as you may
reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes
effective, or to make any amendment or supplement to the Prospectus
of which you shall not previously have been advised or to which you
shall reasonably object; and to prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the
Registration Statement or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the
Securities by you, and to use its best efforts to cause the same to
become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel for the Underwriters a prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish to each Underwriter and dealer as many copies of
the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if it is necessary to amend or supplement the
Prospectus to comply with any law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply
with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter
or dealers may reasonably request.
(g) Prior to any public offering of the Securities, to
cooperate with you and counsel for the Underwriters in connection
with the registration or qualification of the Securities for offer
and sale by the several Underwriters and by dealers under the state
securities or Blue Sky laws of such jurisdictions as you may request,
to continue such qualification in effect so long as required for
distribution of the Securities and to file such consents to service
of process or other documents as may be necessary in order to effect
such registration or qualification.
(h) To mail and make generally available to its
securityholders as soon as reasonably practicable an earnings
statement covering a period of at least twelve months after the
effective date of the Registration Statement (but in no event
commencing later than 90 days after such date) which shall satisfy
the provisions of Section 11(a) of the Securities Act, and to advise
you in writing when such statement has been so made available.
(i) During the period of five years after the date of this
Agreement, or for such shorter period if the Securities no longer
remain outstanding, (i) to mail as soon as reasonably practicable
after the end of each fiscal year to the record holders of its
Securities a financial report of the Company and its subsidiaries on a
consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if required by Regulation S-X), all such
financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of
cash flows and a consolidated statement of shareholders' equity as of
the end of and for such fiscal year, together with comparable
information as of the end of and for the preceding year, certified by
independent certified public accountants, and (ii) to mail and make
generally available as soon as practicable after the end of each
quarterly period (except for the last quarterly period of each fiscal
year) to such holders, a consolidated balance sheet, a consolidated
statement of operations and a consolidated statement of cash flows
(and similar financial reports of all unconsolidated subsidiaries, if
required by Regulation S-X) as of the end of and for such period, and
for the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i), to furnish
to you as soon as available a copy of each report or other publicly
available information of the Company mailed to the securityholders of
the Company or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as
you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident to the
performance of its obligations hereunder, including without limiting
the generality of the foregoing, all costs and expenses incident to
(i) the preparation, issuance, and delivery of the certificates for
the Securities, including any expenses of the Trustee, (ii) the
preparation, printing, filing and distribution under the Securities
Act of the Registration Statement (including financial statements and
exhibits), each preliminary prospectus and all amendments and
supplements to any of them prior to or during the period specified in
paragraph (e), (iii) the printing and delivery of the Prospectus and
any Preliminary Prospectus and all amendments or supplements to it
during the period specified in paragraph (e), (iv) the printing and
delivery of this Agreement, Preliminary and Supplemental Blue Sky
Memoranda and all other agreements, memoranda, correspondence and
other documents printed and delivered in connection with the offering
of the Securities (including in each case any disbursements of
counsel for the Underwriters relating to such printing and delivery),
(v) the registration or qualification of the Securities for offer and
sale under the securities or Blue Sky laws of the several states
(including in each case the fees and disbursements of counsel for the
Underwriters relating to such registration or qualification and
memoranda relating thereto), (vi) filings and clearance with the
National Association of Securities Dealers, Inc. in connection with
the offering, (vii) furnishing such copies of the Registration
Statement, the Prospectus and all amendments and supplements thereto
as may be requested for use in connection with the offering or sale
of the Securities by the Underwriters or by dealers to whom
Securities may be sold and (viii) the rating of the Securities
including, without limitation, fees payable to rating agencies in
connection therewith.
(l) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement
by the Company prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Securities.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge
of the Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply,
or will comply, as the case may be, in all material respects with the
Securities Act, and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the date of the Prospectus and any amendment or
supplement thereto, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and the
Prospectus, as amended or supplemented at the Closing Date, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; except that the foregoing representations and
warranties shall not apply to statements or omissions in the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the
Representatives expressly for use therein;
(b) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents are filed with the
Commission will conform in all material respects to the requirements
of the Exchange Act, as applicable, and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(c) The Company and each of its subsidiaries and each of its
affiliates which meets the criteria in the definition of "significant
subsidiary" pursuant to Rule 1-02(w) of Regulation S-X under the
Securities Act (each, a "Principal Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority required to carry on its business as it
is currently being conducted and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Principal Subsidiaries, taken as a whole.
(d) Except as set forth in the Registration Statement or on
Annex I hereto, all of the outstanding shares of capital stock of, or
other ownership interests in, the Principal Subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company or one of the Principal
Subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
(e) The shares of Common Stock to be issued and sold by the
Company pursuant to the Purchase Contract Agreement (the "Shares")
and the preferred share purchase rights (the "Rights") to be issued
with the Shares have been duly and validly authorized and reserved
for issuance; such Shares, when issued and delivered in accordance
with the provisions of the Purchase Contract Agreement and the Pledge
Agreement dated as of _________ (the "Pledge Agreement") among the
Company, the Collateral Agent and the Purchase Contract Agent, will
be duly authorized, validly issued and fully paid and non-assessable
and will conform to the descriptions of the Common Stock and the
Rights contained in the Prospectus and the Registration Statement;
and the issuance of such Shares will not be subject to preemptive or
other similar rights.
(f) The entry into the Purchase Contracts underlying the
Securities by the Company, the offer of the Securities as
contemplated herein and in the Prospectus, the issue and sale of the
Shares by the Company pursuant to the Purchase Contracts; the
execution, delivery and performance by the Company of all of the
provisions of this Agreement and the Pledge Agreement; the
consummation of the transactions herein and therein and thereunder
and hereunder have been duly authorized by all necessary corporate
action of the Company and will not conflict with or constitute a
breach of, or a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries, or any applicable law, administrative regulation or
administrative or court decree.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company (except as rights to indemnity and contribution hereunder may
be limited by applicable law).
(h) The Purchase Contract Agreement and the Pledge Agreement
have been duly authorized, executed and delivered by the Company, and
each constitutes a legal, valid and binding obligation of the Company
enforceable in accordance with its terms.
(i) The Securities conform as to legal matters to the
description thereof contained in the Registration Statement and the
Prospectus.
(j) The Company is not in violation of its Restated
Certificate of Incorporation or its By-laws and none of the Principal
Subsidiaries is in violation of its respective charter, or except for
any such violations which would not have a material adverse effect on
the Company and its subsidiaries taken as a whole, in violation of
its by-laws, nor is the Company or any of the Principal Subsidiaries,
except as set forth in the Registration Statement, in default in the
performance of any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of indebtedness or in
any other agreement, indenture or instrument to which the Company or
any of the Principal Subsidiaries is a party or by which it or any of
the Principal Subsidiaries or their respective property is bound
except for any such defaults which, individually or in the aggregate,
would not have a material adverse effect on the business, financial
condition or results of operations of the Company and the Principal
Subsidiaries, taken as a whole.
(k) The execution, delivery and performance of this Agreement,
the compliance by the Company with all the provisions hereof, the
consummation of the transactions contemplated hereby, the entry into
the Purchase Contracts underlying the Securities, the issuance and
sale of the Securities hereunder, the issuance and sale of the shares
by the Company pursuant to such Purchase Contracts or the
consummation by the Company of the transactions contemplated under
this Agreement, such Purchase Contracts, the Purchase Contract
Agreement and the Pledge Agreement will not require any consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except such as may
be required under the Securities Act, the Exchange Act, the Trust
Indenture Act, or other securities or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of the
Company or any of the Principal Subsidiaries or any agreement,
indenture or other instrument to which it or any of the Principal
Subsidiaries is a party or by which it or any of the Principal
Subsidiaries or their respective property is bound, or violate or
conflict with any laws, administrative regulations or rulings or
court decrees applicable to the Company, any of the Principal
Subsidiaries or their respective property (except state securities or
Blue Sky laws).
(l) Except as set forth in the Registration Statement, there
are no material legal or governmental proceedings pending to which
the Company or any of the Principal Subsidiaries is a party or to
which any of their respective property is the subject, and, to the
best of the Company's knowledge, no such proceedings are threatened
or contemplated. No contract or document of a character required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement is not so described
or filed as required.
(m) Except as set forth in the Registration Statement, neither
the Company nor any of the Principal Subsidiaries has violated any
U.S. federal or state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable U.S. federal or
state wages and hours laws, or any provisions of the Employee
Retirement Income Security Act or the rules and regulations
promulgated thereunder, which in each case could result in any
material adverse change in the business, financial condition or
results of operations of the Company and the Principal Subsidiaries,
taken as a whole.
(n) Except as set forth in the Registration Statement, the
Company and each of the Principal Subsidiaries has good and
marketable title, free and clear of all liens, claims, encumbrances
and restrictions which are required to be described in the
Registration Statement except liens for taxes not yet due and
payable, to all property and assets described in the Registration
Statement as being owned by it. All leases to which the Company or
any of the Principal Subsidiaries is a party are valid and binding
and no default by the Company or any such Principal Subsidiary, or,
to the best of the Company's knowledge, by any other party to any
such leases, has occurred or is continuing thereunder, which could
result in any material adverse change in the business, financial
condition or results of operations of the Company and the Principal
Subsidiaries taken as a whole, and the Company and the Principal
Subsidiaries enjoy peaceful and undisturbed possession under all such
leases to which any of them is a party as lessee with such exceptions
as do not materially interfere with the use made by the Company or
such Principal Subsidiary.
(o) Deloitte & Touche are independent public accountants with
respect to the Company as required by the Securities Act.
(p) The financial statements, together with related schedules
and notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and
statements of cash flow of the Company and its subsidiaries on the
basis stated in the Registration Statement at the respective dates
and for the respective periods to which they apply; such statements
and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), in all material respects, present fairly the
information purported to be shown thereby at the respective dates or
for the respective periods to which they apply and have been prepared
on a basis consistent with such financial statements and the books
and records of the Company.
(q) Each of the Company and the Principal Subsidiaries has
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities ("permits") which are required to have been
obtained by it prior to the date hereof and which are material to the
ownership or leasing and operation of or construction of its
respective properties and to the conduct of its business in the
manner described in the Prospectus, except for any such permits, the
failure of which to have, individually or in the aggregate, would not
have a material adverse effect on the business, financial condition
or results of operations of the Company and the Principal
Subsidiaries, taken as a whole, and subject to such qualifications
as may be set forth in the Registration Statement; each of the
Company and the Principal Subsidiaries has fulfilled and performed
all of its material obligations with respect to such permits required
to have been fulfilled and performed prior to the date hereof and no
event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or result in any other
material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Registration Statement; and, except as described in the Registration
Statement, such permits do not materially interfere with the use or
operation of the electric power generation facilities of the Principal
Subsidiaries as currently used or operated or as contemplated to be
used or operated.
(r) Each of the AES Beaver Valley, the AES Deepwater, the AES
Placerita, the AES Shady Point, the AES Barbers Point and the AES
Thames facilities (each as defined in the Registration Statement) is
a "qualifying cogeneration facility" under the Federal Power Act
("FPA"), as amended by Section 201 of the Public Utility Regulatory
Policies Act of 1978 ("PURPA") and the FERC's regulations promulgated
thereunder, and each such facility's current use, operation and
ownership are consistent with such facility's status as a "qualifying
cogeneration facility".
(s) Neither the Company nor any of the Principal Subsidiaries
is (i) subject to regulation as a "holding company" or a "subsidiary
company" of a holding company or a "public utility company" under
Section 2(a) of the Public Utility Holding Company Act of 1935
("PUHCA"), except that the Company and its subsidiary in the United
Kingdom, Applied Energy Services Electric Limited, are exempt holding
companies under Section 3(a)(5) of PUHCA by order of the Commission,
(ii) subject to regulation under the FPA, other than as contemplated
by 18 C.F.R. Section 292.601(c), or (iii) except as described in the
Registration Statement (other than contained in the exhibits
thereto), subject to regulation by any state law with respect to
rates or the financial or organizational regulation of electric
utilities.
(t) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(u) Except as set forth in the Registration Statement, each of
the Company, each Principal Subsidiary, and any other subsidiary or
entity which the Company may be deemed to operate (together with the
Principal Subsidiaries, the "Subsidiaries") is in compliance with all
applicable foreign, federal, state and local environmental
(including, without limitation, the Comprehensive Environmental
Response, Compensation & Liability Act of 1980, as amended), safety
or similar law, rule and regulation, and there are no costs or
liabilities associated with any such law, rule or regulation, except
for any such noncompliances, costs or liabilities which, individually
or in the aggregate, would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Subsidiaries, taken as a whole.
(v) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (other
than that part of the Registration Statement that constitutes the Form T-1) or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or judgments purchased Notes, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Notes to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages, liabilities or judgments.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against
the Company, such Underwriter shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of all
fees and expenses. Any Underwriter or any such controlling person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
employment of such counsel has been specifically authorized in writing by the
Company, (ii) the Company has failed to assume the defense and employ counsel
or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the Company
(in which case the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person, it being
understood, however, that the Company shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be designated in
writing by __________________ and that all such fees and expenses shall be
reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of
this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 10 business days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the Company to each
Underwriter but only with reference to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through
you expressly for use in the Registration Statement, the Prospectus, any
preliminary prospectus or any amendment or supplement thereto. In case any
action shall be brought against the Company, any of its directors, any such
officer or any person controlling the Company based on the Registration
Statement, the Prospectus or any preliminary prospectus or any amendment or
supplement thereto and in respect of which indemnity may be sought against any
Underwriter, the Underwriter shall have the rights and duties given to the
Company (except that if the Company shall have assumed the defense thereof,
such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and the
Company, its directors, any such officers and any person controlling the
Company shall have the rights and duties given to the Underwriter, by Section
7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Underwriters shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company, and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the
public of the Securities, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public was offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7(d) are several in proportion to the respective number of
Securities purchased by each of the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Initial Securities under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.
(b) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending before or,
to the best of the Company's knowledge, contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have been
any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating
accorded any of the Company's securities by any "nationally recognized
statistical rating organization", as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act.
(d)(i) Since the date of the latest balance sheet included in
the Registration Statement, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in
the ordinary course of business, of the Company and the Principal
Subsidiaries, taken as a whole, from that described in the
Registration Statement, (ii) since the date of the latest balance
sheet included in the Registration Statement there shall not have
been any material change, or any development involving a prospective
material adverse change, in the capital stock or in the long-term
debt of the Company from that set forth in the Registration
Statement, (iii) the Company shall have no liability or
obligation, direct or contingent, which is material to the Company
and the Principal Subsidiaries, taken as a whole, other than those
reflected in the Registration Statement and (iv) on the Closing
Date you shall have received a certificate dated the Closing Date,
signed by such executive officers of the Company as you may
designate, and such other certificates of executive officers and
key personnel of the Principal Subsidiaries as you may specify
confirming the matters set forth in paragraphs (a), (b), (c) and
(d) of this Section 8.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of William R. Luraschi, General Counsel of AES, to the
effect that:
(i) the Company and each of the Principal Subsidiaries
has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation and has the corporate power and authority
required to carry on its business as it is currently being
conducted and to own its properties;
(ii) the Company and each of the Principal Subsidiaries is
duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Company and the Principal Subsidiaries, taken as a whole;
(iii) except as set forth in the Registration Statement or
otherwise set forth on Annex I, all of the outstanding shares
of capital stock of, or other ownership interests in, the
Principal Subsidiaries have been duly and validly authorized
and issued and are fully paid and non-assessable, and are owned
of record, and to the knowledge of such counsel, after due
inquiry, beneficially, by the Company or the Principal
Subsidiary as set forth in such opinion; and such counsel,
after due inquiry, is not aware of any security interest,
claim, lien, encumbrance or adverse interest of any nature on
such shares or other ownership interests except as set forth in
the Registration Statement or in Annex I;
(iv) the Company is not in violation of its Restated
Certificate of Incorporation or in violation of its By-laws and
none of the Principal Subsidiaries is in violation of its
respective charter or, except for any such violations which
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole, its by-laws;
(v) the execution, delivery and performance of this
Agreement, the Purchase Contract Agreement and the Pledge
Agreement, the issuance of the Securities by the Company,
compliance by the Company with all the provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except such
as may be required under the Securities Act, the Exchange Act
or other securities or Blue Sky laws) and will not conflict
with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of
the Company or any of the Principal Subsidiaries or any
agreement, indenture or other instrument known to such
counsel, to which the Company or any of the Principal
Subsidiaries is a party or by which the Company or any of
the Principal Subsidiaries or their respective properties
are bound that is material to the Company and its Principal
Subsidiaries, taken as a whole, or violate or conflict with
any laws, administrative regulations or rulings or court
decrees known to such counsel, after due inquiry, applicable
to the Company or any of the Principal Subsidiaries or their
respective properties;
(vi) such counsel does not know of any legal or
governmental proceeding pending or threatened to which the
Company or any of the Principal Subsidiaries is a party or to
which any of their respective property is subject which is
required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other
document which is required to be described in the Registration
Statement or the Prospectus or is required to be filed as an
exhibit to the Registration Statement which is not described or
filed as required;
(vii) each of the applicable Principal Subsidiaries has
obtained all permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits") which are
required to have been obtained by it prior to the date hereof
and which are material to the construction, ownership or
leasing and operation of each of the Principal Subsidiaries, as
the case may be, as contemplated by the Registration Statement,
except for any such permits, the failure to have obtained
which, individually or in the aggregate would not have a
material adverse effect on the business, financial condition or
results of operations of the Company and the Principal
Subsidiaries, taken as a whole, and subject to such
qualifications as may be set forth in the Registration
Statement, and all such permits are in full force and effect;
and such counsel has no reason to believe that any other
permits which may be material to the construction, ownership or
leasing and operation of such facilities will not be obtained
in due course;
(viii) each of the AES Beaver Valley, the AES Deepwater,
the AES Placerita, the AES Shady Point, the AES Barbers Point
and the AES Thames facilities is a "qualifying cogeneration
facility" under the FPA, as amended by Section 201 of PURPA and
the FERC regulations promulgated thereunder, and, to the best
of such counsel's knowledge, after due inquiry, each such
facility's current use, operation and ownership are consistent
with such facility's status as a "qualifying cogeneration
facility";
(ix) neither the Company nor any of the Principal
Subsidiaries is (i) subject to regulation as a "holding
company" or a "subsidiary company" of a holding company or an
"affiliate" of a subsidiary or holding company or a "public
utility company" under Section 2(a) of PUHCA, except that the
Company and its subsidiary in the United Kingdom, Applied
Energy Services Electric Limited, are exempt holding
companies under Section 3(a)(5) of PUHCA by order of the
Commission, (ii) subject to regulation under the FPA, other
than as contemplated by 18 C.F.R. Section 292.601(c), or
(iii) except as described in the Registration Statement,
subject to regulation under any state law with respect to
the rates or the financial or organizational regulation of
electric utilities; and
(x) the Company is not an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Davis Polk & Wardwell, counsel for the Company, to
the effect that:
(i) the Shares subject to the Purchase Contract
Agreement have been duly and validly authorized and reserved
for issuance and, when issued and delivered by the Company in
accordance with the provisions of the Purchase Contract
Agreement and the Pledge Agreement, will be fully paid and
non-assessable; the issuance of such Shares will not be subject
to preemptive or other similar rights arising by law or, to the
best of such counsel's knowledge, otherwise;
(ii) the Purchase Contract Agreement, the Purchase
Contracts underlying the Securities being delivered at the
closing time and at any Date of Delivery and the Pledge
agreement have been duly authorized, executed and delivered by
the company;
(iii) the entry into the Purchase contracts underlying
the Securities, the offer of the Securities by the Company as
contemplated herein and in the Prospectus, the issue and sale
of the Shares by the Company pursuant to the Purchase
Contracts; the execution, delivery and performance by the
Company of all of the provisions of this Agreement, the Pricing
Agreement, the Purchase Contracts, the Purchase Contract
Agreement and the Pledge Agreement; the consummation of the
transactions contemplated herein and therein; and the
compliance by the Company with its obligations hereunder and
thereunder will not result in any violation of the provisions
of the charter or by-laws of the Company or any of its
subsidiaries, or any applicable law, administrative regulation
or administrative or court decree;
(iv) the Rights to be issued with the Shares have been
duly authorized and, upon issuance of such Shares, will be
validly issued and conform to the description thereof in the
Prospectus;
(v) this Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding
agreement of the Company (except as rights to indemnity and
contribution hereunder may be limited by applicable law);
(vi) the certificate(s) used to evidence the Securities
are in a form contemplated by the Purchase Contract Agreement
and comply with all applicable statutory requirements and with
the requirements of the New York Stock Exchange;
(vii) the Registration Statement has become effective
under the Securities Act (assuming compliance with clause (2)
of Rule 462(b) in the case of the Additional Registration
Statement) and, to the best of such counsel's knowledge, no
stop order suspending its effectiveness has been issued and no
proceedings for that purpose are pending before or contemplated
by the Commission;
(viii) the statements under the captions "____________" in
the Prospectus, insofar as such statements constitute a summary
of the legal matters, documents or proceedings specifically
referred to therein, fairly present all the material
information called for with respect to such legal matters,
documents or proceedings;
(ix) except for the order of the Commission making the
Registration Statement effective and permits and similar
authorizations required under the securities or Blue Sky laws
of certain states, no consent, approval, authorization or other
order of any regulatory body, administrative agency or other
governmental body is legally required for the valid issuance
and sale of the Securities to the Underwriters as contemplated
by this Agreement or the public offering of the Securities
contemplated by the Prospectus;
(x) the Registration Statement and the Prospectus and
any supplement or amendment thereto (except for financial
statements and other financial and statistical information
therein as to which no opinion need be expressed) comply as to
form in all material respects with the Securities Act;
(xi) the entry into the Purchase Contracts underlying the
Securities, the offer of the Securities by the Company as
contemplated herein and in the Prospectus, the issue and sale
of the Shares by the Company pursuant to the Purchase
Contracts; the execution, delivery and performance by the
Company of all of the provisions of this Agreement, the
Purchase Contracts, the Purchase Contract Agreement and the
Pledge Agreement; the consummation of the transactions
contemplated herein and therein; and the compliance by the
Company with its obligations hereunder and thereunder have been
duly authorized by all necessary corporate action of the
Company and will not conflict with or constitute a breach
of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries
pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which it
or any of them may be bound, or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or of
its subsidiaries, or any applicable law, administrative
regulation or administrative or court decree;
(xii) the Shares and the Securities conform in all
material respects to the description thereof contained in the
Prospectus and the Registration Statement; and
(xiii) no authorization, approval, consent, order,
registration or qualification of or with any court or federal
or New York state governmental authority or agency is required
for the entry into the Purchase Contracts underlying the
Securities, the issuance and sale of the Securities hereunder
or the issuance and sale of the Shares by the Company pursuant
to such Purchase Contracts or the consummation by the Company
of any transactions contemplated under this Agreement, such
Purchase Contracts, the Purchase Contract Agreement and the
Pledge Agreement, except such as have been obtained and made
under the federal securities laws or such as may be required
under state or foreign securities or Blue Sky laws.
In addition, Davis Polk & Wardwell will deliver a separate
letter to the effect that such counsel has participated in
conferences with directors, officers and other representatives of the
Company and representatives of the independent public accountants for
the Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein and that part of the Registration Statement that
constitutes the Form T-1 as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed), contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading.
In rendering their opinions above, Davis Polk & Wardwell may
rely as to factual matters on such certificates of the Company's
officers or of governmental officials as they may deem relevant or
necessary for such opinions and as to matters governed by other than
federal or New York law or by the General Corporation Law of Delaware
on opinions of local counsel.
In addition, Mr. Luraschi will deliver a separate letter to
the effect that such counsel has participated in conferences with
directors, officers and other representatives of the Company and
representatives of the independent public accountants for the
Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein and that part of the Registration Statement that
constitutes the Form T-1 as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed), contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading.
In rendering the opinions above, Mr. Luraschi may rely as to
factual matters on such certificates of the Company's officers or of
governmental officials as he may deem relevant or necessary for such
opinions and as to matters governed by other than federal or New York
law or by the General Corporation Law of Delaware on opinions of
local counsel.
(g) You shall have received on the Closing Date an opinion,
dated the Closing Date, of ___________, counsel for the Underwriters,
as to the matters referred to in clauses (i), (ii), (iii), (vi) (but
only with respect to the statements under the captions "Description
of ___________" and "Underwriting") and (viii) of the foregoing
paragraph (f).
With respect to subparagraph (viii) of paragraph (f) above and
the final subparagraph of this paragraph (g), __________ may state
that their opinion and belief is based upon their participation in
the preparation of the Registration Statement and the Prospectus and
any amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the
contents thereof (including documents incorporated therein by
reference), but is without independent check or verification except
as specified.
In addition, Davis Polk & Wardwell will opine to the effect
that such counsel has participated in conferences with officers and
other representatives of the Company and representatives of the
independent public accountants for the Company, at which conferences
the contents of the Registration Statement and related matters were
discussed, and, although such counsel has not independently verified
and is not passing upon and assume no responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement, except as specified, no facts have come to
such counsel's attention which lead such counsel to believe that the
Registration Statement (other than any financial statements or other
financial or statistical information therein and that part of the
Registration Statement that constitutes the Form T-1 as to which no
opinion is expressed) at its effective date contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
contained therein not misleading, or that the Prospectus as of its
date or the Closing Date (other than any financial statements or
other financial or statistical information therein as to which no
opinion is expressed), contained any untrue statement of a material
fact or omitted to state any material fact necessary to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading.
(h) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Deloitte &
Touche, independent public accountants, with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Deloitte &
Touche on the date of this Agreement.
(i) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the
Company at or prior to the Closing Date.
9. Effective Date of Agreement and Termination. This
Agreement shall become effective upon the later of (i) execution of this
Agreement and (ii) when notification of the effectiveness of the Registration
Statement has been released by the Commission.
This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Company if any of the following
has occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any adverse change or
development involving a prospective adverse change in the condition, financial
or otherwise, of the Company, any Principal Subsidiary or the earnings,
affairs, or business prospects of the Company or any Principal Subsidiary,
whether or not arising in the ordinary course of business, which would, in
your reasonable judgment, make it impracticable to market the Securities on
the terms and in the manner contemplated in the Prospectus, (ii) any outbreak
or escalation of hostilities or other national or international calamity or
crisis or material change in economic conditions, if the effect of such
outbreak, escalation, calamity, crisis or change on the financial markets of
the United States or elsewhere would, in your reasonable judgment, make it
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market System or limitation on prices for
securities on any such exchange or National Market System, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which
in your reasonable judgment materially and adversely affects, or will
materially and adversely affect, the business or operations of the Company,
(v) the declaration of a banking moratorium by either federal or New York
State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which
in your reasonable judgment has a material adverse effect on the financial
markets in the United States.
If on the Closing Date any one or more of the Underwriters
shall fail or refuse to enter into the Purchase Contracts underlying the
Initial Securities which it or they are obligated to enter into under this
Agreement and the aggregate number of the Initial Securities which such
defaulting Underwriter or Underwriters, as the case may be, agreed but failed
or refused to purchase is not more than one-tenth of the total number of
Initial Securities to be purchased by all Underwriters, each non-defaulting
Underwriter shall be obligated severally, in the proportion which the
principal amount of Initial Securities set forth opposite its name in Schedule
I bears to the aggregate number of Initial Securities which all the
non-defaulting Underwriters, as the case may be, have agreed to purchase, or
in such other proportion as you may specify, to enter into Purchase Contracts
underlying the full amount thereof; provided that in no event shall the number
of Initial Securities which any Underwriter has agreed to purchase pursuant to
Section 2 hereof be increased pursuant to this Section 9 by an amount in
excess of one-ninth of such number of Initial Securities without the written
consent of such Underwriter. If on the Closing Date any Underwriter or
Underwriters shall fail or refuse to purchase Initial Securities and the
aggregate number of Initial Securities with respect to which such default
occurs is more than one-tenth of the aggregate number of Initial Securities to
be purchased on such date by all Underwriters in the event of a default by a
Underwriter and arrangements satisfactory to you and the Company for purchase
of such Initial Securities are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter and the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date but in no event for longer than seven
days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to The
AES Corporation, 1001 N. 19th Street, Arlington, Virginia 22209, Attention:
General Counsel and (b) if to any Underwriter or to you, to you c/o
____________________________, Attention: Syndicate Department, or in any case
to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and directors and of the several Underwriters set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Securities, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Company, the officers or directors
of the Company or any controlling person of the Company, (ii) acceptance of the
Securities and payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the several Underwriters for all out-of-pocket expenses
(including the fees and disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Securities from any of the several Underwriters merely because of
such purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Underwriters.
Very truly yours,
THE AES CORPORATION
By:____________________________
Acting severally on behalf of
itself and the several Underwriters
named above
By:________________________________
SCHEDULE I
Number of Initial Securities
Underwriters to be Purchased
------------ ----------------------------
---------------
Total.................................... $
===============
Annex I
Principal Subsidiaries
Ownership Security
Name Interest Interest
---- ----------- ----------
EXHIBIT 1.4
[FORM OF PREFERRED SECURITIES
UNDERWRITING AGREEMENT]
$___________
THE AES CORPORATION
______ Preferred Securities
AES Trust [-] Guaranteed by
__________________
UNDERWRITING AGREEMENT
_______, 199_
Dear Sirs:
AES Trust [__] (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801
et seq.), proposes to issue and sell ____________ shares of its ___% preferred
trust securities (the "Firm Securities") to the several underwriters named in
Schedule I hereto (the "Underwriters"). The Trust also proposes to issue and
sell to the several Underwriters not more than _______ additional shares of
its ___% preferred trust securities (the "Additional Securities") if requested
by the Underwriters as provided in Section 2 hereof. The Firm Securities and
the Additional Securities are herein collectively called the "Securities".
The Securities will be guaranteed by The AES Corporation, a Delaware
corporation (the "Company") to the extent set forth in the Prospectus (as
defined herein).
It is understood that substantially contemporaneously with the
offering and sale of the Firm Securities to the Underwriters contemplated
hereby, (i) the Trust, its trustees (the "Trustees") and the Company shall
take all necessary action to adopt an Amended and Restated Declaration of
Trust in substantially the form of the Form of Amended and Restated
Declaration of Trust attached as Exhibit 4.9 to the Registration Statement
referred to below, (as so amended and restated, the "Declaration") pursuant to
which the Trust shall (x) issue and sell the Securities to the Underwriters
pursuant hereto and (y) issue [_] shares of its [___]% common securities [(and
up to an additional [_] shares of such securities in connection with the
issuance and sale of the Additional Securities)] (the "Common Securities" and,
together with the Securities, the "Trust Securities") to the Company, in each
case with such rights and obligations as shall be set forth in such
Declaration, (ii) the Company and The Bank of New York, as Trustee, shall
enter into an Indenture in substantially the form of the Form of the Junior
Subordinated Debt Indenture attached as Exhibit 4.4 to the Registration
Statement referred to below (as supplemented by the Supplemental Indenture
substantially in the form attached as Exhibit 4.11 to the Registration
Statement referred to below, the "Indenture") providing for the issuance of
$[____________] in aggregate principal amount of the Company's Junior
Subordinated Debentures, Series [_], due 20[__] (the "Debentures"), (iii) the
Company shall deposit such Debentures in the Trust in conjunction with the
consummation of the sale of the Securities to the Underwriters contemplated
hereby and (iv) the Company and _________________________, as Guarantee
Trustee, shall enter into a Guarantee Agreement in substantially the form of
the Form of Guarantee with respect to Securities attached as Exhibit 4.13 of
the Registration Statement referred to below (the "Guarantee") for the benefit
of holders from time to time of the Securities.
1. Registration Statement and Prospectus. The Trust and the
Company have prepared and filed with the Securities and Exchange Commission
(the "Commission") in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Securities Act"), a registration statement on Form
S-3, including a prospectus, relating to, among other things, certain
preferred securities of AES Trust I and II, certain junior subordinated debt
and guarantees of preferred securities of AES Trust I and II (collectively,
the "Shelf Securities"). The Trust and the Company also have filed with, or
propose to file with, the Commission pursuant to Rule 424 under the Securities
Act a prospectus supplement specifically relating to the Securities. The
registration statement as amended to the date of this Agreement is hereinafter
referred to as the "Base Registration Statement" and any registration
statement filed pursuant to Rule 462(b) under the Securities Act relating to
the Securities is herein referred to as the "Additional Registration
Statement", and, together with the Base Registration Statement, the
"Registration Statement". The related prospectus covering the Shelf
Securities in the form first used to confirm sales of the Securities is
hereinafter referred to as the "Basic Prospectus". The Basic Prospectus as
supplemented by the prospectus supplement specifically relating to the
Securities in the form first used to confirm sales of the Securities is
hereinafter referred to as the "Prospectus". Any reference in this Agreement
to the Registration Statement, the Basic Prospectus, any preliminary form of
Prospectus (a "preliminary prospectus") previously filed with the Commission
pursuant to Rule 424 or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act which were filed under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") on or before the date of this
Agreement or the date of the Basic Prospectus, any preliminary prospectus or
the Prospectus, as the case may be; and any reference to "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Basic
Prospectus, any preliminary prospectus or the Prospectus shall be deemed to
refer to and include any documents filed under the Exchange Act after the date
of this Agreement, or the date of the Basic Prospectus, any preliminary
prospectus or the Prospectus, as the case may be, which are deemed to be
incorporated by reference therein.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell and each
Underwriter agrees, severally and not jointly, to purchase from the Trust at a
price per share of $_____ (the "Purchase Price"), the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule I
hereto.
On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Trust agrees to
issue and sell the Additional Securities and the Underwriters shall have the
right to purchase, severally and not jointly, up to _______ Additional
Securities from the Trust at the Purchase Price. Additional Securities may
be purchased solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Securities. The Underwriters may
exercise their right to purchase Additional Securities in whole or in part
from time to time by giving written notice thereof to the Company within 30
days after the date of this Agreement. You shall give any such notice on
behalf of the Underwriters and such notice shall specify the aggregate number
of Additional Securities to be purchased pursuant to such exercise and the
date for payment and delivery thereof. The date specified in any such notice
shall be a business day (i) no earlier than the Closing Date (as hereinafter
defined), (ii) no later than ten business days after such notice has been
given and (iii) no earlier than two business days after such notice has been
given. If any Additional Securities are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the Trust the number of
Additional Securities (subject to such adjustments to eliminate fractional
shares as you may determine) which bears the same proportion to the total
number of Additional Securities to be purchased from the Trust as the number of
Firm Securities set forth opposite the name of such Underwriter in Schedule I
bears to the total number of Firm Securities.
In view of the fact that the proceeds of the sale of the
Securities will be used to purchase Debentures, the Company agrees to pay as
compensation ("Underwriter's Compensation") for the Underwriters' arranging
the investment therein of such proceeds an amount in immediately available
funds of $ per Security purchased hereunder.
[The Trust and the Company hereby agree not to offer, sell,
contract to sell, grant any option to purchase, or otherwise dispose of any
preferred trust securities or any securities convertible into or exercisable
or exchangeable for such preferred trust securities or in any other manner
transfer all or a portion of the economic consequences associated with the
ownership of any such preferred trust securities, except to the Underwriters
pursuant to this Agreement, for a period of ___ days after the date of the
Prospectus without the prior written consent of ____________________________.]
3. Terms of Public Offering. The Company is advised by you
that the Underwriters propose (i) to make a public offering of their
respective portions of the Securities as soon after the effective date of the
Registration Statement as in your judgment is advisable and (ii) initially to
offer the Securities upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and
payment for the Firm Securities and payment of the related Underwriters'
Compensation shall be made at 10:00 A.M., New York City time, on ______, 199_,
or at such other time or such other date as the Underwriters and the Company
may agree upon in writing. The time and date of such payment are referred to
herein as the "Closing Date". As used herein, the term "Business Day" means
any day other than a day on which banks are permitted or required to be closed
in New York City.
Delivery to the Underwriters of and payment for any Additional
Securities to be purchased by the Underwriters and payment of the related
Underwriters' Compensation shall be made at such place as you shall designate
at 10:00 A.M., New York City time, on the date specified in the applicable
exercise notice given by you pursuant to Section 2 (an "Option Closing Date").
Any such Option Closing Date and the location of delivery of and the form of
payment for such Additional Securities may be varied by agreement between you
and the Company.
Certificates for the Securities shall be registered in such
names and issued in such denominations as you shall request in writing not
later than two full business days prior to the Closing Date or an Option
Closing Date, as the case may be. Such certificates shall be made available
to you for inspection not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the applicable Option Closing
Date, as the case may be. Certificates in definitive form evidencing the
Securities shall be delivered to you on the Closing Date or the applicable
Option Closing Date, as the case may be with any transfer taxes thereon duly
paid by the Company, for the respective accounts of the several Underwriters,
against payment of the Purchase Price therefor by wire transfer in immediately
available funds to the account specified by the Company to the Underwriters
(no later than noon the Business Day prior to the Closing Date or the
applicable Option Closing Date, as the case may be) at the office of Davis
Polk & Wardwell, counsel to the Company.
5. Agreements of the Company. The Company agrees with you:
(a) To file the Prospectus in a form approved by you with the
Commission within the time periods specified by Rule 424; and to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Securities; and to furnish copies of the Prospectus to
the Underwriters in New York City prior to 10:00 a.m., New York City
time, on the Business Day next succeeding the date of this Agreement
in such quantities as the Underwriters may reasonably request;
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement has been filed or becomes effective,
(ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, and (iv) of the
happening of any event during the period referred to in paragraph (e)
below which makes any statement of a material fact made in the
Registration Statement or the Prospectus untrue or which requires the
making of any additions to or changes in the Registration Statement
or the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the
Company will make every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(c) To furnish to you three signed copies of the Registration
Statement as first filed with the Commission and of each amendment to
it, including all exhibits thereto and documents incorporated by
reference therein, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits
thereto and documents incorporated by reference therein, as you may
reasonably request.
(d) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or to
which you shall reasonably object; and to prepare and file with the
Commission, promptly upon your reasonable request, any amendment to
the Registration Statement or supplement to the Prospectus which may
be necessary or advisable in connection with the distribution of the
Securities by you, and to use its best efforts to cause the same to
become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel for the Underwriters a prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish to each Underwriter and dealer as many copies of
the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the
Underwriters, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if it is necessary to amend or supplement the
Prospectus to comply with any law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is
so delivered, be misleading, or so that the Prospectus will comply
with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter
or dealers may reasonably request.
(g) Prior to any public offering of the Securities, to
cooperate with you and counsel for the Underwriters in connection
with the registration or qualification of the Securities for offer
and sale by the several Underwriters and by dealers under the state
securities or Blue Sky laws of such jurisdictions as you may request,
to continue such qualification in effect so long as required for
distribution of the Securities and to file such consents to service
of process or other documents as may be necessary in order to effect
such registration or qualification.
(h) To mail and make generally available to its
securityholders as soon as reasonably practicable an earnings
statement covering a period of at least twelve months after the
effective date of the Registration Statement (but in no event
commencing later than 90 days after such date) which shall satisfy
the provisions of Section 11(a) of the Securities Act, and to advise
you in writing when such statement has been so made available.
(i) During the period of five years after the date of this
Agreement, or for such shorter period if the Securities no longer
remain outstanding, (i) to mail as soon as reasonably practicable
after the end of each fiscal year to the record holders of its
Securities a financial report of the Company and its subsidiaries on a
consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if required by Regulation S-X), all such
financial reports to include a consolidated balance sheet, a
consolidated statement of operations, a consolidated statement of
cash flows and a consolidated statement of shareholders' equity as of
the end of and for such fiscal year, together with comparable
information as of the end of and for the preceding year, certified by
independent certified public accountants, and (ii) to mail and make
generally available as soon as practicable after the end of each
quarterly period (except for the last quarterly period of each fiscal
year) to such holders, a consolidated balance sheet, a consolidated
statement of operations and a consolidated statement of cash flows
(and similar financial reports of all unconsolidated subsidiaries, if
required by Regulation S-X) as of the end of and for such period, and
for the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i), to
furnish to you as soon as available a copy of each report or other
publicly available information of the Company mailed to the
securityholders of the Company or filed with the Commission and such
other publicly available information concerning the Company and its
subsidiaries as you may reasonably request.
(k) To pay all costs, expenses, fees and taxes incident to the
performance of its obligations hereunder, including without limiting
the generality of the foregoing, all costs and expenses incident to
(i) the preparation, issuance, and delivery of the certificates for
the Securities, including any expenses of the Trustee, (ii) the
preparation, printing, filing and distribution under the Securities
Act of the Registration Statement (including financial statements and
exhibits), each preliminary prospectus and all amendments and
supplements to any of them prior to or during the period specified in
paragraph (e), (iii) the printing and delivery of the Prospectus and
any Preliminary Prospectus and all amendments or supplements to it
during the period specified in paragraph (e), (iv) the printing and
delivery of this Agreement, the Indenture, Preliminary and
Supplemental Blue Sky Memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in
connection with the offering of the Securities (including in each
case any disbursements of counsel for the Underwriters relating to
such printing and delivery), (v) the registration or qualification of
the Securities for offer and sale under the securities or Blue Sky
laws of the several states (including in each case the fees and
disbursements of counsel for the Underwriters relating to such
registration or qualification and memoranda relating thereto), (vi)
filings and clearance with the National Association of Securities
Dealers, Inc. in connection with the offering, (vii) furnishing such
copies of the Registration Statement, the Prospectus and all
amendments and supplements thereto as may be requested for use in
connection with the offering or sale of the Securities by the
Underwriters or by dealers to whom Securities may be sold and (viii)
the rating of the Securities including, without limitation, fees
payable to rating agencies in connection therewith.
(l) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement
by the Company prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Securities.
6. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter that:
(a) The Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge
of the Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply,
or will comply, as the case may be, in all material respects with the
Securities Act and the Trust Indenture Act of 1939, as amended, and
the rules and regulations of the Commission thereunder (collectively,
the "Trust Indenture Act"), and do not and will not, as of the
applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and the
Prospectus, as amended or supplemented at the Closing Date, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; except that the foregoing representations and
warranties shall not apply to (i) that part of the Registration
Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the
Trustee, and (ii) statements or omissions in the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly
for use therein;
(b) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed in
all material respects to the requirements of the Exchange Act, and
none of such documents contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents are
filed with the Commission will conform in all material respects to
the requirements of the Exchange Act, as applicable, and will not
contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(c) The Company and each of its subsidiaries and each of its
affiliates which meets the criteria in the definition of "significant
subsidiary" pursuant to Rule 1-02(w) of Regulation S-X under the
Securities Act (each, a "Principal Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority required to carry on its business as it
is currently being conducted and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Principal Subsidiaries, taken as a whole.
(d) Except as set forth in the Registration Statement or on
Annex I hereto, all of the outstanding shares of capital stock of, or
other ownership interests in, the Principal Subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company or one of the Principal
Subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
(e) As of the Closing Date, the Trust Securities will have
been duly authorized by the Declaration and (x) when the Securities
are issued in accordance with the terms of this Agreement and
delivered to and paid for by the Underwriters and (y) the Common
Securities are issued against payment therefor as provided in the
Declaration, such Trust Securities will be duly and validly issued
and (subject to the terms of the Declaration) will be fully paid and
nonassessable undivided beneficial interests in the assets of the
Trust, not subject to any preemptive or similar rights. Holders
of Trust Securities will be entitled to the same limitation of
personal liability extended to stockholders of private
corporations for profit organized under the General Corporation
Law of the State of Delaware.
(f) As of the Closing Date, the Declaration will have been
duly authorized, executed and delivered by the Company and the
Trustees and will be a valid and binding obligation of the Company
and the Trustees, enforceable against the Company and the Trustees in
accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(g) The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Act, is and
will be treated as a "grantor trust" for Federal income tax purposes
under existing law, has the business trust power and authority to
conduct its business as presently conducted and as described in the
Registration Statement and Prospectus, and is not required to be
authorized to do business in any other jurisdiction.
(h) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by equitable principles of
general applicability; the Debentures have been duly authorized and
when executed and authenticated in accordance with the provisions of
the Indenture and delivered to the Trust against payment therefore as
provided in the Prospectus will be entitled to the benefits of the
Indenture and the Indenture and the Debentures will conform in all
respects to statements relating thereto contained in the Registration
Statement and the Prospectus.
(i) The Guarantee has been duly qualified under the Trust
Indenture Act of 1939, as amended, and, as of the Closing Date,
assuming due authorization, execution and delivery by the Company
thereunder, of the Guarantee, the Guarantee will be a valid and
binding agreement of the Company, enforceable in accordance with its
terms subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in
a proceeding at law or in equity).
(j) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company (except as rights to indemnity and contribution hereunder may
be limited by applicable law).
(k) The Securities conform as to legal matters to the
description thereof contained in the Registration Statement and the
Prospectus.
(l) The Company is not in violation of its Restated
Certificate of Incorporation or its By-laws and neither the Trust nor
the Principal Subsidiaries are in violation of, as applicable, their
respective Declaration, charter or, except for any such violations
which would not have a material adverse effect on the Trust, the
Company and its subsidiaries taken as a whole, their by-laws, nor is
the Trust, the Company or any of the Principal Subsidiaries, except
as set forth in the Registration Statement, in default in, as
applicable, the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument to
which the Trust, the Company or any of the Principal Subsidiaries is
a party or by which the Trust, the Company or any of the Principal
Subsidiaries or their respective property is bound except for any
such defaults which, individually or in the aggregate, would not have
a material adverse effect on the business, financial condition or
results of operations of the Company and the Principal Subsidiaries,
taken as a whole.
(m) The execution, delivery and performance of this
Agreement, the Indenture, the Debentures, the Guarantee, the
Declaration and the Securities and the compliance by the Trust and
the Company with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will
not require any consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other
governmental body (except such as may be required under the
Securities Act, the Exchange Act, the Trust Indenture Act, or other
securities or Blue Sky laws) and will not conflict with or constitute
a breach of any of the terms or provisions of, or a default under, the
Declaration, charter or by-laws, as applicable, or any agreement,
indenture or other instrument to which the Trust, the Company or any
of the Principal Subsidiaries is a party or by which the Trust, the
Company or any of the Principal Subsidiaries or their respective
property is bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to
the Trust, the Company, any of the Principal Subsidiaries or their
respective property (except state securities or Blue Sky laws).
(n) Except as set forth in the Registration Statement, there
are no material legal or governmental proceedings pending to which
the Trust, the Company or any of the Principal Subsidiaries is a
party or to which any of their respective property is the subject,
and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated. No contract or document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
is not so described or filed as required.
(o) Except as set forth in the Registration Statement,
neither the Company nor any of the Principal Subsidiaries has
violated any U.S. federal or state law relating to discrimination in
the hiring, promotion or pay of employees nor any applicable U.S.
federal or state wages and hours laws, or any provisions of the
Employee Retirement Income Security Act or the rules and regulations
promulgated thereunder, which in each case could result in any
material adverse change in the business, financial condition or
results of operations of the Company and the Principal Subsidiaries,
taken as a whole.
(p) Except as set forth in the Registration Statement, the
Company and each of the Principal Subsidiaries has good and
marketable title, free and clear of all liens, claims, encumbrances
and restrictions which are required to be described in the
Registration Statement except liens for taxes not yet due and
payable, to all property and assets described in the Registration
Statement as being owned by it. All leases to which the Company or
any of the Principal Subsidiaries is a party are valid and binding
and no default by the Company or any such Principal Subsidiary, or,
to the best of the Company's knowledge, by any other party to any
such leases, has occurred or is continuing thereunder, which could
result in any material adverse change in the business, financial
condition or results of operations of the Trust, the Company and the
Principal Subsidiaries taken as a whole, and the Company and the
Principal Subsidiaries enjoy peaceful and undisturbed possession
under all such leases to which any of them is a party as lessee with
such exceptions as do not materially interfere with the use made by
the Company or such Principal Subsidiary.
(q) Deloitte & Touche are independent public accountants with
respect to the Company as required by the Securities Act.
(r) The financial statements, together with related schedules
and Notes forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and
statements of cash flow of the Company and its subsidiaries on the
basis stated in the Registration Statement at the respective dates
and for the respective periods to which they apply; such statements
and related schedules and Notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), in all material respects, present fairly the
information purported to be shown thereby at the respective dates or
for the respective periods to which they apply and have been prepared
on a basis consistent with such financial statements and the books
and records of the Company.
(s) Each of the Company and the Principal Subsidiaries has
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities ("permits") which are required to have been
obtained by it prior to the date hereof and which are material to the
ownership or leasing and operation of or construction of its
respective properties and to the conduct of its business in the
manner described in the Prospectus, except for any such permits, the
failure of which to have, individually or in the aggregate, would not
have a material adverse effect on the business, financial condition
or results of operations of the Company and the Principal
Subsidiaries, taken as a whole, and subject to such qualifications
as may be set forth in the Registration Statement; each of the
Company and the Principal Subsidiaries has fulfilled and performed
all of its material obligations with respect to such permits required
to have been fulfilled and performed prior to the date hereof and no
event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or result in any other
material impairment of the rights of the holder of any such permit,
subject in each case to such qualification as may be set forth in the
Registration Statement; and, except as described in the Registration
Statement, such permits do not materially interfere with the use or
operation of the electric power generation facilities of the Principal
Subsidiaries as currently used or operated or as contemplated to be
used or operated.
(t) Each of the AES Beaver Valley, the AES Deepwater, the AES
Placerita, the AES Shady Point, the AES Barbers Point and the AES
Thames facilities (each as defined in the Registration Statement) is
a "qualifying cogeneration facility" under the Federal Power Act
("FPA"), as amended by Section 201 of the Public Utility Regulatory
Policies Act of 1978 ("PURPA") and the FERC's regulations promulgated
thereunder, and each such facility's current use, operation and
ownership are consistent with such facility's status as a "qualifying
cogeneration facility".
(u) None of the Trust, the Company or any of the Principal
Subsidiaries is (i) subject to regulation as a "holding company" or a
"subsidiary company" of a holding company or a "public utility
company" under Section 2(a) of the Public Utility Holding Company Act
of 1935 ("PUHCA"), except that the Company and its subsidiary in the
United Kingdom, Applied Energy Services Electric Limited, are exempt
holding companies under Section 3(a)(5) of PUHCA by order of the
Commission, (ii) subject to regulation under the FPA, other than as
contemplated by 18 C.F.R. Section 292.601(c), or (iii) except as
described in the Registration Statement (other than contained in the
exhibits thereto), subject to regulation by any state law with
respect to rates or the financial or organizational regulation of
electric utilities.
(v) Neither the Trust nor the Company is an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(w) Except as set forth in the Registration Statement, each
of the Company, each Principal Subsidiary, and any other subsidiary
or entity which the Company may be deemed to operate (together with
the Principal Subsidiaries, the "Subsidiaries") is in compliance with
all applicable foreign, federal, state and local environmental
(including, without limitation, the Comprehensive Environmental
Response, Compensation & Liability Act of 1980, as amended), safety
or similar law, rule and regulation, and there are no costs or
liabilities associated with any such law, rule or regulation, except
for any such noncompliances, costs or liabilities which, individually
or in the aggregate, would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and the Subsidiaries, taken as a whole.
(x) The Trust and the Company have complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws
of Florida).
7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (other
than that part of the Registration Statement that constitutes the Form T-1) or
the Prospectus (as amended or supplemented if the Trust and the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished in writing to the Company by or on
behalf of any Underwriter through you expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, liabilities or
judgments purchased Securities, or any person controlling such Underwriter, if
a copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Securities to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages, liabilities or judgments.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against
the Company, such Underwriter shall promptly notify the Company in writing and
the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of all
fees and expenses. Any Underwriter or any such controlling person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
employment of such counsel has been specifically authorized in writing by the
Company, (ii) the Company has failed to assume the defense and employ counsel
or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the Company
(in which case the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person, it being
understood, however, that the Company shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be designated in
writing by __________________ and that all such fees and expenses shall be
reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of
this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 10 business days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder
by such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless (i) the Trust, the Trustees, its officers who sign
the Registration Statement and any person controlling the Trust within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act and (ii) the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
in each such case to the same extent as the foregoing indemnity from the
Company to each Underwriter but only with reference to information relating to
such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus,
any preliminary prospectus or any amendment or supplement thereto. In case
any action shall be brought against the Trust, the Trustees, its officers who
sign the Registration Statement or any person controlling the Trust or against
the Company, any of its directors, any such officer or any person controlling
the Company based on the Registration Statement, the Prospectus or any
preliminary prospectus or any amendment or supplement thereto and in respect
of which indemnity may be sought against any Underwriter, the Underwriter
shall have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, such Underwriter shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof but the fees and expenses of such counsel shall be at the
expense of such Underwriter), and the Trust, the Trustees, its officers who
sign the Registration Statement and any person controlling the Trust, the
Company, its directors, any such officers and any person controlling the
Company shall have the rights and duties given to the Underwriter, by Section
7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Trust and the Company on the one
hand and the Underwriters on the other hand from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Trust, the Company and the Underwriters in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Trust, the Company and
the Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Trust
and the Company, and the total underwriting discounts and commissions received
by the Underwriters, bear to the total price to the public of the Securities,
in each case as set forth in the table on the cover page of the Prospectus.
The relative fault of the Trust, the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Trust, the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Trust, the Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public was offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7(d) are several in proportion to the respective number of
Securities purchased by each of the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Securities under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the
Closing Date.
(b) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending before or,
to the best of the Company's knowledge, contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have been
any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating
accorded to any of the Company's or the Trust's securities or to any
securities of any other AES Trust that is organized in substantially
the form of, and for substantially the same purpose as, the Trust and
whose common equity capital is wholly owned by the Company or any
subsidiary, by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act.
(d) (i) Since the date of the latest balance sheet included in the
Registration Statement, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or not arising in
the ordinary course of business, of the Company and the Principal
Subsidiaries, taken as a whole, from that described in the
Registration Statement, (ii) since the date of the latest balance
sheet included in the Registration Statement there shall not have
been any material change, or any development involving a prospective
material adverse change, in the capital stock or in the long-term debt
of the Company from that set forth in the Registration Statement,
(iii) the Trust and the Company shall have no liability or
obligation, direct or contingent, which is material to the Trust, the
Company and the Principal Subsidiaries, taken as a whole, other than
those reflected in the Registration Statement and (iv) on the Closing
Date you shall have received a certificate dated the Closing Date,
signed by such executive officers of the Company as you may
designate, and such other certificates of executive officers and key
personnel of the Principal Subsidiaries as you may specify confirming
the matters set forth in paragraphs (a), (b), (c) and (d) of this
Section 8.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of William R. Luraschi, General Counsel of AES, to the
effect that:
(i) the Company and each of the Principal Subsidiaries
has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation and has the corporate power and authority
required to carry on its business as it is currently being
conducted and to own its properties;
(ii) the Company and each of the Principal Subsidiaries
is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on
the Company and the Principal Subsidiaries, taken as a whole;
(iii) except as set forth in the Registration Statement or
otherwise set forth on Annex I, all of the outstanding shares
of capital stock of, or other ownership interests in, the
Principal Subsidiaries have been duly and validly authorized
and issued and are fully paid and non-assessable, and are owned
of record, and to the knowledge of such counsel, after due
inquiry, beneficially, by the Company or the Principal
Subsidiary as set forth in such opinion; and such counsel,
after due inquiry, is not aware of any security interest,
claim, lien, encumbrance or adverse interest of any nature on
such shares or other ownership interests except as set forth in
the Registration Statement or in Annex I;
(iv) the Company is not in violation of its Restated
Certificate of Incorporation or in violation of its By-laws and
none of the Principal Subsidiaries is in violation of its
respective charter or, except for any such violations which
would not have a material adverse effect on the Trust, the
Company and its subsidiaries taken as a whole;
(v) the execution, delivery and performance of this
Agreement, the Indenture, Debentures, Guarantee and Declaration
by the Company, compliance by the Trust and the Company with
all the provisions hereof and thereof, issuance of the
Securities and the consummation of the transactions
contemplated hereby and thereby will not require any consent,
approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except
such as may be required under the Securities Act, the Exchange
Act, the Trust Indenture Act or other securities or Blue Sky
laws) and will not conflict with or constitute a breach of any
of the terms or provisions of, or a default under, the
Declaration, charter or by-laws of the Trust, the Company or
any of the Principal Subsidiaries or any agreement, indenture
or other instrument known to such counsel, to which the Trust,
the Company or any of the Principal Subsidiaries is a party or
by which the Trust, the Company or any of the Principal
Subsidiaries or their respective properties are bound that is
material to the Trust, the Company and its Principal
Subsidiaries, taken as a whole, or violate or conflict with any
laws, administrative regulations or rulings or court decrees
known to such counsel, after due inquiry, applicable to the
Trust, the Company or any of the Principal Subsidiaries or
their respective properties;
(vi) such counsel does not know of any legal or
governmental proceeding pending or threatened to which the
Trust, the Company or any of the Principal Subsidiaries is a
party or to which any of their respective property is subject
which is required to be described in the Registration Statement
or the Prospectus and is not so described, or of any contract or
other document which is required to be described in the
Registration Statement or the Prospectus or is required to be
filed as an exhibit to the Registration Statement which is not
described or filed as required;
(vii) each of the applicable Principal Subsidiaries has
obtained all permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits") which are
required to have been obtained by it prior to the date hereof
and which are material to the construction, ownership or
leasing and operation of each of the Principal Subsidiaries, as
the case may be, as contemplated by the Registration Statement,
except for any such permits, the failure to have obtained
which, individually or in the aggregate would not have a
material adverse effect on the business, financial condition or
results of operations of the Trust, the Company and the
Principal Subsidiaries, taken as a whole, and subject to such
qualifications as may be set forth in the Registration
Statement, and all such permits are in full force and effect;
and such counsel has no reason to believe that any other
permits which may be material to the construction, ownership or
leasing and operation of such facilities will not be obtained in
due course;
(viii) each of the AES Beaver Valley, the AES Deepwater,
the AES Placerita, the AES Shady Point, the AES Barbers Point
and the AES Thames facilities is a "qualifying cogeneration
facility" under the FPA, as amended by Section 201 of PURPA and
the FERC regulations promulgated thereunder, and, to the best
of such counsel's knowledge, after due inquiry, each such
facility's current use, operation and ownership are consistent
with such facility's status as a "qualifying cogeneration
facility";
(ix) none of the Trust, the Company nor any of the
Principal Subsidiaries is (i) subject to regulation as a
"holding company" or a "subsidiary company" of a holding
company or an "affiliate" of a subsidiary or holding company or
a "public utility company" under Section 2(a) of PUHCA, except
that the Company and its subsidiary in the United Kingdom,
Applied Energy Services Electric Limited, are exempt holding
companies under Section 3(a)(5) of PUHCA by order of the
Commission, (ii) subject to regulation under the FPA, other
than as contemplated by 18 C.F.R. Section 292.601(c), or (iii)
except as described in the Registration Statement, subject to
regulation under any state law with respect to the rates or the
financial or organizational regulation of electric utilities;
and
(x) neither the Trust nor the Company is an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date, of Davis Polk & Wardwell, counsel for the Company, to
the effect that:
(i) the Debentures have been duly authorized and, when
executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Trust as set
forth in the Prospectus, will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the
Company enforceable in accordance with their terms except as
the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally
and by equitable principles of general applicability;
(ii) this Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding
agreement of the Company (except as rights to indemnity and
contribution hereunder may be limited by applicable law);
(iii) the Indenture and the Guarantee have been duly
qualified under the Trust Indenture Act, and the Indenture,
Declaration and Guarantee have been duly authorized, executed
and delivered by the Company and (assuming the due
authorization, execution and delivery thereof by the respective
Trustees) are valid and binding agreements of the Company,
enforceable in accordance with their terms except as the
enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and be
equitable principles of general applicability;
(iv) the Securities conform as to legal matters to the
description thereof contained in the Registration Statement and
the Prospectus;
(v) the Registration Statement has become effective
under the Securities Act (assuming compliance with clause (2)
of Rule 462(b) in the case of the Additional Registration
Statement) and, to the best of such counsel's knowledge, no
stop order suspending its effectiveness has been issued and no
proceedings for that purpose are pending before or contemplated
by the Commission;
(vi) the statements under the captions "____________" in
the Prospectus, insofar as such statements constitute a summary
of the legal matters, documents or proceedings specifically
referred to therein, fairly present all the material
information called for with respect to such legal matters,
documents or proceedings;
(vii) except for the order of the Commission making the
Registration Statement effective and permits and similar
authorizations required under the securities or Blue Sky laws
of certain states, no consent, approval, authorization or other
order of any regulatory body, administrative agency or other
governmental body is legally required for the valid issuance
and sale of [the Securities to the Underwriters as contemplated
by this Agreement or the public offering of the Securities
contemplated by the Prospectus]; and
(viii) the Registration Statement and the Prospectus and
any supplement or amendment thereto (except for financial
statements and other financial and statistical information
therein as to which no opinion need be expressed) comply as to
form in all material respects with the Securities Act.
In addition, Davis Polk & Wardwell will deliver a separate
letter to the effect that such counsel has participated in
conferences with directors, officers and other representatives of the
Company and representatives of the independent public accountants for
the Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein and that part of the Registration Statement that
constitutes the Form T-1 as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed), contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading.
In rendering their opinions above, Davis Polk & Wardwell may
rely as to factual matters on such certificates of the Company's
officers or of governmental officials as they may deem relevant or
necessary for such opinions and as to matters governed by other than
federal or New York law or by the General Corporation Law of Delaware
on opinions of local counsel.
In addition, Mr. Luraschi will deliver a separate letter to
the effect that such counsel has participated in conferences with
directors, officers and other representatives of the Company and
representatives of the independent public accountants for the
Company, at which conferences the contents of the Registration
Statement and related matters were discussed, and, although such
counsel has not independently verified and is not passing upon and
assume no responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, except as
specified, no facts have come to such counsel's attention which lead
such counsel to believe that the Registration Statement (other than
any financial statements or other financial or statistical
information therein and that part of the Registration Statement that
constitutes the Form T-1 as to which no opinion is expressed) at its
effective date contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements contained therein not misleading, or
that the Prospectus as of its date or the Closing Date (other than
any financial statements or other financial or statistical
information therein as to which no opinion is expressed), contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading.
In rendering the opinions above, Mr. Luraschi may rely as to
factual matters on such certificates of the Company's officers or of
governmental officials as he may deem relevant or necessary for such
opinions and as to matters governed by other than federal or New York
law or by the General Corporation Law of Delaware on opinions of
local counsel.
(g) You shall have received on the Closing Date an opinion,
dated the Closing Date, of ___________, counsel for the Underwriters,
as to the matters referred to in clauses (i), (ii), (iii), (vi) (but
only with respect to the statements under the captions "Description
of __________" and "Underwriting") and (viii) of the foregoing
paragraph (f).
With respect to subparagraph (viii) of paragraph (f) above and
the final subparagraph of this paragraph (g), __________ may state
that their opinion and belief is based upon their participation in
the preparation of the Registration Statement and the Prospectus and
any amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the
contents thereof (including documents incorporated therein by
reference), but is without independent check or verification except
as specified.
In addition, Davis Polk & Wardwell will opine to the effect
that such counsel has participated in conferences with officers and
other representatives of the Company and representatives of the
independent public accountants for the Company, at which conferences
the contents of the Registration Statement and related matters were
discussed, and, although such counsel has not independently verified
and is not passing upon and assume no responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement, except as specified, no facts have come to
such counsel's attention which lead such counsel to believe that the
Registration Statement (other than any financial statements or other
financial or statistical information therein and that part of the
Registration Statement that constitutes the Form T-1 as to which no
opinion is expressed) at its effective date contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
contained therein not misleading, or that the Prospectus as of its
date or the Closing Date (other than any financial statements or
other financial or statistical information therein as to which no
opinion is expressed), contained any untrue statement of a material
fact or omitted to state any material fact necessary to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the
Closing Date of Richards, Layton & Finger, special counsel for the
Trust, to the effect that:
(i) the Trust has been duly created and is validly
existing in good standing as a business trust under the
Delaware Act and under the Declaration and the Delaware Act
has the business trust power and authority to conduct its
business as described in the Registration Statement and
Prospectus;
(ii) assuming due authorization, execution and delivery of
the Declaration by the Company and the Trustees, the
Declaration is a legal, valid and binding agreement of the
Company and the Trustees, enforceable against the Company and
the Trustees in accordance with its terms, except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation,
fraudulent conveyance or other similar laws relating to or
affecting the rights and remedies of creditors generally and
(b) principles of equity, including applicable laws relating to
fiduciary duties (regardless of whether considered and applied
in a proceeding in equity or at law);
(iii) under the Declaration and the Delaware Act, the
execution and delivery of this Agreement by the Trust, and the
performance by the Trust of its obligations hereunder, have
been duly authorized by all business trust action on the
part of the Trust;
(iv) the Trust Securities have been duly authorized by
the Declaration and (x) when the Securities are issued in
accordance with the terms of this Agreement and delivered to
and paid for by the Underwriters and (y) the Common Securities
are issued against payment therefor as provided in the
Declaration, such Trust Securities will be duly and validly
issued and, will be fully paid and nonassessable undivided
beneficial interests in the assets of the Trust; the holders
of Trust Securities, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of
Delaware;
(v) under the Declaration and the Delaware Act, the
issuance of the Trust Securities is not subject to preemptive
rights; and
(vi) the statements in the Prospectus under the caption
"_____________________" insofar as such statements constitute a
summary of legal matters or documents referred to therein,
fairly present the information called for with respect to such
legal matters and documents.
In rendering such opinion, such counsel may note that holders of
Trust Securities may be obligated, pursuant to the Declaration, to
(i) provide indemnity and security in connection with and pay taxes
or other governmental charges arising from transfers of certificates
for Trust Securities and the issuance of replacement certificates for
Trust Securities, (ii) provide security and indemnity in connection
with requests of or directions to the Property Trustee to exercise
its rights and remedies under the Declaration and (iii) undertake as
a party litigant to pay costs in any suit for the enforcement of any
right or remedy under the Declaration or against the Property
Trustee, to the extent provided in the Declaration. In rendering
such opinion such counsel may also note that the Company, in its
capacity as Sponsor and not in its capacity as a holder, has
undertaken certain payment obligations as set forth in the
Declaration.
(i) You shall have received a letter on and as of the Closing
Date, in form and substance satisfactory to you, from Deloitte &
Touche, independent public accountants, with respect to the financial
statements and certain financial information contained in the
Registration Statement and the Prospectus and substantially in the
form and substance of the letter delivered to you by Deloitte &
Touche on the date of this Agreement.
(j) The Company and the Trust shall not have failed at or
prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied
with by the Company or the Trust at or prior to the Closing Date.
9. Effective Date of Agreement and Termination. This Agreement
shall become effective upon the later of (i) execution of this Agreement and
(ii) when notification of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the
Closing Date by you by written notice to the Company if any of the following
has occurred: (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any adverse change or
development involving a prospective adverse change in the condition, financial
or otherwise, of the Company, any Principal Subsidiary or the earnings,
affairs, or business prospects of the Company or any Principal Subsidiary,
whether or not arising in the ordinary course of business, which would, in
your reasonable judgment, make it impracticable to market the Securities on
the terms and in the manner contemplated in the Prospectus, (ii) any outbreak
or escalation of hostilities or other national or international calamity or
crisis or material change in economic conditions, if the effect of such
outbreak, escalation, calamity, crisis or change on the financial markets of
the United States or elsewhere would, in your reasonable judgment, make it
impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market System or limitation on prices for
securities on any such exchange or National Market System, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which
in your reasonable judgment materially and adversely affects, or will
materially and adversely affect, the business or operations of the Company,
(v) the declaration of a banking moratorium by either federal or New York
State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which
in your reasonable judgment has a material adverse effect on the financial
markets in the United States.
If on the Closing Date or on an Option Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase the Securities which it or they have agreed to purchase hereunder on
such date and the aggregate Firm Securities or Additional Securities, as the
case may be, which such defaulting Underwriter or Underwriters, as the case
may be, agreed but failed or refused to purchase is not more than one-tenth of
the total number of Securities to be purchased by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion
which the number of Securities set forth opposite its name in Schedule I bears
to the aggregate number of Securities which all the non-defaulting
Underwriters, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Securities which such
defaulting Underwriter or Underwriters, as the case may be, agreed but failed
or refused to purchase on such date; provided that in no event shall the number
of Firm Securities or Additional Securities, as the case may be, which any
Underwriter has agreed to purchase pursuant to Section 2 hereof be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such number
of Firm Securities or Additional Securities, as the case may be, without the
written consent of such Underwriter. If on the Closing Date or on an Option
Closing Date, as the case may be, any Underwriter or Underwriters shall fail
or refuse to purchase Securities and the aggregate number of Firm Securities
or Additional Securities, as the case may be, with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm
Securities to be purchased on such date by all Underwriters in the event of a
default by a Underwriter and arrangements satisfactory to you and the Company
for purchase of such Securities are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter and the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date or on an Option Closing Date, as the
case may be, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of any such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Trust, to AES
Trust, [ ], c/o The AES Corporation, 1001 N. 19th Street,
Arlington, Virginia 22209, Attention: General Counsel; (b) if to the Company,
to The AES Corporation, 1001 N. 19th Street, Arlington, Virginia 22209,
Attention: General Counsel and (C) if to any Underwriter or to you, to you c/o
____________________________, Attention: Syndicate Department, or in any case
to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, its officers
and directors of the Trust, the Trustee and its officers and of the several
Underwriters set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and
payment for the Securities, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of any Underwriter or by or on
behalf of the Company, the officers or directors of the Company or any
controlling person of the Company or by or on behalf of the Trust, the
Trustees or the officers or any controlling person of the Trust, (ii)
acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
If this Agreement shall be terminated by the Underwriters
because of any failure or refusal on the part of the Trust or the Company to
comply with the terms or to fulfill any of the conditions of this Agreement,
the Company agrees to reimburse the several Underwriters for all out-of-pocket
expenses (including the fees and disbursements of counsel) reasonably incurred
by them.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Trust, the
Company, the Underwriters, any controlling persons referred to herein and
their respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under or
by virtue of this Agreement. The term "successors and assigns" shall not
include a purchaser of any of the Securities from any of the several
Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement among the Trust, the Company and the Underwriters.
Very truly yours,
AES TRUST [_______],
a Delaware statutory business trust
By: THE AES CORPORATION,
as Sponsor
By: ____________________________________
Title:
THE AES CORPORATION
By: ____________________________________
Title:
Acting severally on behalf of
itself and the several Underwriters
named above
By: _____________________________
SCHEDULE I
Number of Firm Securities
Underwriters to be Purchased
------------ -------------------------
-------------
Total........................... $
=============
Annex I
Principal Subsidiaries
Ownership Security
Name Interest Interest
---- ----------- ----------
EXHIBIT 4.14
DECLARATION OF TRUST, dated as of November 13, 1996, between
The AES Corporation, a Delaware corporation, as Sponsor, and The First
National Bank of Chicago, not in its individual capacity but solely as trustee
(the "Property Trustee"), First Chicago Delaware Inc., not in its individual
capacity but solely as trustee (the "Delaware Trustee"), and William R.
Luraschi, Willard Hoagland and Barry J. Sharp, each not in his individual
capacity but solely as trustee (the Property Trustee, Delaware Trustee and
each such individual as trustee, collectively the "Trustees"). The Sponsor
and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "AES Trust III",
in which name the Trustees, or the Sponsor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.
2. The Sponsor hereby assigns, transfers, conveys and sets
over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt
of such amount in trust from the Sponsor, which amount shall constitute the
initial trust estate. The Trustees hereby declare that they will hold the
trust estate in trust for the Sponsor. It is the intention of the parties
hereto that the Trust created hereby constitute a business trust under Chapter
38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq. (the
"Business Trust Act"), and that this document constitute the governing
instrument of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Secretary of State of the
State of Delaware in the form attached hereto. The Trust is hereby
established by the Sponsors and the Trustees for the purposes of (i) issuing
preferred securities representing undivided beneficial interests in the assets
of the Trust ("Preferred Securities") in exchange for cash and investing the
proceeds thereof in junior subordinated debentures of the Sponsor, (ii)
issuing and selling common securities representing undivided beneficial
interest in the assets of the Trust to the Sponsor in exchange for cash and
investing the proceeds thereof in additional junior subordinated debentures of
the Sponsor and, (iii) engaging in such other activities as are necessary,
convenient or incidental thereto.
3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party and
substantially in the form included as an exhibit to the 1933 Act Registration
Statement referred to below, to provide for the contemplated operation of the
Trust created hereby and the issuance of the Preferred Securities and Common
Securities referred to therein. Prior to the execution and delivery of such
amended and restated Declaration of Trust, the Trustees shall not have any
duty or obligation hereunder or with respect to the trust estate, except as
otherwise required by applicable law or as may be necessary to obtain prior to
such execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct
the Sponsor, as the sponsor of the Trust, (i) to prepare and file with the
Securities and Exchange Commission (the "Commission") and execute, in each
case on behalf of the Trust, (a) a Registration Statement on Form S-3 (the
"1933 Act Registration Statement") including any pre-effective or
post-effective amendments to such Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities of the Trust and (b) a Registration Statement on Form 8-A (the
"1934 Act Registration Statement") (including all pre-effective and
post-effective amendments thereto) relating to the registration of the
Preferred Securities of the Trust under Section 12(b) of the Securities
Exchange Act of 1934, as amended; (ii) to prepare and file with the New York
Stock Exchange and execute on behalf of the Trust a listing application and
all other applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the New York Stock Exchange; (iii) to prepare and
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of process
and other papers and documents as shall be necessary or desirable to register
the Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable and (iv) to negotiate the terms of and execute on behalf of the
Trust an underwriting agreement among the Trust, the Sponsor and any
underwriter, dealer or agent relating to the Preferred Securities,
substantially in the form included as Exhibit 1.3 to the 1933 Act Registration
Statement. In the event that any filing referred to in clauses (i)-(iii)
above is required by the rules and regulations of the Commission, the New York
Stock Exchange or state securities or blue sky laws, to be executed on behalf
of the Trust by the Trustees, William R. Luraschi, Willard Hoagland and Barry
J. Sharp, in their capacities as Trustees of the Trust, are hereby authorized
and directed to join in any such filing and to execute on behalf of the Trust
any and all of the foregoing, it being understood that The First National Bank
of Chicago and First Chicago Delaware Inc., in their capacities as Trustees
of the Trust, shall not be required to join in any such filing or execute on
behalf of the Trust any such document unless required by the rules and
regulations of the Commission, the New York Stock Exchange or state securities
or blue sky laws. In connection with all of the foregoing, the Sponsor and
each Trustee, solely in its capacity as Trustee of the Trust, hereby
constitutes and appoints Willard Hoagland, Diane Crockett, William R.
Luraschi, Dennis W. Bakke and Barry J. Sharp, and each of them, his, her or
its, as the case may be, true and lawful attorneys-in-fact, and agents, with
full power of substitution and resubstitution, for the Sponsor or such Trustee
and in the Sponsor's or such Trustee's name, place and stead, in any and all
capacities, to sign and file (i) any and all amendments (including
post-effective amendments) to the 1933 Act Registration Statement and the 1934
Act Registration Statement with all exhibits thereto, and other documents in
connection therewith, and (ii) a registration statement, and any and all
amendments thereto, relating thereto filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended with the Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as the Sponsor or such Trustee
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her substitute
or substitutes, shall do or cause to be done by virtue hereof.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be five (5) and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor which may increase
or decrease the number of Trustees; provided, however, that the number of
Trustees shall in no event be less than five (5); and provided, further that
to the extent required by the Business Trust Act, one Trustee shall either be
a natural person who is a resident of the State of Delaware or, if not a
natural person, an entity which has its principal place of business in the
State of Delaware and meets other requirements imposed by applicable law.
Subject to the foregoing, the Sponsor is entitled to appoint or remove without
cause any Trustee at any time. The Trustees may resign upon thirty days prior
notice to the Sponsor.
7. First Chicago Delaware Inc., in its capacity as Trustee,
shall not have any of the powers or duties of the Trustees set forth herein
and shall be a Trustee of the Trust for the sole purpose of satisfying the
requirements of section 3807 of the Business Trust Act.
8. The Trust shall terminate before the issuance of any
Preferred Securities at the election of the Sponsor.
IN WITNESS WHEREOF, the parties hereto have caused this
Declaration of Trust to be duly executed as of the day and year first above
written.
The AES Corporation,
as Sponsor
By: /s/ William J. Luraschi
___________________________
Name: William J. Luraschi
Title: General Counsel and
Secretary
The First National Bank of
Chicago, not in its individual
capacity but solely as
Property Trustee
By: /s/ Richard D. Manella
___________________________
Name: Richard D. Manella
Title: Vice President
First Chicago Delaware Inc.,
not in its individual capacity
but solely as Delaware Trustee
By: /s/ L. Dillard
___________________________
Name: L. Dillard
Title: Vice President
/s/ William R. Luraschi
______________________________
William R. Luraschi,
not in his individual capacity
but solely as Trustee
/s/ Willard Hoagland
_____________________________
Willard Hoagland,
not in his individual capacity
but solely as Trustee
/s/ Barry J. Sharp
______________________________
Barry J. Sharp,
not in his individual capacity
but solely as Trustee
EXHIBIT 4.15
CERTIFICATE OF TRUST
OF
AES TRUST III
THIS Certificate of Trust of AES Trust III (the "Trust"), dated
as of November 13, 1996, is being duly executed and filed by the undersigned,
as trustees, to form a business trust under the Delaware Business Trust Act
(12 Del. Code Section 3801 et seq.).
1. Name. The name of the business trust being formed hereby
is AES Trust III.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the State of
Delaware is First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware
19801.
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
4. Registered Agent. The name and address of the Registered
Agent upon whom process of service may be served is First Chicago Delaware
Inc., 300 King Street, Wilmington, Delaware 19801.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of
the Trust, have executed this Certificate of Trust as of the date first above
written.
FIRST CHICAGO DELAWARE INC.,
AS DELAWARE TRUSTEE
By: /s/ L. Dillard
_____________________________
Name: L. Dillard
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Richard D. Manella
______________________________
Name: Richard D. Manella
Title: Vice President
/s/ William R. Luraschi
______________________________
William R. Luraschi as Trustee
/s/ Willard Hoagland
_____________________________
Willard Hoagland as Trustee
/s/ Barry J. Sharp
_____________________________
Barry J. Sharp as Trustee
EXHIBIT 4.16
THE AES CORPORATION
AND
___________________________
AS PURCHASE CONTRACT AGENT
PURCHASE CONTRACT AGREEMENT
DATED AS OF ___________, ______
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions
Section 1.01. Definitions............................................. 1
Section 1.02. Compliance Certificates and Opinions.................... 8
Section 1.03. Form of Documents Delivered to Agent.................... 9
Section 1.04. Acts of Holders; Record Dates........................... 9
Section 1.05. Notices, Etc., to Agent and the Company................. 11
Section 1.06. Notice to Holders; Waiver............................... 11
Section 1.07. Effect of Headings and Table of Contents................ 12
Section 1.08. Successors and Assigns.................................. 12
Section 1.09. Separability Clause..................................... 12
Section 1.10. Benefits of Agreement................................... 12
Section 1.11. Governing Law........................................... 13
Section 1.12. Legal Holidays.......................................... 13
Section 1.13. Counterparts............................................ 13
Section 1.14. Inspection of Agreement................................. 13
ARTICLE 2
Security Certificate Forms
Section 2.01. Forms of Security Certificates Generally................ 13
Section 2.02. Form of Agent's Certificate of Authentication........... 14
ARTICLE 3
The Securities
Section 3.01. Title and Terms; Denominations.......................... 15
Section 3.02. Rights and Obligations Evidenced by the Security
Certificates ........................................... 15
Section 3.03. Execution, Authentication, Delivery and Dating.......... 15
Section 3.04. Temporary Security Certificates......................... 16
Section 3.05. Registration; Registration of Transfer and Exchange..... 17
Section 3.06. Mutilated, Destroyed, Lost and Stolen Security
Certificates............................................ 19
Section 3.07. Persons Deemed Owners................................... 20
Section 3.08. Cancellation............................................ 21
Section 3.09. Securities Not Separable................................ 22
Section 3.10. No Consent to Assumption................................ 22
ARTICLE 4
The Treasury Notes
Section 4.01. Payment of Interest; Interest Rights Preserved.......... 22
Section 4.02. Transfer of Treasury Notes upon Occurrence of
Termination Event..................................... 23
ARTICLE 5
The Purchase Contracts
Section 5.01. Purchase of Shares of Common Stock...................... 24
Section 5.02. Yield Enhancement Payments.............................. 26
Section 5.03. Deferral of Payment Dates for Yield Enhancement Payment. 26
Section 5.04. Payment of Purchase Price............................... 28
Section 5.05. Issuance of Shares of Common Stock...................... 28
Section 5.06. Adjustment of Settlement Rate........................... 29
Section 5.07. Notice of Adjustments and Certain Other Events.......... 35
Section 5.08. Termination Event; Notice............................... 35
Section 5.09. Early Settlement........................................ 36
Section 5.10. No Fractional Shares.................................... 38
Section 5.11. Charges and Taxes....................................... 38
ARTICLE 6
Remedies
Section 6.01. Unconditional Right of Holders to Receive Yield
Enhancement .......................................... 39
Section 6.02. Restoration of Rights and Remedies...................... 39
Section 6.03. Rights and Remedies Cumulative.......................... 39
Section 6.04. Rights and Remedies Cumulative.......................... 39
Section 6.05. Undertaking for Costs................................... 40
Section 6.06. Waiver of Stay or Extension Laws........................ 40
ARTICLE 7
The Agent
Section 7.01. Certain Duties and Responsibilities..................... 41
Section 7.02. Notice of Default....................................... 41
Section 7.03. Certain Rights of Agent................................. 42
Section 7.04. Not Responsible for Recitals or Issuance of Securities.. 43
Section 7.05. May Hold Securities..................................... 43
Section 7.06. Money Held in Custody................................... 43
Section 7.07. Compensation and Reimbursement.......................... 43
Section 7.08. Corporate Agent Required; Eligibility................... 44
Section 7.09. Resignation and Removal; Appointment of Successor....... 44
Section 7.10. Acceptance of Appointment by Successor.................. 46
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business ............................................. 46
Section 7.12. Preservation of Information; Communications to Holders.. 47
Section 7.13. No Obligations of Agent................................. 47
Section 7.14. Tax Compliance.......................................... 47
ARTICLE 8
Supplemental Agreements
Section 8.01. Supplemental Agreements Without Consent of Holders...... 48
Section 8.02. Supplemental Agreements with Consent of Holders......... 49
Section 8.03. Execution of Supplemental Agreements.................... 50
Section 8.04. Effect of Supplemental Agreements....................... 50
Section 8.05. Reference to Supplemental Agreements.................... 50
ARTICLE 9
Consolidation, Merger, Sale or Conveyance
Section 9.01. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions.............. 50
Section 9.02. Rights and Duties of Successor Corporation.............. 51
Section 9.03. Opinion of Counsel to Agent............................. 51
ARTICLE 10
Covenants
Section 10.01. Performance under Purchase Contracts................... 52
Section 10.02. Maintenance of Office or Agency........................ 52
Section 10.03. Company to Reserve Common Stock........................ 53
Section 10.04. Covenants as to Common Stock........................... 53
Section 10.05. Statements of Officers of the Company as Default....... 53
PURCHASE CONTRACT AGREEMENT, dated as of ____________, _____,
between The AES Corporation, a Delaware corporation (the "Company"), and The
First National Bank of Chicago, a national banking association, acting as
purchase contract agent for the Holders of Securities from time to time (the
"Agent").
RECITALS
The Company has duly authorized the execution and delivery of
this Agreement and the Security Certificates evidencing the Securities.
All things necessary to make the Company's obligations under
the Securities, when the Security Certificates are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Agent,
as in this Agreement provided, the valid obligations of the Company, and to
constitute these presents a valid agreement of the Company, in accordance with
its terms, have been done.
W I T N E S S E T H:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually agreed as follows:
Definitions and Other Provisions of General Application
ARTICLE 1
Definitions
Section 1.01. Definitions.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular; and
(2) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" when used with respect to any Holder, has the meaning
specified in Section 1.04.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means the Person named as the "Agent" in the first
paragraph of this instrument until a successor Agent shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Agent" shall mean the Person who is then the Agent hereunder.
"Agreement" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section
5.01.
"Bankruptcy Code" means Title 11 of the United States Code, or
any other law of the United States that from time to time provides a uniform
system of bankruptcy laws.
"Board of Directors" means the board of directors of the Company
or a duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification and
delivered to the Agent.
"Business Day" means any day that is not a Saturday, Sunday or
a day on which the NYSE or banking institutions or trust companies in The City
of New York are authorized or obligated by law or executive order to be closed.
"Closing Price" has the meaning specified in Section 5.01.
"Collateral Agent" means _______________, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have
become such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such pursuant
to the applicable provision of this Agreement, and thereafter "Company" shall
mean such successor.
"Corporate Trust Office" means the principal corporate trust
office of the Agent at which, at any particular time, its corporate trust
business shall be administered; which office at the date hereof is located at
_________________ ____________________. Attention: _____________, except that
for purposes of Section 10.02, such term shall mean the office or agency of
the Agent in the Borough of Manhattan, the City of New York, which office at
the date hereof is located at 14 Wall Street, Eighth Floor, New York, New York
10005.
"Current Market Price" has the meaning specified in Section
5.06(a)(8).
"Deferred Yield Enhancement Payments" has the meaning specified
in Section 5.03.
"Depositary" means a clearing agency registered under the
Exchange Act that is designated to act as Depositary for the Securities as
contemplated by Section 3.05.
"Early Settlement" has the meaning specified in Section 5.09(a).
"Early Settlement Amount" has the meaning specified in Section
5.09(a).
"Early Settlement Date" has the meaning specified in Section
5.09(a).
"Early Settlement Rate" has the meaning specified in Section
5.09(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
"Excess Treasury Notes" has the meaning specified in Section
4.02.
"Expiration Date" has the meaning specified in Section 1.04.
"Expiration Time" has the meaning specified in Section
5.06(a)(6).
"Final Settlement Date" means _______________, ______.
"Final Settlement Fund" has the meaning specified in Section
5.05.
"Global Security Certificate" means a Security Certificate that
evidences all or part of the Securities and is registered in the name of a
Depositary or a nominee thereof.
"Holder," when used with respect to a Security Certificate (or
a Security), means a Person in whose name the Security evidenced by such
Security Certificate (or the Security Certificate evidencing such Security) is
registered in the Security Register, subject to Section 3.07.
"Issuer Order" or "Issuer Request" means a written order or
request signed in the name of the Company by its Chairman of the Board, any
Vice Chairman, its President or a Vice President and by its Treasurer, an
Assistant
Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Agent.
"NYSE" has the meaning specified in Section 5.01.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, any Vice Chairman of the Board, the President or any
Vice President and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary of the Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company and who
shall be reasonably acceptable to the Agent.
"Outstanding Securities" means, as of the date of
determination, all Securities evidenced by then Outstanding Security
Certificates, except:
(i) If a Termination Event has occurred, Securities for
which the underlying Treasury Notes have been theretofore deposited with the
Agent in trust for the Holders of such Securities; and
(ii) On and after the applicable Early Settlement Date,
Securities as to which the Holder has elected to effect Early Termination of
the related Purchase Contracts;
provided, however, that in determining whether the Holders of the requisite
number of Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
Affiliate of the Company shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Agent shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Securities which the Agent knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Agent the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any Affiliate of the Company.
"Outstanding Security Certificates" means, as of the date of
determination, all Security Certificates theretofore authenticated, executed
and delivered under this Agreement, except:
(i) Security Certificates theretofore cancelled by the
Agent or delivered to the Agent for cancellation; and
(ii) Security Certificates in exchange for or in lieu of
which other Security Certificates have been authenticated, executed on behalf
of the Holder and delivered pursuant to this Agreement, other than any such
Security Certificate in respect of which there shall have been presented to
the Agent proof satisfactory to it that such Security Certificate is held by a
bona fide purchaser in whose hands the Securities evidenced by such Security
Certificate are valid obligations of the Company.
"Payment Date" means each __________ and ___________, commencing
_______________, ______.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" means the pledge under the Pledge Agreement of the
Treasury Notes constituting a part of the Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the
date hereof, among the Company, the Collateral Agent and the Agent, on its own
behalf and as attorney-in-fact for the Holders from time to time of the
Securities.
"Predecessor Security Certificate" of any particular Security
Certificate means every previous Security Certificate evidencing all or a
portion of the rights and obligations of the Holder under the Securities
evidenced thereby; and, for the purposes of this definition, any Security
Certificate authenticated and delivered under Section 3.06 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security Certificate shall
be deemed to evidence the same rights and obligations of the Holder as the
mutilated, destroyed, lost or stolen Security Certificate.
"Purchase Contract," when used with respect to any Security,
means the contract obligating the Company to sell and the Holder of such
Security to purchase Common Stock on the terms and subject to the conditions
set forth in Article Five hereof.
"Purchased Shares" has the meaning specified in Section
5.06(a)(6).
"Record Date" for the interest and Yield Enhancement Payments
payable on any Payment Date means [, as to any Global Security Certificate,]
the Business Day next preceding such Payment Date, and as to any other
Security Certificate, the 15th day of the month preceding such Payment Date.
"Reorganization Event" has the meaning specified in Section
5.06(b).
"Responsible Officer," when used with respect to the Agent,
means any officer of the Agent assigned by the Agent to administer its
corporate trust matters.
"Security" means the collective rights and obligations of a
Holder of a Security Certificate in respect of Treasury Notes with a principal
amount equal to the Stated Amount, subject to the Pledge thereof, and a
Purchase Contract.
"Security Certificate" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Securities
specified on such certificate.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.05.
"Settlement Rate" has the meaning specified in Section 5.01.
"Stated Amount" means $__________.
"Termination Date" means the date, if any, on which a
Termination Event occurs.
"Termination Event" means the occurrence of any of the
following events: (i) at any time on or prior to the Final Settlement Date, a
judgment, decree or order by a court having jurisdiction in the premises shall
have been entered granting relief under the Bankruptcy Code, adjudicating the
Company to be insolvent, or approving as properly filed a petition seeking
reorganization or liquidation of the Company under the Bankruptcy Code or any
other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Final
Settlement Date, such decree or order shall have continued undischarged and
unstayed for a period of 60 days; or (ii) a judgment, decree or order of a
court having jurisdiction in the premises for the appointment of a receiver 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, shall
have been entered, and, unless such judgment, decree or order shall have been
entered within 6Q days prior to the Final Settlement Date, such judgment,
decree or order shall have continued undischarged and unstayed for a period of
60 days, or (iii) at any time on or prior to the Final Settlement Date the
Company shall file a petition for relief under the Bankruptcy Code, or shall
consent to the filing of a bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking reorganization or liquidation under the
United States 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 of a receiver 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, or shall admit in writing its inability to pay
its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in
Section 5.01.
"TIA" means the Trust Indenture Act of 1939, as amended, or any
successor statute.
"Trading Day" has the meaning specified in Section 5.01.
"Treasury Notes" means % United States Treasury Notes due
__________, ______.
"Underwriting Agreement" means the Underwriting Agreement dated
__________, _____ between the Company and ____________________
__________________________________________________________, as representatives
of the several Underwriters named therein.
"Vice President" means any vice president, whether or not
designated by a number or a word or words added before or after the title
"vice president."
"Yield Enhancement Payment" means the fee payable by the
Company in respect of each Purchase Contract, equal to ______% per annum of
the Stated Amount, accruing from _______________, _____, computed on the basis
of the actual number of days elapsed in a year of 365 or 366 days, as the case
may be, plus any Deferred Yield Enhancement Payments accrued pursuant to
Section 5.03, except that on the initial Payment Date the Yield Enhancement
Payment shall be reduced by an amount equal to accrued interest to
_______________, _____, on the Treasury Note constituting a part of a
Security.
Section 1.02. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon
any application or request by the Company to the Agent to take any action
under any provision of this Agreement, the Company shall furnish to the Agent
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Agreement 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, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(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 each such individual,
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, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some matters
and one or more other such Persons as to other matters, and any such Person
may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be
consolidated and form one instrument.
Section 1.04. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Agent and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and (subject to
Section 7.01) conclusive in favor of the Agent and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Agent deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security
Certificate evidencing such Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Agent or the Company
in reliance thereon, whether or not notation of such action is made upon
such Security Certificate.
(e) The Company may set any day as a record date for the
purpose of determining the Holders of Outstanding Securities entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Agreement to
be given, made or taken by Holders of Securities. If any record date is
set pursuant to this paragraph, the Holders of Outstanding Securities on
such record date, and no other Holders, shall be entitled to take the
relevant action, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders of
the requisite number of Outstanding Securities on such record date.
Nothing in this paragraph shall be construed to prevent the Company from
setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be
cancelled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders of the
requisite number of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph,
the Company, at its own expense, shall cause notice of such record date,
the proposed action by Holders and the applicable Expiration Date to be
given to the Agent in writing and to each Holder of Securities in the
manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section,
the Company may designate any date as the "Expiration Date" and from time to
time may change the Expiration Date to any earlier or later day; provided that
no such change shall be effective unless notice of the proposed new Expiration
Date is given to the Agent in writing, and to each Holder of Securities in the
manner set forth in Section 1.06, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the Company shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
Section 1.05. Notices, Etc., to Agent and the Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and personally
delivered or mailed, first-class postage prepaid, to the Agent at
____________________________________, Attention: _____________, or at any
other address previously furnished in writing by the Agent to the Holders
and the Company, or
(2) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and personally
delivered or mailed, first-class postage prepaid, to the Company at 1001
North 19th Street, Arlington, Virginia 22209, Attention: Treasurer, or at
any other address previously furnished in writing to the Agent by the
Company.
Section 1.06. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Where this
Agreement provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Agent, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon
such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Agent
shall constitute a sufficient notification for every purpose hereunder.
Section 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction
hereof.
Section 1.08. Successors and Assigns.
All covenants and agreements in this Agreement by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 1.09. Separability Clause.
In case any provision in this Agreement or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof and thereof shall not in any
way be affected or impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefits or any legal or equitable
right, remedy or claim under this Agreement. The Holders from time to time
shall be beneficiaries of this Agreement and shall be bound by all of the
terms and conditions hereof and of the Securities evidenced by their Security
Certificates by their acceptance of delivery thereof.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Payment Date, any Early Settlement Date
or the Final Settlement Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or of the Securities)
payment in respect of interest on Treasury Notes or Yield Enhancement Payments
shall not be made, Purchase Contracts shall not be performed and Early
Settlement shall not be effected on such date, but such payments shall be
made, or the Purchase Contracts shall be performed or Early Settlement
effected, as applicable, on the next succeeding Business Day with the same
force and effect as if made on such Payment Date, Early Settlement Date or
Final Settlement Date, as the case may be; provided, that no interest shall
accrue or be payable by the Company or any Holder for the period from and
after any such Payment Date, Early Settlement Date or Final Settlement Date,
as the case may be.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable
times at the Corporate Trust Office for inspection by any Holder.
ARTICLE 2
Security Certificate Forms
Section 2.01. Forms of Security Certificates Generally.
The Security Certificates (including the form of Purchase
Contracts forming part of the Securities evidenced thereby) shall be in
substantially the form set forth in Exhibit A hereto, with such letters,
numbers or other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as may be required by
the rules of any securities exchange on which the Securities are listed or
Depositary therefor, or as may, consistently herewith, be determined by the
officers of the Company executing such Security Certificates, as evidenced by
their execution of the Security Certificates.
The definitive Security Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing the
Security Certificates, consistent with the provisions of this Agreement, as
evidenced by their execution thereof.
Every Global Security Certificate authenticated, executed on
behalf of the Holders and delivered hereunder shall bear a legend in
substantially the following form:
THIS SECURITY CERTIFICATE IS A GLOBAL SECURITY CERTIFICATE
WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
SECURITY CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY
CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS SECURITY CERTIFICATE IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH
DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE PURCHASE CONTRACT AGREEMENT.
Section 2.02. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the
Securities shall be in substantially the form set forth on the form of the
Security Certificates.
ARTICLE 3
The Securities
Section 3.01. Title and Terms; Denominations.
The aggregate number of Securities evidenced by Security
Certificates authenticated, executed on behalf of the Holders and delivered
hereunder is limited to _______________ (subject to increase up to a maximum
of to the extent the over-allotment option of the underwriters under the
Purchase Agreement is exercised), except for Security Certificates
authenticated, executed and delivered upon registration of transfer of, in
exchange for, or in lieu of, other Security Certificates pursuant to Section
3.04, 3.05, 3.06, 5.09 or 8.05.
The Security Certificates shall be issuable only in registered
form and only in denominations of a single Security and any integral multiple
thereof.
Section 3.02. Rights and Obligations Evidenced by the Security
Certificates.
Each Security Certificate shall evidence the number of
Securities specified therein, with each such Security representing the
ownership by the Holder thereof of Treasury Notes with a principal amount
equal to the Stated Amount, subject to the Pledge of such Treasury Notes by
such Holder pursuant to the Pledge Agreement, and the rights and obligations
of the Holder under one Purchase Contract. Pursuant to the Pledge Agreement,
dated as of the date hereof, the Agent as attorney-in-fact for, and on behalf
of, the Holder shall pledge the Treasury Notes to the Collateral Agent and
grant to the Collateral Agent a security interest in the right, title, and
interest of such Holders in the Treasury Notes, for the benefit of the
Company, to secure the obligation of the Holders under the Purchase Contracts
to purchase the Common Stock of the Company. Prior to the purchase, if any, of
shares of Common Stock under the Purchase Contracts, the Securities shall not
entitle the Holders to any of the rights of a holder of shares of Common
Stock, including, without limitation, the right to vote or receive any
dividends or other payments or to consent or to receive notice as stockholders
in respect of the meetings of stockholders or for the election of directors of
the Company or for any other matter, or any other rights whatsoever as
stockholders of the Company, except to the extent otherwise expressly provided
in this Agreement.
Section 3.03. Execution, Authentication, Delivery and Dating.
Upon the execution and delivery of this Agreement, and at any
time and from time to time thereafter, the Company may deliver Security
Certificates executed by the Company to the Agent for authentication,
execution on behalf of the Holders and delivery, together with its Issuer
Order for authentication of such Security Certificates, and the Agent in
accordance with such Issuer Order shall authenticate, execute on behalf of the
Holder and deliver such Security Certificates.
The Security Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Vice Chairman of the Board, its
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Security Certificates may be manual
or facsimile.
Security Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and
delivery of such Security Certificates or did not hold such offices at the
date of such Security Certificates.
No Purchase Contract underlying a Security evidenced by a
Security Certificate shall be valid until such Security Certificate has been
executed on behalf of the Holder by the manual signature of an authorized
signatory of the Agent, as such Holder's attorney-in-fact. Such signature by
an authorized signatory of the Agent shall be conclusive evidence that the
Holder of such Security Certificate has entered into the Purchase Contracts
underlying the Securities evidenced by such Security Certificate.
Each Security Certificate shall be dated the date of its
authentication.
No Security Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose unless there appears
on such Security Certificate a certificate of authentication substantially in
the form provided for herein executed by an authorized signatory of the Agent
by manual signature, and such certificate upon any Security Certificate shall
be conclusive evidence, and the only evidence, that such Security Certificate
has been duly authenticated and delivered hereunder.
Section 3.04. Temporary Security Certificates.
Pending the preparation of definitive Security Certificates,
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holders, and deliver, in lieu of such
definitive Security Certificates, temporary Security Certificates which are in
substantially the form set forth in Exhibit A hereto, with such letters,
numbers or other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as may be required by
the rules of any securities exchange on which the Securities are listed, or as
may, consistently herewith, be determined by the officers of the Company
executing such Security Certificates, as evidenced by their execution of the
Security Certificates.
If temporary Security Certificates are issued, the Company will
cause definitive Security Certificates to be prepared without unreasonable
delay. After the preparation of definitive Security Certificates, the
temporary Security Certificates shall be exchangeable for definitive Security
Certificates upon surrender of the temporary Security Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Security Certificates, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the Holder, and deliver in
exchange therefor, one or more definitive Security Certificates of authorized
denominations and evidencing a like number of Securities as the temporary
Security Certificate or Security Certificates so surrendered. Until so
exchanged, the temporary Security Certificates shall in all respects evidence
the same benefits and the same obligations with respect to the Securities
evidenced thereby as definitive Security Certificates.
Section 3.05. Registration; Registration of Transfer and
Exchange.
The Agent shall keep at the Corporate Trust Office a register
(the register maintained in such office being herein referred to as the
"Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Agent shall provide for the registration of Security
Certificates and of transfers of Security Certificates (the Agent, in such
capacity, the "Security Registrar").
Upon surrender for registration of transfer of any Security
Certificate at the Corporate Trust Office, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf of
the designated transferee or transferees, and deliver, in the name of the
designated transferee or transferees, one or more new Security Certificates of
any authorized denominations and evidencing a like number of Securities.
At the option of the Holder, Security Certificates may be
exchanged for other Security Certificates, of any authorized denominations and
evidencing a like number of Securities, upon surrender of the Security
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Security Certificates are so surrendered for exchange, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holder, and deliver the Security Certificates which the Holder
making the exchange is entitled to receive.
All Security Certificates issued upon any registration of
transfer or exchange of a Security Certificate shall evidence the ownership of
the same number of Securities and be entitled to the same benefits and subject
to the same obligations, under this Agreement as the Securities evidenced by
the Security Certificate surrendered upon such registration of transfer or
exchange.
Every Security Certificate presented or surrendered for
registration of transfer or for exchange shall (if so required by the Agent)
be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Agent duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of a Security Certificate, but the Company and the Agent
may require payment from the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Security Certificates, other than any
exchanges pursuant to Sections 3.06 and 8.05 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder and deliver any
Security Certificate presented or surrendered for registration of transfer or
for exchange on or after the Final Settlement Date or the Termination Date. In
lieu of delivery of a new Security Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of
appropriate registration or transfer instructions from such Holder, the Agent
shall (i) if the Final Settlement Date has occurred, deliver the shares of
Common Stock issuable in respect of the Purchase Contracts forming a part of
the Securities evidenced by such Security Certificate, or (ii) if a
Termination Event shall have occurred prior to the Final Settlement Date,
transfer the principal amount of the Treasury Notes evidenced thereby, in each
case subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.
The provisions of Clauses (1), (2), (3) and (4) below shall
apply only to Global Security Certificates:
(1) Each Global Security Certificate authenticated and
executed on behalf of the Holders under this Agreement shall be
registered in the name of the Depositary designated for such
Global Security Certificate or a nominee thereof and delivered to
such Depositary or a nominee thereof or custodian therefor, and
each such Global Security Certificate shall constitute a single
Security Certificate for all purposes of this Agreement.
(2) Notwithstanding any other provision in this Agreement,
no Global Security Certificate may be exchanged in whole or in part
for Security Certificates registered, and no transfer of a Global
Security Certificate in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global
Security Certificate or a nominee thereof unless (A) such
Depositary (i) has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Security
Certificate or (ii) has ceased to be a clearing agency registered
under the Exchange Act or (B) there shall have occurred and be
continuing a default by the Company in respect to its obligations
under one or more Purchase Contracts.
(3) Subject to Clause (2) above, any exchange of a Global
Security Certificate for other Security Certificates may be made
in whole or in part, and all Security Certificates issued in
exchange for a Global Security Certificate or any portion thereof
shall be registered in such names as the Depositary for such
Global Security Certificate shall direct.
(4) Every Security Certificate authenticated and delivered
upon registration of transfer of, or in exchange for or in lieu
of, a Global Security Certificate or any portion thereof, whether
pursuant to this Section, Section 3.04, 3.06, 5.09 or 8.05 or
otherwise, shall be authenticated, executed on behalf of the
Holders and delivered in the form of, and shall be, a Global
Security Certificate, unless such Security Certificate is
registered in the name of a Person other than the Depositary for
such Global Security Certificate or a nominee thereof.
Section 3.06. Mutilated, Destroyed, Lost and Stolen Security
Certificates.
If any mutilated Security Certificate is surrendered to the
Agent, the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, a new Security Certificate, evidencing the same number of Securities
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security Certificate, and (ii) such security or indemnity as may be required
by them to save each of them and any agent of any of them harmless, then, in
the absence of notice to the Company or the Agent that such Security
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holder, and deliver to the Holder, in lieu of any such
destroyed, lost or stolen Security Certificate, a new Security Certificate,
evidencing the same number of Securities and bearing a number not
contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder, and deliver to the
Holder, a Security Certificate on or after the Final Settlement Date or the
Termination Date. In lieu of delivery of a new Security Certificate, upon
satisfaction of the applicable conditions specified above in this Section and
receipt of appropriate registration or transfer instructions from such Holder,
the Agent shall (i) if the Final Settlement Date has occurred, deliver the
shares of Common Stock issuable in respect of the Purchase Contracts forming a
part of the Securities evidenced by such Security Certificate, or (ii) if a
Termination Event shall have occurred prior to the Final Settlement Date,
transfer the principal amount of the Treasury Notes evidenced thereby, in each
case subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.
Upon the issuance of any new Security Certificate under this
Section, the Company and the Agent may require the payment by the Holder 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 Agent) connected therewith.
Every new Security Certificate issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security Certificate shall constitute
an original additional contractual obligation of the Company and of the
Holder, whether or not the destroyed, lost or stolen Security Certificate
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits and be subject to all the obligations of this Agreement equally and
proportionately with any and all other Security Certificates delivered
hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or settlement of mutilated, destroyed, lost or stolen Security
Certificates.
Section 3.07. Persons Deemed Owners.
Prior to due presentment of a Security Certificate for
registration of transfer, the Company and the Agent, and any agent of the
Company or the Agent, may treat the Person in whose name such Security
Certificate is registered as the owner of the Securities evidenced thereby,
for the purpose of receiving payments of interest on the Treasury Notes,
receiving payments of Yield Enhancement Payments, performance of the Purchase
Contracts and for all other purposes whatsoever, whether or not the payment of
interest on the Treasury Notes or any Yield Enhancement Payment payable in
respect of the Purchase Contracts constituting a part of the Securities
evidenced thereby shall be overdue and notwithstanding any notice to the
contrary, and neither the Company nor the Agent, nor any agent of the Company
or the Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global
Security Certificate, nothing herein shall prevent the Company, the Agent or
any agent of the Company or the Agent, from giving effect to any written
certification, proxy or other authorization furnished by any Depositary (or
its nominee), as a Holder, with respect to such Global Security Certificate or
impair, as between such Depositary and owners of beneficial interests in such
Global Security Certificate, the operation of customary practices governing
the exercise of rights of such Depositary (or its nominee) as Holder of such
Global Security Certificate.
Section 3.08. Cancellation.
All Security Certificates surrendered for delivery of shares of
Common Stock on or after the Final Settlement Date, transfer of Treasury Notes
after the occurrence of a Termination Event or pursuant to an Early Settlement
or registration of transfer or exchange shall, if surrendered to any Person
other than the Agent, be delivered to the Agent and, if not already cancelled,
shall be promptly cancelled by it. The Company may at any time deliver to the
Agent for cancellation any Security Certificates previously authenticated,
executed and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Security Certificates so delivered shall, upon
Issuer Order, be promptly cancelled by the Agent. No Security Certificates
shall be authenticated, executed on behalf of the Holder and delivered in lieu
of or in exchange for any Security Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Security Certificates held by the Agent shall be disposed of as directed by
Issuer Order.
If the Company or any Affiliate of the Company shall acquire
any Security Certificate, such acquisition shall not operate as a cancellation
of such Security Certificate unless and until such Security Certificate is
delivered to the Agent cancelled or for cancellation.
Section 3.09. Securities Not Separable.
Notwithstanding anything contained herein or in the Security
Certificates to the contrary, for so long as the Purchase Contract comprising
a portion of a Security remains in effect, such Security shall not be
separable into its constituent parts, for purposes of transfer or exchange of
such Security, and the rights and obligations of the Holder of such Security
in respect of the Treasury Notes and Purchase Contracts comprising such
Security may be acquired, and may be transferred and exchanged, only as a
Security. Other than a Security Certificate evidencing a Security, no Holder
of a Security, or any transferee thereof, shall be entitled to receive a
certificate evidencing the ownership of Treasury Notes or the rights and
obligations of the Holder and the Company under a Purchase Contract for so
long as the Purchase Contract underlying the Security remains in effect.
Section 3.10. No Consent to Assumption.
Each Holder of a Security, by acceptance thereof, shall be
deemed expressly to have withheld any consent to the assumption under Section
365 of the Bankruptcy Code or otherwise, of the Purchase Contract by the
Company or its trustee in the event that the Company becomes the debtor under
the Bankruptcy Code.
ARTICLE 4
The Treasury Notes
Section 4.01. Payment of Interest; Interest Rights Preserved.
Interest on any Treasury Note which is paid on any Payment Date
shall, subject to receipt thereof by the Agent from the Collateral Agent as
provided by the terms of the Pledge Agreement, be paid to the Person in whose
name the Security Certificate (or one or more Predecessor Security
Certificates) of which such Treasury Note is a part is registered at the close
of business on the Record Date next preceding such Payment Date.
Each Security Certificate evidencing Treasury Notes delivered
under this Agreement upon registration of transfer of or in exchange for or in
lieu of any other Security Certificate shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by the Treasury Notes
underlying such other Security Certificate.
In the case of any Security with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date after any Record Date and on or prior to the next succeeding
Payment Date, interest on the Treasury Notes underlying such Security
otherwise payable on such Payment Date shall be payable on such Payment Date
notwithstanding such Early Settlement, and such interest shall, subject to
receipt thereof by the Agent, be paid to the Person in whose name the Security
Certificate (or one or more Predecessor Security Certificates) is registered
at the close of business on the Record Date. Except as otherwise expressly
provided in the immediately preceding sentence, in the case of any Security
with respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date, interest on the related Treasury Notes
that would otherwise be payable after the Early Settlement Date shall not be
payable hereunder to the Holder of such Security.
Section 4.02. Transfer of Treasury Notes upon Occurrence of
Termination Event.
Upon the occurrence of a Termination Event and the transfer to
the Agent of the Treasury Notes underlying such Securities pursuant to the
terms of the Pledge Agreement, the Agent shall request transfer instructions
with respect to such Treasury Notes from each Holder of Securities by written
request mailed to such Holder at his address as it appears in the Security
Register, in respect of the Treasury Notes underlying the Security Certificate
held by such Holder. Upon surrender to the Agent of a Security Certificate
with such transfer instructions in proper form for transfer of the Treasury
Notes by Federal Reserve Bank-Wire or other appropriate procedure, the Agent
shall transfer the Treasury Notes evidenced by such Security Certificate to
such Holder in accordance with such instructions. If a Security Certificate is
not duly surrendered to the Agent with appropriate transfer instructions, the
Agent shall hold the Treasury Notes evidenced by such Security Certificate as
custodian for the Holder of such Security Certificate.
Treasury Notes shall be transferred only in denominations of
$1,000 and integral multiples thereof. As promptly as practicable following
the occurrence of a Termination Event, the Agent shall determine the excess of
(i) the aggregate principal amount of Treasury Notes underlying the
Outstanding Securities over (ii) the aggregate principal amount of Treasury
Notes in denominations of $1,000 and integral multiples thereof transferrable
to Holders of record on the date of such Termination Event (such excess being
herein referred to as the "Excess Treasury Notes"). As soon as practicable
after transfer to the Agent of the Treasury Notes underlying the Outstanding
Securities as provided in the Pledge Agreement, the Agent shall sell the
Excess Treasury Notes to or through one or more U.S. Government securities
dealers at then prevailing prices. The Agent shall deduct from the proceeds of
such sales all commissions and other out-of-pocket transaction costs incurred
in connection with such sales of Excess Treasury Notes and, until the net
proceeds of such sale or sales have been distributed to Holders of the
Securities, the Agent shall hold such proceeds as custodian for the Holders of
Securities. Such proceeds shall be held by the Agent uninvested without
liability to any Person for interest or other compensation thereon. Each
Holder shall be entitled to receive a portion, if any, of such net proceeds in
lieu of Treasury Notes with a principal amount of less than $1,000 determined
by multiplying the aggregate amount of such net proceeds by a fraction, the
numerator of which is the fraction of $1,000 in principal amount of Treasury
Notes to which such Holder would otherwise be entitled (after taking into
account all Securities then held by such Holder) and the denominator of which
is the aggregate principal amount of Excess Treasury Notes.
ARTICLE 5
The Purchase Contracts
Section 5.01. Purchase of Shares of Common Stock.
Each Purchase Contract shall obligate the Holder of the related
Security to purchase, and the Company to sell, on the Final Settlement Date at
a price equal to the Stated Amount, a number of shares of Common Stock equal
to the Settlement Rate, unless, on or prior to the Final Settlement Date,
there shall have occurred a Termination Event or an Early Settlement with
respect to the Security of which such Purchase Contract is a part. The
"Settlement Rate" is equal to (a) if the Applicable Market Value (as defined
below) is greater than $___________ (the "Threshold Appreciation Price"),
_____________ of a share of Common Stock per Purchase Contract, (b) if the
Applicable Market Value is less than or equal to the Threshold Appreciation
Price but is greater than the Stated Amount, a fractional share of Common
Stock per Purchase Contract equal to the Stated Amount divided by the
Applicable Market Value (rounded upward or downward to the nearest 1/l0,000th
of a share) and (c) if the Applicable Market Value is less than or equal to
the Stated Amount, one share of Common Stock per Purchase Contract, in each
case subject to adjustment as provided in Section 5.06. As provided in Section
5.10, no fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts.
The "Applicable Market Value" means the average of the Closing
Prices per share of Common Stock on each of the twenty consecutive Trading
Days ending on the second Trading Day immediately preceding the Final
Settlement Date. The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, or if the Common Stock is not so
listed on a United States national or regional securities exchange, as
reported by The Nasdaq Stock Market, or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or
similar organization, or, if such bid price is not available, the market
value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Company. A "Trading Day" means a day on which the Common Stock (A) is
not suspended from trading on any national or regional securities exchange
or association or over-the-counter market at the close of business and (B)
has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
Each Holder of a Security Certificate evidencing Securities, by
his acceptance thereof, authorizes the Agent to enter into and perform the
related Purchase Contracts on his behalf as his attorney-in-fact, agrees to be
bound by the terms and provisions thereof, covenants and agrees to perform his
obligations under such Purchase Contracts, consents to the provisions hereof,
irrevocably authorizes the Agent as his attorney-in-fact to enter into and
perform the Pledge Agreement on his behalf as his attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Treasury Notes
underlying such Security Certificate pursuant to the Pledge Agreement;
provided that upon an Event of Termination the rights of the Holder of such
Security under the Purchase Contract may be enforced without regard to any
other rights or obligations. Each Holder of a Security, by his acceptance
thereof, further covenants and agrees, that, to the extent and in the manner
provided in Section 5.04 and the Pledge Agreement, but subject to the terms
thereof, payments in respect of principal of the Treasury Notes on the Final
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and
such Holder shall acquire no right, title or interest in such payments.
Upon registration of transfer of a Security Certificate
evidencing Purchase Contracts, the transferee shall be bound (without the
necessity of any other action on the part of such transferee), under the terms
of this Agreement, the Purchase Contracts evidenced thereby and the Pledge
Agreement and the transferor shall be released from the obligations under the
Purchase Contracts evidenced by the Security Certificates so transferred. The
Company covenants and agrees, and each Holder of a Security Certificate, by
his acceptance thereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
Section 5.02. Yield Enhancement Payments.
Subject to Section 5.03, the Company shall pay, on each Payment
Date, the Yield Enhancement Payments payable in respect of each Purchase
Contract to the Person in whose name the Security Certificate (or one or more
Predecessor Security Certificates) evidencing such Purchase Contract is
registered at the close of business on the Record Date next preceding such
Payment Date. The Yield Enhancement Payment will be payable at the office of
the Agent in The City of New York maintained for that purpose or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto at such address as it appears on the Security Register.
Each Security Certificate delivered under this Agreement upon
registration of transfer of or in exchange for or in lieu of any other
Security Certificate shall carry the rights to Yield Enhancement Payments
accrued and unpaid, and to accrue, which were carried by the Purchase
Contracts evidenced by such other Security Certificate.
[In the case of any Security with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date after any Record Date and on or prior to the next succeeding
Payment Date, Yield Enhancement Payments otherwise payable on such Payment
Date shall be payable on such Payment Date notwithstanding such Early
Settlement, and such Yield Enhancement Payments shall be paid to the Person in
whose name the Security Certificate evidencing such Security (or one or more
Predecessor Security Certificates) is registered at the close of business on
such Record Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Security with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, Yield Enhancement Payments that would otherwise be payable
after the Early Settlement Date with respect to the Purchase Contract
underlying such Security shall not be payable.]
The Company's obligations with respect to Yield Enhancement
Payments are subordinate and junior in right of payment to all liabilities of
the Company and pari passu with the most senior preferred stock issued from
time to time, if any, by the Company.
Section 5.03. Deferral of Payment Dates for Yield Enhancement
Payment.
The Company shall have the right, at any time prior to the
Final Settlement Date, to defer the payment of any or all of the Yield
Enhancement Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) at least ten
Business Days prior to the earlier of (i) the next succeeding Payment Date or
(ii) the date the Company is required to give notice of the Record Date or
Payment Date with respect to payment of such Yield Enhancement Payment to the
New York Stock Exchange or other applicable self-regulatory organization or to
Holders of the Securities, but in any event not less than two Business Days
prior to such Record Date. Any Yield Enhancement Payments so deferred shall
bear additional Yield Enhancement Payments thereon at the rate of _____% per
annum (computed on the basis of the actual number of days elapsed in a year of
365 or 366 days, as the case may be), compounding on each succeeding Payment
Date, until paid in full (such deferred installments of Yield Enhancement
Payments together with the additional Yield Enhancement Payments accrued
thereon, are referred to herein as the "Deferred Yield Enhancement Payments").
Deferred Yield Enhancement Payments shall be due on the next succeeding
Payment Date except to the extent that payment is deferred pursuant to this
Section. No Yield Enhancement Payments may be deferred to a date that is after
the Final Settlement Date or, with respect to any particular Purchase
Contract, Early Settlement thereof.
In the event that the Company elects to defer the payment of
Yield Enhancement Payments on the Purchase Contracts until the Final
Settlement Date, each holder will receive on the Final Settlement Date, in
lieu of a cash payment, a number of shares of Common Stock (in addition to a
number of shares of Common Stock equal to the Settlement Rate) equal to (x)
the aggregate amount of
Deferred Yield Enhancement Payments payable to a Holder divided
by (y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by the
Company with respect to the payment of Deferred Yield Enhancement Payments on
the Final Settlement Date. In lieu of fractional shares otherwise issuable
with respect to such payment of Deferred Yield Enhancement Payments, the
Holder will be entitled to receive an amount in cash as provided in Section
5.10.
In the event the Company exercises its option to defer the
payment of Yield Enhancement Payments, then (a) the Company shall not declare
or pay dividends on, make distributions with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock (other than (i) purchase or acquisitions of shares of Common Stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security requiring the Company to purchase shares
of Common Stock, (ii) as a result of a reclassification of the Company's
capital stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock or (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing), (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company that rank pari passu with or junior to such Yield Enhancement Payments
and (c) the Company shall not make any guarantee payments with respect to the
foregoing.
Section 5.04. Payment of Purchase Price.
The purchase price for the shares of Common Stock purchased
pursuant to a Purchase Contract, shall be paid by application of payments
received by the Company on the Final Settlement Date from the Collateral Agent
pursuant to the Pledge Agreement in respect of the principal of the Treasury
Notes Pledged to secure the obligations of the relevant Holder under such
Purchase Contract. Such application shall satisfy in full the obligations
under such Purchase Contract of the Holder of the Security of which such
Purchase Contract is a part. The Company shall not be obligated to issue any
shares of Common Stock in respect of a Purchase Contract or deliver any
certificates therefor to the Holder unless it shall have received payment in
full of the aggregate purchase price for the shares of Common Stock to be
purchased thereunder in the manner herein set forth.
Section 5.05. Issuance of Shares of Common Stock.
Unless a Termination Event shall have occurred on or prior to
the Final Settlement Date, on the Final Settlement Date, upon its receipt of
payment in full of the purchase price for the shares of Common Stock purchased
by the Holders pursuant to the foregoing provisions of this Article, and in
payment of Deferred Yield Enhancement Payments, if any, owed by the Company to
the Holders and subject to Section 5.06(b), the Company shall issue and
deposit with the Agent, for the benefit of the Holders of the Outstanding
Securities, one or more certificates representing the shares of Common Stock
registered in the name of the Agent (or its nominee) as custodian for the
Holders (such certificates for shares of Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Final Settlement Fund") to which the Holders are entitled hereunder.
Subject to the foregoing, upon surrender of a Security Certificate to the
Agent on or after the Final Settlement Date, together with settlement
instructions thereon duly completed and executed, the Holder of such Security
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article Five (after
taking into account all Securities then held by such Holder) together with
cash in lieu of fractional shares as provided in Section 5.10 and any
dividends or distributions with respect to such shares constituting part of
the Final Settlement Fund, but without any interest thereon, and the Security
Certificate so surrendered shall forthwith be cancelled. Such shares shall be
registered in the name of the Holder or the Holder's designee as specified in
the settlement instructions on the Security Certificate. If any shares of
Common Stock issued in respect of a Purchase Contract and in payment of any
Deferred Yield Enhancement Payments are to be registered to a Person other
than the Person in whose name the Security Certificate evidencing such
Purchase Contract is registered, no such registration shall be made unless the
Person requesting such registration has paid any transfer and other taxes
required by reason of such registration in a name other than that of the
registered Holder of the Security Certificate evidencing such Purchase
Contract or has established to the satisfaction of the Company that such tax
either has been paid or is not payable.
Section 5.06. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on any class of Common Stock of the Company in Common Stock, the
Settlement Rate in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be increased by dividing such Settlement
Rate by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or other
distribution, such increase to become effective immediately after the opening
of business on the day following the date fixed for such determination. For
the purposes of this paragraph (1), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not
pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants
to all holders of its Common Stock (not being available on an equivalent
basis to Holders of the Securities upon settlement of the Purchase
Contracts underlying such Securities) entitling them, for a period expiring
within 45 days after the record date for the determination of stockholders
entitled to receive such rights, options or warrants, to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price per share of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights, options or
warrants (other than pursuant to a dividend reinvestment plan), the
Settlement Rate in effect at the opening of business on the day following
the date fixed for such determination shall be increased by dividing such
Settlement Rate by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately
after the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), 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 shall not issue any such rights, options or
warrants in respect of shares of Common Stock held in the treasury of the
Company.
(3) In case outstanding shares of Common Stock shall be
subdivided or split into a greater number of shares of Common Stock, the
Settlement Rate in effect at the opening of business on the day following the
day upon which such subdivision or split becomes effective shall be
proportionately increased, and, conversely, in case outstanding shares of
Common Stock shall each be combined into a smaller number of shares of Common
Stock, the Settlement Rate in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day
following the day upon which such subdivision, split or combination becomes
effective.
(4) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness or
assets (including securities, but excluding any rights or warrants referred to
in paragraph (2) of this Section, any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in paragraph
(1) of this Section), the Settlement Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution filed with the Agent)
of the portion of the assets or evidences of indebtedness so distributed
applicable to one share of Common Stock and the denominator shall all 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 date fixed for the determination of stockholders entitled to receive such
distribution. In any case in which this paragraph (4) is applicable, paragraph
(2) of this Section shall not be applicable.
(5) In case the Company shall, (I) by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash that is
distributed in a Reorganization Event to which Section 5.06(b) applies or as
part of a distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (II) the aggregate amount of any
other distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such distribution
and in respect of which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made and (III) the aggregate of any
cash plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board Resolution)
of consideration payable in respect of any tender or exchange offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of the
distribution described in clause (I) above and in respect of which no
adjustment pursuant to this paragraph (5) or paragraph (6) of this Section has
been made, exceeds 15% of the product of the Current Market Price per share of
the Common Stock on the date for the determination of holders of shares of
Common Stock entitled to receive such distribution times the number of shares
of Common Stock outstanding on such date, then, and in each such case,
immediately after the close of business on such date for determination, the
Settlement Rate shall be increased so that the same shall equal the rate
determined by dividing the Settlement Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the Current Market Price per share of the Common Stock on
the date fixed for such determination less an amount equal to the quotient of
(x) the combined amount distributed or payable in the transactions described
in clauses (I), (II) and (III) above and (y) the number of shares of Common
Stock outstanding on such date for determination and (ii) the denominator of
which shall be equal to the Current Market Price per share of the Common Stock
on such date for determination.
(6) In case (I) a tender or exchange offer made by the Company or
any subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance
(up to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair market value as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (II) the
aggregate of the cash plus the fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (III) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash within the 12 months preceding the expiration of such
tender or exchange offer and in respect of which no adjustment pursuant to
paragraph (5) of this Section or this paragraph (6) has been made, exceeds 15%
of the product of the Current Market Price per share of the Common Stock as of
the last time (the "Expiration Time") tenders could have been made pursuant to
such tender or exchange offer (as it may be amended) times the number of
shares of Common Stock outstanding (including any tendered shares) on the
Expiration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Settlement
Rate shall be adjusted so that the same shall equal the rate determined by
dividing the Settlement Rate immediately prior to the close of business on the
date of the Expiration Time by a fraction (i) the numerator of which shall be
equal to (A) the product of (I) the Current Market Price per share of the
Common Stock on the date of the Expiration Time and (II) the number of shares
of Common Stock outstanding (including any tendered shares) on the Expiration
Time less (B) the amount of cash plus the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
transactions described in clauses (I), (II) and (III) above (assuming in the
case of clause (I) the acceptance, up to any maximum specified in the terms of
the tender or exchange offer, of Purchased Shares), and (ii) the denominator
of which shall be equal to the product of (A) the Current Market Price per
share of the Common Stock as of the Expiration Time and (B) the number of
shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not
withdrawn as of the Expiration Time (the shares deemed so accepted, up to any
such maximum, being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.06(b) applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and the "date fixed for such determination"
within the meaning of paragraph (4) of this Section), and (b) a subdivision,
split or combination, as the case may be, of the number of shares of Common
Stock outstanding immediately prior to such reclassification into the number
of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision or split becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which
such subdivision, split or combination becomes effective" within the meaning
of paragraph (3) of this Section).
(8) The "Current Market Price" per share of Common Stock on any
day means the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex date" with respect to the issuance or distribution
requiring such computation. For purposes of this paragraph, the term "ex
date", when used with respect to any issuance or distribution, shall mean the
first date on which the Common Stock trades regular way on such exchange or in
such market without the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to
the nearest 1/l0,000th of a share of Common Stock (or if there is not a nearest
1/l0,000th of a share to the next lower 1/l0,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require
an increase or decrease of at least one percent therein; provided, however,
that any adjustments which by reason of this subparagraph are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. If an adjustment is made to the Settlement Rate pursuant to
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.06(a),
an adjustment shall also be made to the Applicable Market Value solely to
determine which of clauses (a), (b) or (c) of the definition of Settlement
Rate in Section 5.01 will apply on the Final Settlement Date. Such adjustment
shall be made by multiplying the Applicable Market Value by a fraction of
which the numerator shall be the Settlement Rate immediately after such
adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of
this Section 5.06(a) and the denominator shall be the Settlement Rate
immediately before such adjustment.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, 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.
(b) Adjustment for Consolidation, Merger or Other Reorganization
Event. In the event of (i) any consolidation or merger of the Company, with or
into another Person (other than a merger or consolidation in which the Company
is the continuing corporation and in which the Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of the Company or another corporation), (ii) any
sale, transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety, (iii) any statutory
exchange of securities of the Company with another Person (other than in
connection with a merger or acquisition) or (iv) any liquidation, dissolution
or winding up of the Company other than as a result of or after the occurrence
of a Termination Event (any such event, a "Reorganization Event"), the
Settlement Rate will be adjusted to provide that each Holder of Securities
will receive on the Final Settlement Date with respect to each Purchase
Contract forming a part thereof, the kind and amount of securities, cash and
other property receivable upon such Reorganization Event by a Holder of the
number of shares of Common Stock issuable on account of each Purchase Contract
if the Final Settlement Date had occurred immediately prior to such
Reorganization Event, assuming such Holder of Common Stock is not a Person
with which the Company consolidated or into which the Company merged or which
merged into the Company or to which such sale or transfer was made, as the
case may be ("Constituent Person"), or an Affiliate of a constituent Person,
and failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
Reorganization Event (provided that if the kind or amount of securities, cash
and other property receivable upon such Reorganization Event is not the same
for each share of Common Stock held immediately prior to such Reorganization
Event by other than a constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
Reorganization Event by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the non-electing shares).
In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of
the Company or, in the event of a liquidation or dissolution of the Company,
the Company or a liquidating trust created in connection therewith, shall
execute and deliver to the Agent an agreement supplemental hereto providing
that the Holders of each Outstanding Security shall have the rights provided
by this Section 5.06. Such supplemental agreement shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions of this
Section shall similarly apply to successive Reorganization Events.
Section 5.07. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided,
the Company shall:
(i) forthwith compute the adjusted Settlement Rate in
accordance with Section 5.06 and prepare and transmit to the
Agent an Officers' Certificate setting forth the Settlement Rate,
the method of calculation thereof in reasonable detail, and the
facts requiring such adjustment and upon which such adjustment is
based; and
(ii) within 10 Business Days following the occurrence of an
event that permits or requires an adjustment to the Settlement
Rate pursuant to Section 5.06 (or if the Company is not aware of
such occurrence, as soon as practicable after becoming so aware),
provide a written notice to the Holders of the Securities of the
occurrence of such event and a statement in reasonable detail
setting forth the method by which the adjustment to the
Settlement Rate was determined and setting forth the adjusted
Settlement Rate.
(b) The Agent shall not at any time be under any duty or
responsibility to any holder of Securities to determine whether any facts
exist which may require any adjustment of the Settlement Rate, or with respect
to the nature or extent or calculation of any such adjustment when made, or
with respect to the method employed in making the same. The Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at the
time be issued or delivered with respect to any Purchase Contract; and the
Agent makes no representation with respect thereto. The Agent shall not be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock pursuant to a Purchase Contract or to comply with any
of the duties, responsibilities or covenants of the Company contained in this
Article.
Section 5.08. Termination Event; Notice.
The Purchase Contracts and the obligations and rights of the
Company and the Holders thereunder, including, without limitation, the rights
of the Holders to receive and the obligation of the Company to pay any Yield
Enhancement Payment, shall immediately and automatically terminate, without
the necessity of any notice or action by any Holder, the Agent or the Company,
if, on or prior to the Final Settlement Date, a Termination Event shall have
occurred. Upon and after the occurrence of a Termination Event, the Securities
shall thereafter represent the right to receive the Treasury Notes forming a
part of such Securities in accordance with the provisions of Section 4.02 and
the Pledge Agreement. Upon the occurrence of a Termination Event, the Company
shall promptly but in no event after two business days thereafter give written
notice to the Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the Security Register.
Each Holder of Securities, by acceptance hereof, expressly
withholds any consent to the assumption (i.e., affirmance) of the Purchase
Contracts by the Company or its trustee in the event that the Company becomes
the subject of a case under the Bankruptcy Code.
Section 5.09. Early Settlement.
(a) Subject to and upon compliance with the provisions of this
Section 5.09 at the option of the Holder thereof, any Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $__________
or an integral multiple thereof may be settled early ("Early Settlement") as
provided herein. In order to exercise the right to effect Early Settlement
with respect to any Purchase Contracts, the Holder of the Security Certificate
evidencing such Purchase Contracts shall deliver such Security Certificate to
the Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early on the reverse
thereof duly completed and accompanied by payment in the form of a certified
or cashier's check payable to the order of the Company in immediately
available funds in an amount (the "Early Settlement Amount") equal to (i) the
product of (A) the Stated Amount times (B) the number of Purchase Contracts
with respect to which the Holder has elected to effect Early Settlement [plus
(ii) if such delivery is made with respect to any Purchase Contracts during
the period from the close of business on any Record Date next preceding any
Payment Date to the opening of business on such Payment Date, an amount equal
to the sum of (x) the Yield Enhancement Payments payable on such Payment Date
with respect to such Purchase Contracts plus (y) the interest on the related
Treasury Notes payable on such Payment Date. Except as provided in the
immediately preceding sentence and subject to the second to last paragraph of
Section 5.02, no payment or adjustment shall be made upon Early Settlement of
any Purchase Contract on account of any Yield Enhancement Payments accrued on
such Purchase Contract or on account of any dividends on the Common Stock
issued upon such Early Settlement]. If the foregoing requirements are first
satisfied with respect to Purchase Contracts underlying any Securities at or
prior to 5:00 p.m., New York City time, on a Business Day, such day shall be
the "Early Settlement Date" with respect to such Securities and if such
requirements are first satisfied after 5:00 p.m., New York City time, on a
Business Day or on a day that is not a Business Day, the "Early Settlement
Date" with respect to such Securities shall be the next succeeding Business
Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of
the related Securities, the Company shall issue, and the Holder shall be
entitled to receive, a number of shares of Common Stock on account of each
Purchase Contract as to which Early Settlement is effected equal to the
Early Settlement Rate; provided, however, that upon the Early Settlement of
the Purchase Contracts, the Holder of such related Securities will forfeit
the right to receive any Deferred Yield Enhancement Payments. The Early
Settlement Rate shall initially be equal to __________ and shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted. As promptly as practicable after Early Settlement of Purchase
Contracts in accordance with the provisions of this Section 5.09, the
Company shall issue and shall deliver to the Agent at the Corporate Trust
Office a certificate or certificates for the full number of shares of
Common Stock issuable upon such Early Settlement together with payment in
lieu of any fraction of a share, as provided in Section 5.10.
(c) The Company shall cause the shares of Common Stock
issuable, and Treasury Notes deliverable, upon Early Settlement of Purchase
Contracts to be issued and delivered' in the case of such shares of Common
Stock, and released from the Pledge by the Collateral Agent and
transferred, in the case of such Treasury Notes, to the Agent, for delivery
to the Holder thereof or its designee, no later than the third Business Day
after the applicable Early Settlement Date.
(d) Upon Early Settlement of any Purchase Contracts, and
subject to receipt thereof from the Company or the Collateral Agent, as
applicable, the Agent shall, in accordance with the instructions provided
by the Holder thereof on the applicable form of Election to Settle Early on
the reverse of the Security Certificate evidencing the related Securities'
(i) transfer the Treasury Notes forming a part of such Securities and (ii)
deliver a certificate or certificates for the full number of shares of
Common Stock issuable upon such Early Settlement together with payment in
lieu of any fraction of a share, as provided in Section 5.10.
(e) In the event that Early Settlement is effected with
respect to Purchase Contracts underlying less than all the Securities
evidenced by a Security Certificate, upon such Early Settlement the Company
shall execute and the Agent shall authenticate, countersign and deliver to
the Holder thereof, at the expense of the Company, a Security- Certificate
evidencing the Securities as to which Early Settlement was not effected.
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional shares of
Common Stock shall be issued or delivered upon settlement on the Final
Settlement Date or upon Early Settlement of any Purchase Contracts or with
respect to the payment of Deferred Yield Enhancement Payments, if any, on the
Final Settlement Date. If Security Certificates evidencing more than one
Purchase Contract shall be surrendered for settlement at one time by the same
Holder, the number of full shares of Common Stock which shall be delivered
upon settlement shall be computed on the basis of the aggregate number of
Purchase Contracts evidenced by the Security Certificates so surrendered.
Instead of any fractional share of Common Stock which would otherwise be
deliverable upon settlement of any Purchase Contracts on the Final Settlement
Date or upon Early Settlement or with respect to the payment of any Deferred
Yield Enhancement Payments, the Company, through the Agent, shall make a cash
payment in respect of such fractional interest in an amount equal to the value
of such fractional shares at the Closing Price per share on the Trading Day
immediately preceding the Final Settlement Date or the related Early
Settlement Date, respectively. The Company shall provide the Agent from time
to time with sufficient funds to permit the Agent to make all cash payments
required by this Section 5.10 in a timely manner.
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes
attributable to the initial issuance and delivery of the shares of Common
Stock pursuant to the Purchase Contracts and in payment of any Deferred Yield
Enhancement Payments; provided, however, that the Company shall not be
required to pay any such tax or taxes which may be payable in respect of any
exchange of or substitution for a Security Certificate evidencing a Purchase
Contract or any issuance of a share of Common Stock in a name other than that
of the registered Holder of a Security Certificate surrendered in respect of
the Purchase Contracts evidenced thereby, other than in the name of the Agent,
as custodian for such Holder, and the Company shall not be required to issue
or deliver such share certificates or Security Certificates unless or until
the Person or Persons requesting the transfer or issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
ARTICLE 6
Remedies
Section 6.01. Unconditional Right of Holders to Receive Yield
Enhancement.
The Holder of any Security shall have the right, which is
absolute and unconditional (subject to the right of the Company to defer
payment thereof pursuant to Section 5.03 and subject to the forfeiture of any
Deferred Yield Enhancement Payments upon Early Settlement pursuant to Section
5.09(b)), to receive payment of each installment of the Yield Enhancement
Payment with respect to the Purchase Contract constituting a part of such
Security on the respective Payment Date for such Security and to purchase
Common Stock pursuant to such Purchase Contract and, in each such case, to
institute suit for the enforcement of any such payment and right to purchase
Common Stock, and such rights shall not be impaired without the consent of
such Holder.
Section 6.02. Restoration of Rights and Remedies.
If any Holder of Securities has instituted any proceeding to
enforce any right or remedy under this Agreement and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company and such Holder shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of such Holder shall continue as though no such proceeding had been
instituted.
Section 6.03. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement of
mutilated, destroyed, lost or stolen Security Certificates in the last
paragraph of Section 3.06, no right or remedy herein conferred upon or
reserved to the Holders of Securities is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.04. Rights and Remedies Cumulative.
No delay or omission of any Holder to exercise any right or
remedy shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
Section 6.05. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of any
Security by his acceptance of the Security Certificate evidencing such
Security 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
Agreement, or in any suit against the Agent for any action taken, suffered or
omitted by it as Agent, 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; provided
that the provisions of this Section shall not apply to any suit instituted by
the Company, to any suit instituted by the Agent, to any suit instituted by any
Holder of Securities, or group of Holders, holding in the aggregate more than
10% of the Outstanding Securities, or to any suit instituted by any Holder for
the enforcement of the payment of the interest on any Treasury Note or the
Yield Enhancement Payment on any Purchase Contract on or after the respective
Payment Date therefor constituting a part of the Securities held by such
Holder, or for enforcement of the right to purchase shares of Common Stock
under the Purchase Contracts constituting a part of the Securities held by
such Holder.
Section 6.06. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may affect
the covenants or the performance of this Agreement; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Agent or the Holders,
but will suffer and permit the execution of every such power as though no such
law had been enacted.
ARTICLE 7
The Agent
Section 7.01. Certain Duties and Responsibilities.
(a)(1) The Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically
set forth in this Agreement and the Pledge Agreement, and no
implied covenants or obligations shall be read into this
Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its part,
the Agent may, with respect to the Securities, conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions
furnished to the Agent and conforming to the requirements of this
Agreement, but in the case of any certificates or opinions which
by any provision hereof are specifically required to be furnished
to the Agent, the Agent shall be under a duty to examine the same
to determine whether or not they conform to the requirements of
this Agreement.
(b) No provision of this Agreement shall be construed to relieve
the Agent from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be
proved that the Agent was negligent in ascertaining the pertinent
facts; and
(3) no provision of this Agreement shall require the Agent
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers' if adequate
indemnity is not provided to it.
(c) Whether or not therein expressly so provided, every provision
of this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
Section 7.02. Notice of Default.
Within 30 days after the occurrence of any default by the
Company hereunder, of which a Responsible Officer of the Agent has actual
knowledge, the Agent shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Security Register, notice of such
default hereunder, unless such default shall have been cured or waived.
Section 7.03. Certain Rights of Agent.
Subject to the provisions of Section 7.01:
(a) the Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Agent (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate of the Company;
(d) the Agent may consult with counsel 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, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document,
but the Agent, in its discretion, may make reasonable further inquiry or
investigation into such facts or matters related to the issuance of the
Securities and the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Agent shall determine to
make such further inquiry or investigation, it shall be entitled to examine
the books, records and promises of the Company, personally or by agent or
attorney; and
(f) the Agent may execute any of its powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys or
an Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder.
Section 7.04. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Security Certificates
shall be taken as the statements of the Company and the Agent assumes no
responsibility for their accuracy. The Agent makes no representations as to
the validity or sufficiency of either this Agreement or of the Securities, or
of the Pledge Agreement or the Pledge. The Agent shall not be accountable for
the use or application by the Company of the proceeds in respect of the
Purchase Contracts.
Section 7.05. May Hold Securities.
Any Security Registrar or any other agent of the Company, or
the Agent and its Affiliates, in their individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with the
Company, the Collateral Agent or any other Person with the same rights it
would have if it were not Security Registrar or such other agent, or the Agent.
Section 7.06. Money Held in Custody.
Money held by the Agent in custody hereunder need not be
segregated from the other funds except to the extent required by law. The
Agent shall be under no obligation to invest or pay interest on any money
received by it hereunder except as otherwise agreed in writing with the
Company.
Section 7.07. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time reasonable
compensation for all services rendered by it hereunder;
(2) except as otherwise expressly provided herein, to
reimburse the Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Agent in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(3) to indemnify the Agent and any predecessor Agent
for, and to hold each of them harmless against, any loss,
liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the
acceptance or administration of its duties hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Section 7.08. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall
be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having (or
being a member of a bank holding company having) a combined capital and
surplus of at least $50,000,000, subject to supervision or examination by
Federal or State authority and having a Corporate Trust Office in the
Borough of Manhattan, The City of New York, if there be such a corporation
in the Borough of Manhattan, The City of New York qualified and eligible
under this Article and willing to act on reasonable terms. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of said 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. If at any time
the Agent shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 7.09. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Agent and no appointment
of a successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice
thereof to the Company 60 days prior to the effective date of such
resignation. If the instrument of acceptance by a successor Agent required by
Section 7.10 shall not have been delivered to the Agent within 30 days after
the giving of such notice of resignation, the resigning Agent may petition any
court of competent jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders
of a majority in number of the Outstanding Securities delivered to the
Agent and the Company.
(d) if at any time
(1) the Agent fails to comply with Section 310(b) of the
TIA, as if the Agent were an indenture trustee under an
indenture qualified under the TIA, after written request
therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(2) the Agent shall cease to be eligible under Section
7.08 and shall fail to resign after written request therefor
by the Company or by any such Holder, or
(3) the Agent shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the
Agent or of its property shall be appointed or any public
officer shall take charge or control of the Agent or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Agent for any
cause, the Company, by a Board Resolution, shall promptly appoint a
successor Agent and shall comply with the applicable requirements of
Section 7.10. If no successor Agent shall have been so appointed by the
Company and accepted appointment in the manner required by Section 7.10,
any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Agent.
(f) The Company shall give, or shall cause such successor Agent
to give, notice of each resignation and each removal of the Agent and each
appointment of a successor Agent by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders of Securities as their names
and addresses appear in the Security Register. Each notice shall include the
name of the successor Agent and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent,
every such successor Agent so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Agent an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Agent
shall become effective and such successor Agent, without any further act, deed
or conveyance, shall become vested with all the rights, powers, agencies and
duties of the retiring Agent; but, on the request of the Company or the
successor Agent, such retiring Agent shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Agent all the
rights, powers and trusts of the retiring Agent and shall duly assign,
transfer and deliver to such successor Agent all property and money held by
such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Agent all such rights, powers and agencies
referred to in paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at
the time of such acceptance such successor Agent shall be qualified and
eligible under this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession
to Business.
Any corporation into which the Agent 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 Agent shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Agent, shall be the successor of the Agent hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Security Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Agent then in office, any successor by merger, conversion or consolidation to
such Agent may adopt such authentication and execution and deliver the
Security Certificates so authenticated and executed with the same effect as if
such successor Agent had itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to
Holders.
(a) The Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received by the
Agent in its capacity as Security Registrar.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Agent, and furnish to the Agent
reasonable proof that each such applicant has owned a Security 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 with respect to their rights under this Agreement or under the
Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Agent
shall, within five Business Days after the receipt of such application,
afford such applicants access to the information preserved at the time by
the Agent in accordance with Section 7.12(a).
(d) Every Holder of Securities, by receiving and holding the
Security Certificates evidencing the same, agrees with the Company and the
Agent that none of the Company, the Agent nor any agent of any of them shall
be held accountable by reason of the disclosure of any such information as to
the names and addresses of the Holders in accordance with Section 7.12(b),
regardless of the source from which such information was derived.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement,
the Agent assumes no obligations and shall not be subject to any liability
under this Agreement, the Pledge Agreement or any Purchase Contract in
respect of the obligations of the Holder of any Security thereunder. The
Company agrees, and each Holder of a Security Certificate, by his
acceptance thereof, shall be deemed to have agreed, that the Agent's
execution of the Security Certificates on behalf of the Holders shall be
solely as agent and attorney-in-fact for the Holders, and that the Agent
shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article Five
hereof.
Section 7.14. Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the
Company, will comply with all applicable certification, information
reporting and withholding (including "backup" withholding) requirements
imposed by applicable tax laws, regulations or administrative practice with
respect to (i) any payments made with respect to the Securities or (ii) the
issuance, delivery, holding, transfer, redemption or exercise of rights
under the Securities. Such compliance shall include, without limitation,
the preparation and timely filing of required returns and the timely
payment of all amounts required to be withheld to the appropriate taxing
authority or its designated agent.
(b) The Agent shall comply with any direction received from the
Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 7.01(a)(2) hereof.
(c) The Agent shall maintain all appropriate records
documenting compliance with such requirements, and shall make such records
available, on written request, to the Company or to its authorized
representative within a reasonable period of time after receipt of such
request.
ARTICLE 8
Supplemental Agreements
Section 8.01. Supplemental Agreements Without Consent of
Holders.
Without the consent of any Holders, the Company and the Agent,
at any time and from time to time, may enter into one or more agreements
supplemental hereto, in form satisfactory to the Company and the Agent, for
any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the
covenants of the Company herein and in the Security
Certificates; or
(2) to add to the covenants of the Company for the benefit
of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to evidence and provide for the acceptance of
appointment hereunder by a successor Agent; or
(4) to make provision with respect to the rights of Holders
pursuant to the requirements of Section 5.06(b); or
(5) except as provided for in Section 5.06, to cure any
ambiguity, to correct or supplement any provisions herein
which may be inconsistent with any other provisions herein,
or to make any other provisions with respect to such matters
or questions arising under this Agreement, provided such
action shall not adversely affect the interests of the
Holders.
Section 8.02. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% of the
Outstanding Securities, by Act of said Holders delivered to the Company and
the Agent, the Company when authorized by a Board Resolution, and the Agent
may enter into an agreement or agreements supplemental hereto for the
purpose of modifying in any manner the terms of the Securities, or the
provisions of this Agreement or the rights of the Holders in respect of the
Securities; provided, however, that no such supplemental agreement shall,
without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change any Payment Date;
(2) change the amount or type of Treasury Notes underlying
a Security, impair the right of the Holder of any Security to
receive interest payments on the underlying Treasury Notes or
otherwise adversely affect the Holder's rights in or to such
Treasury Notes;
(3) reduce any Yield Enhancement Payment or any Deferred
Yield Enhancement Payment, or change any place where, or the
coin or currency in which, any Yield Enhancement Payment is
payable;
(4) impair the right to institute suit for the enforcement
of any Purchase Contract;
(5) reduce the number of shares of Common Stock to be
purchased pursuant to any Purchase Contract, increase the
price to purchase shares of Common Stock upon settlement of
any Purchase Contract, change the Final Settlement Date or
otherwise adversely affect the Holder's rights under any
Purchase Contract; or
(6) reduce the percentage of the Outstanding Securities the
consent of whose Holders is required for any such supplemental
agreement.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental agreement,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 8.03. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by,
any supplemental agreement permitted by this Article or the modifications
thereby of the agencies created by this Agreement, the Agent 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 execution of such supplemental
agreement is authorized or permitted by this Agreement. The Agent may, but
shall not be obligated to, enter into any such supplemental agreement which
affects the Agent's own rights, duties or immunities under this Agreement or
otherwise.
Section 8.04. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this
Article, this Agreement shall be modified in accordance therewith, and such
supplemental agreement shall form a part of this Agreement for all purposes;
and every Holder of Security Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered hereunder shall
be bound thereby.
Section 8.05. Reference to Supplemental Agreements.
Security Certificates authenticated, executed on behalf of the
Holders and delivered after the execution of any supplemental agreement
pursuant to this Article may, and shall if required by the Agent, bear a
notation in form approved by the Agent as to any matter provided for in such
supplemental agreement. If the Company shall so determine, new Security
Certificates so modified as to conform, in the opinion of the Agent and the
Company, to any such supplemental agreement may be prepared and executed by
the Company and authenticated, executed on behalf of the Holders and delivered
by the Agent in exchange for Outstanding Security Certificates.
ARTICLE 9
Consolidation, Merger, Sale or Conveyance
Section 9.01. Covenant Not to Merge, Consolidate, Sell or
Convey Property Except Under Certain Conditions.
The Company covenants that it will not merge or consolidate
with any other Person or sell, assign, transfer, lease or convey all or
substantially all of its properties and assets to any Person or group of
affiliated Persons in one transaction or a series of related transactions,
unless (i) either the Company shall be the continuing corporation, or the
successor (if other than the Company) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof or
the District of Columbia and such corporation shall expressly assume all the
obligations of the Company under the Purchase Contracts, this Agreement and
the Pledge Agreement by one or more supplemental agreements in form
satisfactory to the Agent and the Collateral Agent, executed and delivered to
the Agent and the Collateral Agent by such corporation, and (ii) the Company
or such successor corporation' as the case may be, shall not, immediately
after such merger or consolidation, or such sale, assignment, transfer, lease
or conveyance, be in default in the performance of any covenant or condition
hereunder, under any of the Securities or under the Pledge Agreement.
Section 9.02. Rights and Duties For Successor Corporation.
In case of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance and upon any such assumption by the successor
corporation in accordance with Section 9.01, such successor corporation shall
succeed to and be substituted for the Company with the same effect as if it
had been named herein as the Company. Such successor corporation thereupon may
cause to be signed, and may issue either in its own name or in the name of The
AES Corporation, any or all of the Security Certificates evidencing Securities
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Agent; and, upon the order of such successor corporation,
instead of the Company, and subject to all the terms, conditions and
limitations in this Agreement prescribed, the Agent shall authenticate and
execute on behalf of the Holders and deliver any Security Certificates which
previously shall have been signed and delivered by the officers of the Company
to the Agent for authentication and execution, and any Security Certificate
evidencing Securities which such successor corporation thereafter shall cause
to be signed and delivered to the Agent for that purpose. All the Security
Certificates so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Security Certificates theretofore or
thereafter issued in accordance with the terms of this Agreement as though all
of such Security Certificates had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance such change in phraseology and form (but not in
substance) may be made in the Security Certificates evidencing Securities
thereafter to be issued as may be appropriate.
Section 9.03. Opinion of Counsel to Agent.
The Agent, subject to Sections 7.01 and 7.03, shall receive an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, assignment, transfer, lease or conveyance, and any such assumption,
complies with the provisions of this Article and that all conditions precedent
to the consummation of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance have been met.
ARTICLE 10
Covenants
Section 10.01. Performance under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders
from time to time of the Securities that it will duly and punctually perform
its obligations under the Purchase Contracts in accordance with the terms of
the Purchase Contracts and this Agreement.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City
of New York an office or agency where Security Certificates may be
presented or surrendered for acquisition of shares of Common Stock upon
settlement or Early Settlement and for transfer of Treasury Notes upon
occurrence of a Termination Event, where Security Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this
Agreement may be served. The Company will give prompt written notice to
the Agent of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Agent with the
address thereof, such presentations, surrenders' notices and demands may be
made or served at the Corporate Trust Office, and the Company hereby
appoints the Agent as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies where Security Certificates may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an
office or agency in the Borough of Manhattan, The City of New York for such
purposes. The Company will give prompt written notice to the Agent of any such
designation or rescission and of any change in the location of any such other
office or agency. The Company hereby designates as the place of payment for
the Securities the Corporate Trust Office and appoints the Agent at its
Corporate Trust Office as paying agent in such city.
Section 10.03. Company to Reserve Common Stock.
The Company shall at all times prior to the Final Settlement
Date reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock the full number of shares of Common Stock
issuable (x) against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Security
Certificates and (y) in payment of Deferred Yield Enhancement Payments, if
any, owed by the Company to the Holders.
Section 10.04. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may
be issued against tender of payment in respect of any Purchase Contract
constituting a part of the Outstanding Securities and in payment of any
Deferred Yield Enhancement Payments will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable.
Section 10.05. Statements of Officers of the Company as
Default.
The Company will deliver to the Agent, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions hereof, and if the Company shall
be in default, specifying all such defaults and the nature and status thereof
of which they may have knowledge.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
THE AES CORPORATION
Attested by
________________________________ By: ________________________________
________________________________
Attested by
________________________________ By: ________________________________
EXHIBIT A
THE AES CORPORATION
_____% PREFERRED REDEEMABLE INCREASED
DIVIDEND EQUITY SECURITIES
(STATED AMOUNT $__________ PER SECURITY)
No. Securities
This Security Certificate certifies that ____________________
is the registered Holder of the number of Securities set forth above. Each
Security represents (i) ownership by the Holder of _____% United States
Treasury Notes due __________, _____ ("Treasury Notes") with a principal
amount equal to the Stated Amount, subject to the Pledge of such Treasury
Notes by such Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with The AES
Corporation, a Delaware corporation (the "Company"). [The Treasury Notes
represented by this Security Certificate were acquired by the Underwriters on
behalf of the Company with the proceeds of the offering of this Security
Certificate and are being conveyed to the Holder of this Certificate and
pledged pursuant to the Pledge Agreement simultaneously therewith.]
Pursuant to the Pledge Agreement, the Treasury Notes
constituting part of each Security evidenced hereby have been pledged to the
Collateral Agent to secure the obligations of the Holder under the Purchase
Contract constituting part of such Security.
The Pledge Agreement provides that all payments of principal
of, or interest on, any Treasury Notes constituting part of the Securities
received by the Collateral Agent shall be paid by the Collateral Agent by wire
transfer in same day funds no later than 1:00 p.m., New York City time' on the
Business Day such payment is received by the Collateral Agent (provided that
in the event such payment is received by the Collateral Agent on a day that is
not a Business Day or after 1:00 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:00 a.m., New York City time,
on the next succeeding Business Day) (i) in the case of (A) interest payments
and (B) any principal payments with respect to any Treasury Notes that have
been released from the Pledge pursuant to the Pledge Agreement, to the Agent
to the account designated by it for such purpose and (ii) in the case of
principal payments on any Pledged Treasury Notes (as defined in the Pledge
Agreement), at the direction of the Agent on behalf of the Holders, to the
Company, in full satisfaction of the respective obligations of the Holders of
the Securities of which such Pledged Treasury Securities are a part under the
Purchase Contracts forming a part of such Securities. Interest on any Treasury
Note forming part of a Security evidenced hereby which is paid on any or
__________, commencing __________, _____ (a "Payment Date"), shall, subject to
receipt thereof by the Agent from the Collateral Agent, be paid to the Person
in whose name this Security Certificate (or a Predecessor Security
Certificate) is registered at the close of business on the Record Date next
preceding such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of
this Security Certificate to purchase, and the Company to sell, on __________,
_____ (the "Final Settlement Date"), at a price equal to $__________ (the
"Stated Amount"), a number of shares of Common Stock, par value $.01 per share
("Common Stock"), of the Company, equal to the Settlement Rate, unless on or
prior to the Final Settlement Date there shall have occurred a Termination
Event or Early Settlement with respect to the Security of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement and
more fully described on the reverse hereof. The purchase price for the shares
of Common Stock purchased pursuant to each Purchase Contract evidenced hereby,
if not paid earlier, shall be paid on the Final Settlement Date by application
of payment received in respect of the principal of the Treasury Notes pledged
to secure the obligations under such Purchase Contract of the Holder of the
Security of which such Purchase Contract is a part.
The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of a Security evidenced hereby an amount (the
"Yield Enhancement Payment") equal to _____% per annum of the Stated Amount
from _______________, _____, computed on the basis of the actual number of
days elapsed in a year of 365 or 366 days, as the case may be, subject to
deferral at the option of the Company as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof; except that on the
initial Payment Date the Yield Enhancement Payment shall be reduced by an
amount equal to accrued interest to _______________, _____, on the Treasury
Note constituting a part of this Security. Such Yield Enhancement Payment
shall be payable to the Person in whose name this Security Certificate (or a
Predecessor Security Certificate) is registered at the close of business on
the Record Date next preceding such Payment Date.
Interest on the Treasury Notes and the Yield Enhancement
Payment will be payable at the office of the Agent in The City of New York or,
at the option of the Company, by check mailed to the address of the Person
entitled thereto as such address appears on the Security Register.
Reference is hereby made to the further provisions set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Agent by manual signature, this Security Certificate shall not
be entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
THE AES CORPORATION
By: ____________________________________
Attested:
_______________________________
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the Purchase
Contracts evidenced hereby)
By: ____________________________________,
not individually but solely as
Attorney-in-Fact of such Holder
By: ____________________________________
Dated:
This is one of the Security Certificates referred to in the
within mentioned Purchase Contract Agreement.
_______________, as Agent
By:________________________________
(Form of Reverse of Security Certificate)
Each Purchase Contract evidenced hereby is governed by a
Purchase Contract Agreement, dated as of _______________, _____ (the "Purchase
Contract Agreement"), between the Company and ____________________, as
Purchase Contract Agent (herein called the "Agent"), to which Purchase
Contract Agreement and supplemental agreements thereto reference is hereby
made for a description of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Agent, the Company,
and the Holders and of the terms upon which the Security Certificates are,
and are to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of
this Security Certificate to purchase, and the Company to sell, on the Final
Settlement Date at a price equal to the Stated Amount, a number of shares of
Common Stock of the Company equal to the Settlement Rate, unless, on or prior
to the Final Settlement Date, there shall have occurred a Termination Event or
an Early Settlement with respect to the Security of which such Purchase
Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable
Market Value (as defined below) is greater than $________ (the "Threshold
Appreciation Price"), ________ of a share of Common Stock per Purchase
Contract, (b) if the Applicable Market Value is less than or equal to the
Threshold Appreciation Price but is greater than the Stated Amount, a
fractional share of Common Stock per Purchase Contract equal to the Stated
Amount divided by the Applicable Market Value and (c) if the Applicable Market
Amount is less than or equal to the Stated Amount, one share of Common Stock
per Purchase Contract, in each case subject to adjustment as provided in the
Purchase Contract. No fractional shares of Common Stock will be issued upon
settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement.
The "Applicable Market Value" means the average of the Closing
Prices per share of Common Stock on each of the twenty consecutive Trading Days
ending on the second Trading Day immediately preceding the Final Settlement
Date. The "Closing Price" of the Common Stock on any date of determination
means the closing sale price (or, if no closing price is reported, the last
reported sale price) of the Common Stock on the New York Stock Exchange (the
"NYSE") on such date or, if the Common Stock is not listed for trading on the
NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which the Common Stock is so
listed, or if the Common Stock is not so listed on a United States national or
regional securities exchange, as reported by The Nasdaq Stock Market, or, if
the Common Stock is not so reported, the last quoted bid price for the Common
Stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization, or, if such bid price is not available, the
market value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Company. A "Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
The purchase price for the shares of Common Stock purchased
pursuant to each Purchase Contract shall be paid by application of payments
received by the Company on the Final Settlement Date from the Collateral Agent
at the direction of the Agent on behalf of the Holders pursuant to the Pledge
Agreement in respect of the principal of the Treasury Notes pledged to secure
the obligations of the relevant Holder under such Purchase Contract.
The Company shall not be obligated to issue any shares of
Common Stock in respect of a Purchase Contract or deliver any certificates
therefor to the Holder unless it shall have received payment in full of the
aggregate purchase price for the shares of Common Stock to be purchased
thereunder in the manner herein set forth.
Subject to the next succeeding paragraph, the Company shall
pay, on each Payment Date, the Yield Enhancement Payment payable in respect of
each Purchase Contract to the Person in whose name the Security Certificate
evidencing such Purchase Contract is registered at the close of business on
the Record Date next preceding such Payment Date. Yield Enhancement Payments
will be payable at the office of the Agent in The City of New York or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto at such address as it appears on the Security Register.
The Company shall have the right, at any time prior to the
Final Settlement Date, to defer the payment of any or all of the Yield
Enhancement Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Yield Enhancement Payments so deferred shall
bear additional Yield Enhancement Payments thereon at the rate of ______% per
annum (computed on the basis of the actual number of days elapsed in a year of
365 or 366 days, as the case may be), compounding on each succeeding Payment
Date, until paid in full (such deferred installments of Yield Enhancement
Payments together with the additional Yield Enhancement Payments accrued
thereon, are referred to herein as the "Deferred Yield Enhancement Payments").
Deferred Yield Enhancement Payments shall be due on the next succeeding
Payment Date except to the extent that payment is deferred pursuant to the
Purchase Contract Agreement. No Yield Enhancement Payments may be deferred to
a date that is after the Final Settlement Date.
In the event that the Company elects to defer the payment of
Yield Enhancement Payments on the Purchase Contracts until the Final
Settlement Date, the Holder of this Security Certificate will receive on the
Final Settlement Date, in lieu of a cash payment, a number of shares of Common
Stock (in addition to a number of shares of Common Stock equal to the
Settlement Rate) equal to (x) the aggregate amount of Deferred Yield
Enhancement Payments payable to the Holder of the Security Certificate of
Securities divided by (y) the Applicable Market Value. No fractional shares of
Common Stock will be issued with respect to the payment of Deferred Yield
Enhancement Payments on the Final Settlement Date, as provided in the Purchase
Contract Agreement.
In the event the Company exercises its option to defer the
payment of Yield Enhancement Payments, then (a) the Company shall not declare
or pay dividends on, make distributions with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock (other than (i) purchase or acquisitions of shares of Common Stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security requiring the Company to purchase shares
of Common Stock, (ii) as a result of a reclassification of the Company's
capital stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock or (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing), (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company that rank pari passu with or junior to such Yield Enhancement Payments
and (c) the Company shall not make any guarantee payments with respect to the
foregoing.
The Purchase Contracts and the obligations and rights of the
Company and the Holders thereunder, including, without limitation, the rights
of the Holders to receive and the obligation of the Company to pay any Yield
Enhancement Payment or any Deferred Yield Enhancement Payments, shall
immediately and automatically terminate, without the necessity of any notice
or action by any Holder, the Agent or the Company, if, on or prior to the
Final Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
after two business days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in the
Security Register. Upon and after the occurrence of a Termination Event, the
Collateral Agent shall release the Treasury Notes from the Pledge in
accordance with the provisions of the Pledge Agreement. The Securities shall
thereafter represent the right to receive the Treasury Notes forming a part of
such Securities in accordance with the provisions of the Purchase Contract
Agreement and the Pledge Agreement.
Subject to and upon compliance with the provisions of the
Purchase Contract Agreement at the option of the Holder thereof, Purchase
Contracts underlying Securities having an aggregate Stated Amount equal to
$________ or an integral multiple thereof may be settled early ("Early
Settlement") as provided in the Purchase Contract Agreement. In order to
exercise the right to effect Early Settlement with respect to any Purchase
Contracts evidenced by this Security Certificate, the Holder of this Security
Certificate shall deliver this Security Certificate to the Agent at the
Corporate Trust Office duly endorsed for transfer to the Company or in blank
with the form of Election to Settle Early set forth below duly completed and
accompanied by payment in the form of a certified or cashier's check payable
to the order of the Company in immediately available funds in an amount (the
"Early Settlement Amount") equal to (i) the product of (A) the Stated Amount
times (B) the number of Purchase Contracts with respect to which the Holder
has elected to effect Early Settlement, plus (ii) if such delivery is made
with respect to any Purchase Contracts during the period from the close of
business on any Record Date next preceding any Payment Date to the opening
of business on such Payment Date, an amount equal to the sum of (x) the
Yield Enhancement Payments payable on such Payment Date with respect to
such Purchase Contracts plus (y) the interest with respect to the related
Treasury Notes payable on such Payment Date. Upon Early Settlement of
Purchase Contracts by a Holder of the related Securities, the Treasury
Notes underlying such Securities shall be released from the Pledge as
provided in the Pledge Agreement and the Holder shall be entitled to
receive, a number of shares of Common Stock on account of each Purchase
Contract forming part of a Security as to which Early Settlement is
effected equal to the Early Settlement Rate; provided however, that upon
the Early Settlement of the Purchase Contracts, the Holder thereof will
forfeit the right to receive any Deferred Yield Enhancement Payments on
such Purchase Contracts. The Early Settlement Rate shall initially be
equal to __________ and shall be adjusted in the same manner and at the
same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.
The Security Certificates are issuable only in registered form
and only in denominations of a single Security and any integral multiple
thereof. The transfer of any Security Certificate will be registered and
Security Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Security Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. For so long as the Purchase Contract
underlying a Security remains in effect, such Security shall not be separable
into its constituent parts, and the rights and obligations of the Holder of
such Security in respect of the Treasury Notes and Purchase Contract
constituting such Security may be transferred and exchanged only as a
Security.
Upon registration of transfer of this Security Certificate, the
transferee shall be bound (without the necessity of any other action on the
part of such transferee, except as may be required by the Agent pursuant to
the Purchase Contract Agreement), under the terms of the Purchase Contract
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contracts evidenced by
this Security Certificate. The Company covenants and agrees, and the Holder,
by his acceptance hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
The Holder of this Security Certificate, by his acceptance
hereof, authorizes the Agent to enter into and perform the related Purchase
Contracts forming part of the Securities evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the
event that the Company becomes the subject of a case under the Bankruptcy
Code, agrees to be bound by the terms and provisions thereof, covenants and
agrees to perform his obligations under such Purchase Contracts, consents
to the provisions of the Purchase Contract Agreement, authorizes the Agent
to enter into and perform the Pledge Agreement on his behalf as his
attorney-in-fact, and consents to the Pledge of the Treasury Notes
underlying this Security Certificate pursuant to the Pledge Agreement. The
Holder further covenants and agrees, that, to the extent and in the manner
provided in the Purchase Contract Agreement and the Pledge Agreement, but
subject to the terms thereof, payments in respect of principal of the
Treasury Notes on the Final Settlement Date shall be paid by the Collateral
Agent to the Company in satisfaction of such Holder's obligations under
such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Subject to certain exceptions, the provisions of the Purchase
Contract Agreement may be amended with the consent of the Holders of at least
66 2/3% of the Outstanding Securities.
All terms used herein which are defined in the Purchase
Contract Agreement have the meanings set forth therein.
The Purchase Contracts shall for all purposes be governed by,
and construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Security
Certificate is registered as the owner of the Securities evidenced hereby for
the purpose of receiving payments of interest on the Treasury Notes, receiving
payments of Yield Enhancement Payments and any Deferred Yield Enhancement
Payments, performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement
thereof, entitle the Holder to any of the rights of a holder of shares of
Common Stock.
A copy of the Purchase Contract Agreement is available for
inspection at the offices of the Agent.
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of
Common Stock deliverable upon settlement on or after the Final Settlement Date
of the Purchase Contracts underlying the number of Securities evidenced by
this Security Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned
at the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable
incident thereto.
Dated: _____________________ ____________________________________
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the Holder,
please print such Person's name
and address:
Please print name and address
of Registered Holder:
____________________________________ ____________________________________
Name Name
____________________________________ ____________________________________
Address Address
____________________________________ ____________________________________
Social Security or other
Taxpayer Identification ____________________________________
Number, if any
ELECTION TO SETTLE EARLY
The undersigned Holder of this Security Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Securities evidenced by this Security
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Securities with
an aggregate Stated Amount equal to $__________ or an integral multiple
thereof. The undersigned Holder directs that a certificate for shares of
Common Stock deliverable upon such Early Settlement be registered in the name
of, and delivered, together with a check in payment for any fractional share
and any Security Certificate representing any Securities evidenced hereby as
to which Early Settlement of the related Purchase Contracts is not effected,
to the undersigned at the address indicated below unless a different name and
address have been indicated below. Treasury Notes deliverable upon such Early
Settlement will be transferred in accordance with the transfer instructions
set forth below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable
incident thereto.
Dated:_____________________________ ____________________________________
Signature
Number of Securities evidenced hereby as to which Early
Settlement of the related Purchase Contracts is being elected:
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the Holder,
please print such Person's name
and address:
Please print name and address
of Registered Holder:
____________________________________ ____________________________________
Name Name
____________________________________ ____________________________________
Address Address
____________________________________ ____________________________________
Social Security or other
Taxpayer Identification ____________________________________
Number, if any
____________________________________
Transfer Instructions for Treasury Notes Transferable Upon Early Settlement or
a Termination Event:
__________________________ _________________________________________________
__________________________ _________________________________________________
__________________________ _________________________________________________
EXHIBIT 4.17
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of __________, 1996 (this
"Agreement"), among The AES Corporation, a Delaware corporation (the
"Company"), _____________, not individually but solely as collateral agent (in
such capacity, together with its successors in such capacity, the "Collateral
Agent"), and _______________________, not individually but solely as purchase
contract agent and as attorney-in-fact of the Holders (as hereinafter defined)
from time to time of the Securities (as hereinafter defined) (in such
capacity, together with its successors in such capacity, the "Purchase
Contract Agent") under the Purchase Contract Agreement (as hereinafter
defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there will be issued ____% Preferred Redeemable
Increased Dividend Equity Securities (the "Securities").
Each Security consists of (a) one Purchase Contract (as
hereinafter defined) and (b) ___% United States Treasury Notes due ________,
____ ("Treasury Notes") having a principal amount equal to $__________ (the
"Stated Amount") and maturing on _________, ____ (the "Final Settlement
Date"), subject to the pledge of such Treasury Notes created hereby.
The Company has caused the Underwriters to purchase the
Treasury Notes on its behalf with the proceeds of the offering of the
Securities and the Company has simultaneously conveyed such Treasury Notes to
the Holders as a part of the Securities.
Pursuant to the terms of the Purchase Contract Agreement and
the Purchase Contracts, the Holders (as defined in the Purchase Contract
Agreement) from time to time of the Securities have irrevocably authorized
the Purchase Contract Agent, as attorney-in-fact of such Holders, among
other things to execute and deliver this Agreement on behalf of such
Holders and to grant the pledge provided hereby of the Treasury Notes
constituting part of such Securities as provided herein and subject to the
terms hereof.
Accordingly, the Company, the Collateral Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the Holders from
time to time of the Securities, agree as follows:
Section 1. Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise
requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular; and
(2) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in the Purchase Contract
Agreement.
"Agreement" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Treasury Regulations" means Subpart O-Book-Entry
Procedure of Title 31 of the Code of Federal Regulations (31 CFR (S) 306.115
et. seq.) and any other regulations of the United States Treasury Department
from time to time applicable to the transfer or pledge of book-entry U.S.
Treasury Securities.
"Bankruptcy Code" means Title 11 of the United States Code, or
any other law of the United States that from time to time provides a uniform
system of bankruptcy laws.
"Board Resolution" has the meaning specified in the Purchase
Contract Agreement.
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which the New York Stock Exchange or banking institutions or trust
companies in The City of New York are authorized or obligated by law or
executive order to be closed.
"Collateral Agent" has the meaning specified in the first
paragraph of this instrument.
"Collateral Account" means the account maintained at
_____________ in the name "_____________ as Collateral Agent of The AES
Corporation as pledgee of _____________________ as Purchase Contract Agent".
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Early Settlement" has the meaning specified in the Purchase
Contract Agreement.
"Early Settlement Amount" has the meaning specified in the
Purchase Contract Agreement.
"Final Settlement Date" has the meaning specified in the
Recitals.
"Holder" when used with respect to a Security, or a Purchase
Contract constituting a part thereof, has the meaning specified in the
Purchase Contract Agreement.
"Opinion of Counsel" means an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company and who
shall be reasonably acceptable to the Collateral Agent or the Purchase
Contract Agent, as the case may be.
"Outstanding Securities" has the meaning specified in the
Purchase Contract Agreement.
"Outstanding Security Certificates" has the meaning specified
in the Purchase Contract Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2 hereof.
"Pledged Treasury Notes" has the meaning specified in Section 2
hereof.
"Purchase Contract" has the meaning specified in the Purchase
Contract Agreement.
"Purchase Contract Agent" has the meaning specified in the
first paragraph of this instrument.
"Security" has the meaning specified in the Recitals.
"Security Certificate" has the meaning specified in the
Purchase Contract Agreement.
"Stated Amount" has the meaning specified in the Recitals.
"Termination Event" has the meaning specified in the Purchase
Contract Agreement.
"Treasury Notes" has the meaning specified in the Recitals.
Section 2. The Pledge. The Holders from time to time of the
Securities acting through the Purchase Contract Agent, as their
attorney-in-fact, hereby pledge and grant to the Collateral Agent for the
benefit of the Company, as collateral security for the performance when due by
such Holders of their respective obligations under the Purchase Contracts
constituting part of such Securities, a security interest in all of the right,
title and interest of such Holders in the Treasury Notes constituting a part
of such Securities. Prior to or concurrently with the execution and delivery
of this Agreement, the initial Holders and the Purchase Contract Agent shall
(i) cause the Treasury Notes to be transferred to the Collateral Agent by
Federal Reserve Bank-Wire to the account of the Collateral Agent and (ii) the
Collateral Agent shall credit the Treasury Notes to the Collateral Account; in
each case pursuant to Applicable Treasury Regulations and to the Uniform
Commercial Code to the extent such laws are applicable. The pledge provided
in this Section 2 is herein referred to as the "Pledge" and the Treasury Notes
subject to the Pledge, excluding any Treasury Notes released from the Pledge
as provided in Section 4 hereof, are hereinafter referred to as the "Pledged
Treasury Notes". Subject to the Pledge, the Holders from time to time of the
Securities shall have full beneficial ownership of the Treasury Notes
constituting a part of such Securities.
Section 3. Distribution of Principal and Interest. (a) All
payments of principal of, or interest on, any Treasury Notes constituting part
of the Securities received by the Collateral Agent shall be paid by the
Collateral Agent by wire transfer in same day funds no later than 1:00 p.m.,
New York City time, on the Business Day such interest payment is received by
the Collateral Agent (provided that in the event such interest payment is
received by the Collateral Agent on a day that is not a Business Day or after
1:00 p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:00 a.m., New York City time, on the next succeeding
Business Day) (i) in the case of (A) interest payments and (B) any principal
payments with respect to any Treasury Notes that have been released from the
Pledge pursuant to Section 4 hereof, to the Purchase Contract Agent to the
account designated by it for such purpose and (ii) in the case of principal
payments on any Pledged Treasury Notes, the Purchase Contract Agent on behalf
of the Holder hereby directs the Collateral Agent to make such payments to the
Company, in full satisfaction of the respective obligations of the Holders of
the Securities of which such Pledged Treasury Notes are a part under the
Purchase Contracts forming a part of such Securities. All such payments
received by the Purchase Contract Agent as provided herein shall be applied by
the Purchase Contract Agent pursuant to the provisions of the Purchase
Contract Agreement. If, notwithstanding the foregoing, the Purchase Contract
Agent shall receive any payments of principal on account of any Pledged
Treasury Notes, the Purchase Contract Agent shall hold the same as trustee of
an express trust for the benefit of the Company (and promptly deliver over to
the Company) for application to the obligations of the Holders of the
Securities of which such Treasury Notes are a part under the Purchase
Contracts relating to the Securities of which such Treasury Notes are a part,
and such Holders shall acquire no right, title or interest in any such
payments of principal so received.
Section 4. Release of Pledged Treasury Notes. (a) Upon
written notice to the Collateral Agent by the Company or the Purchase Contract
Agent that there has occurred a Termination Event, the Collateral Agent shall
release all Pledged Treasury Notes from the Pledge and shall transfer all such
Treasury Notes, free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent.
If such Termination Event shall result from the Company's
becoming a debtor under the Bankruptcy Code, and if the Collateral Agent shall
for any reason fail immediately to effectuate the release and transfer of all
Pledged Treasury Notes as provided by this Section 4(a), the Purchase Contract
Agent shall, subject to Section 6.12, (i) use its best efforts to obtain an
opinion of a nationally recognized law firm reasonably acceptable to the
Collateral Agent to the effect that, as a result of the Company's being the
debtor in such a bankruptcy case, the Collateral Agent will not be prohibited
from releasing or transferring the Treasury Notes as provided in this Section
4(a), and shall deliver such opinion to the Collateral Agent within ten days
after the occurrence of such Termination Event, and if (y) the Purchase
Contract Agent shall be unable to obtain such opinion within ten days after
the occurrence of such Termination Event or (z) the Collateral Agent shall
continue, after delivery of such opinion, to refuse to effectuate the release
and transfer of all Pledged Treasury Notes as provided in this Section 4(a),
then the Purchase Contract Agent shall within fifteen days after the
occurrence of such Termination Event commence an action or proceeding in the
court with jurisdiction of the Company's case under the Bankruptcy Code
seeking an order requiring the Collateral Agent to effectuate the release
and transfer of all Pledged Treasury Notes as provided by this Section 4(a)
or (ii) commence an action or proceeding like that described in subsection
(i)(z) hereof within ten days after the occurrence of such Termination
Event.
(b)Upon written notice to the Collateral Agent by the Purchase
Contract Agent that one or more Holders of Securities have elected to effect
Early Settlement of their respective obligations under the Purchase Contracts
forming a part of such Securities in accordance with the terms of the Purchase
Contracts and the Purchase Contract Agreement (setting forth the number of
such Purchase Contracts as to which such Holders have elected to effect Early
Settlement), and that the Purchase Contract Agent has received from such
Holders, and paid to the Company, the related Early Settlement Amounts
pursuant to the terms of the Purchase Contracts and the Purchase Contract
Agreement and that all conditions to such Early Settlement have been
satisfied, then the Collateral Agent shall release from the Pledge Pledged
Treasury Notes with a principal amount equal to the product of (i) the Stated
Amount times (ii) the number of such Purchase Contracts as to which such
Holders have elected to effect Early Settlement.
(c)Transfers of Treasury Notes pursuant to Section 4(a) or (b)
shall be by Federal Reserve Bank-Wire or in another appropriate manner, (i) if
the Collateral Agent shall have received such notification at or prior to
11:00 a.m., New York City time, on a Business Day, then no later than 2:00
p.m., New York City time, on such Business Day and (ii) if the Collateral
Agent shall have received such notification on a day that is not a Business
Day or after 11:00 a.m., New York City time, on a Business Day, then no later
than 10:00 a.m., New York City time, on the next succeeding Business Day.
Section 5. Rights and Remedies. (a) The Collateral Agent
shall have all of the rights and remedies with respect to the Pledged Treasury
Notes of a secured party under the Uniform Commercial Code as in effect in the
State of New York (the "Code") (whether or not the Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted.
(b) Without limiting any rights or powers otherwise granted by
this Agreement to the Collateral Agent, in the event the Collateral Agent is
unable to make payments to the Company on account of principal payments of any
Pledged Treasury Notes as provided in Section 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which such Pledged Treasury
Notes are a part under the Purchase Contracts forming a part of such
Securities, the Collateral Agent shall have and may exercise, with reference
to such Pledged Treasury Notes and such obligations of such Holder, any and
all of the rights and remedies available to a secured party under the Code
after default by a debtor, and as otherwise granted herein or under any other
law.
(c) Without limiting any rights or powers otherwise granted by
this Agreement to the Collateral Agent, the Collateral Agent is hereby
irrevocably authorized to receive and collect all payments of principal of or
interest on the Pledged Treasury Notes.
(d) The Purchase Contract Agent agrees that, from time to
time, upon the written request of the Collateral Agent, the Purchase
Contract Agent shall execute and deliver such further documents and do such
other acts and things as the Collateral Agent may reasonably request in
order to maintain the Pledge, and the perfection and priority thereof, and
to confirm the rights of the Collateral Agent hereunder.
Section 6. The Collateral Agent and the Purchase Contract
Agent. It is hereby agreed as follows:
6.01. Appointment, Powers and Immunities. The Collateral
Agent shall act as agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. The
Collateral Agent: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against the Collateral Agent, nor shall
the Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or other document
referred to or provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or the Purchase
Contract Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person (except the
Collateral Agent) to perform any of its obligations hereunder or thereunder;
(c) shall not be required to initiate or conduct any litigation or collection
proceedings hereunder (except pursuant to directions furnished under Section
6.02 hereof); (d) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith or therewith, except for its
own negligence; and (e) shall not be required to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder. Subject to
the foregoing, during the term of this Agreement, the Collateral Agent shall
take all reasonable action in connection with the safe keeping and
preservation of the Pledged Treasury Notes hereunder.
No provision of this Agreement shall require the Collateral Agent to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the value of the Pledged Treasury
Notes.
6.02. Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for any right or remedy available to the Collateral Agent, or of
exercising any power conferred on the Collateral Agent, or to direct the
taking or refraining from taking of any action authorized by this Agreement;
provided, however, that (i) such direction shall not conflict with the
provisions of any law or of this Agreement and (ii) the Collateral Agent shall
be adequately indemnified as provided herein. Nothing in this Section 6.02
shall impair the right of the Collateral Agent in its discretion to take any
action or omit to take any action which it deems proper and which is not
inconsistent with such direction.
6.03. Reliance by Collateral Agent. The Collateral Agent shall
be entitled to rely upon any certification, order, judgment, opinion, notice
or other communication (including, without limitation, any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons (without being required to determine the correctness of any
fact stated therein), and upon advice and statements of legal counsel and
other experts selected by the Collateral Agent. As to any matters not
expressly provided for by this Agreement, the Collateral Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions given by the Company in accordance with this
Agreement.
6.04. Rights in Other Capacities. The Collateral Agent and its
affiliates may (without having to account therefor to the Company) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Purchase Contract Agent and
any Holder of Securities (and any of their subsidiaries or affiliates) as if
it were not acting as the Collateral Agent, and the Collateral Agent and its
affiliates may accept fees and other consideration from the Purchase Contract
Agent and any Holder of Securities without having to account for the same to
the Company, provided that the Collateral Agent covenants and agrees with the
Company that the Collateral Agent shall not accept, receive or permit there to
be created in its favor any security interest, lien or other encumbrance of
any kind in or upon the Pledged Treasury Notes.
6.05. Non-Reliance on Collateral Agent. The Collateral Agent
shall not be required to keep itself informed as to the performance or
observance by the Purchase Contract Agent or any Holder of Securities of this
Agreement, the Purchase Contract Agreement, the Securities or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder of
Securities. The Collateral Agent shall not have any duty or responsibility to
provide the Company with any credit or other information concerning the
affairs, financial condition or business of the Purchase Contract Agent or any
Holder of Securities (or any of their affiliates) that may come into the
possession of the Collateral Agent or any of its affiliates.
6.06. Compensation and Indemnity. The Company agrees: (i) to
pay the Collateral Agent from time to time reasonable compensation for all
services rendered by it hereunder and (ii) to indemnify the Collateral Agent
for, and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of its powers and duties under this
Agreement, including the costs and expenses (including reasonable fees and
expenses of counsel) of defending itself against any claim or liability in
connection with the exercise or performance of such powers and duties.
6.07. Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by
or among the parties hereto and/or any other Person with respect to any funds
or property deposited hereunder, the Collateral Agent shall be entitled, at
its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and the Collateral Agent shall not be or become
liable in any way to any of the parties hereto for its failure or refusal to
comply with such conflicting claims, demands or instructions. The Collateral
Agent shall be entitled to refuse to act until either (i) such conflicting or
adverse claims or demands shall have been finally determined by a court of
competent jurisdiction or settled by agreement between the conflicting parties
as evidenced in a writing, satisfactory to the Collateral Agent or (ii) the
Collateral Agent shall have received security or an indemnity satisfactory to
the Collateral Agent sufficient to save the Collateral Agent harmless from and
against any and all loss, liability or expense which the Collateral Agent may
incur by reason of its acting. The Collateral Agent may in addition elect to
commence an interpleader action or seek other judicial relief or orders as the
Collateral Agent may deem necessary. Notwithstanding anything contained
herein to the contrary, the Collateral Agent shall not be required to take any
action that is in its opinion contrary to law or to the terms of this
Agreement, or which would in its opinion subject it or any of its officers,
employees or directors to liability.
6.08. Resignation of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided below,
(a) the Collateral Agent may resign at any time by giving notice thereof to
the Company and the Purchase Contract Agent, (b) the Collateral Agent may be
removed at any time by the Company and (c) if the Collateral Agent fails to
perform any of its material obligations hereunder in any material respect for
a period of not less than 20 days after receiving written notice of such
failure by the Purchase Contract Agent and such failure shall be continuing,
the Collateral Agent may be removed by the Purchase Contract Agent. The
Purchase Contract Agent shall promptly notify the Company of any removal of
the Collateral Agent pursuant to clause (c) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the
right to appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Collateral Agent's giving of notice of
resignation or such removal, then the retiring Collateral Agent may petition
any court of competent jurisdiction for the appointment of a successor
Collateral Agent. The Collateral Agent shall be a bank which has an office in
New York, New York with a combined capital and surplus of at least
$50,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, and the retiring
Collateral Agent shall take all appropriate action to transfer any money and
property held by it hereunder (including the Pledged Treasury Notes) to such
successor Collateral Agent. The retiring Collateral Agent shall, upon such
succession, be discharged from its duties and obligations as Collateral Agent
hereunder. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Section 6 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Collateral Agent.
Promptly following the removal or resignation of the Collateral
Agent the Company shall give written notice thereof to Moody's Investors
Services, Inc.
6.09. Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of
its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by such agents or advisors selected in good faith.
6.10. Survival. The provisions of this Section 6 shall
survive termination of this Agreement and the resignation or removal of the
Collateral Agent.
6.11. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or its officers,
employees or agents be liable under this Agreement to any third party for
indirect, special, punitive, or consequential loss or damage of any kind
whatsoever, including lost profits' whether or not the likelihood of such loss
or damage was known to the Collateral Agent, or any of them, incurred without
any act or deed that is found to be attributable to gross negligence on the
part of the Collateral Agent.
6.12. The Purchase Contract Agent. The duties and
responsibilities of the Purchase Contract Agent under this Agreement shall in
each case be governed by Article VII of the Purchase Contract Agreement.
Section 7. Amendment.
7.01. Amendment Without Consent of Holders. Without the
consent of any Holders, the Company, the Collateral Agent and the Purchase
Contract Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral Agent and
the Purchase Contract Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of the
Company; or
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power herein conferred
upon the Company; or
(3) to evidence and provide for the acceptance of
appointment hereunder by a successor Collateral Agent or Purchase Contract
Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such provisions
herein, or to make any other provisions with respect to such matters or
questions arising under this Agreement, provided such action shall not
adversely affect the interests of the Holders.
7.02. Amendment with Consent of Holders. With the consent of
the Holders of not less than 66 2/3% of the Outstanding Securities, by Act of
said Holders delivered to the Company, the Purchase Contract Agent and the
Collateral Agent, the Company, when authorized by a Board Resolution, the
Purchase Contract Agent and the Collateral Agent may amend this Agreement for
the purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the amount or type of Treasury Notes
underlying a Security, impair the right of the Holder of any Security to
receive interest payments on the underlying Treasury Notes or otherwise
adversely affect the Holder's rights in or to such Treasury Notes; or
(2) otherwise effect any action that would require the
consent of the Holder of each Outstanding Security affected thereby pursuant
to the Purchase Contract Agreement if such action were effected by an
agreement supplemental thereto; or
(3) reduce the percentage of Outstanding Securities the
consent of whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such Act shall approve the substance thereof.
7.03. Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent and the Purchase Contract
Agent shall be entitled to receive and (subject to Section 6.01 hereof, with
respect to the Collateral Agent, and Section 7.1 of the Purchase Contract
Agreement, with respect to the Purchase Contract Agent) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Agreement.
7.04. Effect of Amendments. Upon the execution of any
amendment under this Section, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this Agreement for all
purposes; and every Holder of Security Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby and that all conditions
precedent to such execution and delivery have been satisfied.
7.05. Reference to Amendments. Security Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this Section may, and shall if required
by the Collateral Agent or the Purchase Contract Agent, bear a notation in
form approved by the Purchase Contract Agent and the Collateral Agent as to
any matter provided for in such amendment. If the Company shall so determine,
new Security Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in accordance with the Purchase Contract Agreement in exchange for Outstanding
Security Certificates.
Section 8. Miscellaneous.
8.01. No Waiver. No failure on the part of the Collateral
Agent or any of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Collateral Agent or any of its agents of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
8.02. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Company,
the Collateral Agent and the Holders from time to time of the Securities,
acting through the Purchase Contract Agent as their attorney-in-fact, hereby
submit to the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York and of any New York state court sitting
in New York City for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. The
Company, the Collateral Agent and the Holders from time to time of the
Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.
8.03. Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to
the intended recipient at the "Address for Notices" specified below its name
on the signature pages hereof or, as to any party, at such other address as
shall be designated by such party in a notice to the other parties. Except as
otherwise provided in this Agreement, all such communications shall be deemed
to have been duly given when transmitted by telecopier or personally delivered
or, in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
8.04. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent and the Purchase Contract Agent, and the Holders
from time to time of the Securities, by their acceptance of the same, shall be
deemed to have agreed to be bound by the provisions hereof and to have
ratified the agreements of, and the grant of the Pledge hereunder by, the
Purchase Contract Agent.
8.05. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
8.06. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
8.07. Expenses, etc. The Company agrees to reimburse the
Collateral Agent for: (a) all reasonable out-of-pocket costs and expenses of
the Collateral Agent (including, without limitation, the reasonable fees and
expenses of counsel to the Collateral Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the terms
of this Agreement; (b) all reasonable costs and expenses of the Collateral
Agent (including, without limitation, reasonable fees and expenses of counsel)
in connection with (i) any enforcement or proceedings resulting or incurred in
connection with causing any Holder of Securities to satisfy its obligations
under the Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 8.07; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document referred
to herein and all costs, expenses, taxes, assessments and other charges
incurred in connection with any filing, registration, recording or perfection
of any security interest contemplated hereby.
8.08. Security Interest Absolute. All rights of the
Collateral Agent and security interests hereunder, and all obligations of the
Holders from time to time of the Securities hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of any
provision of the Purchase Contracts or the Securities or any other agreement
or instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or any other term of, or any increase in the amount of, all or any of the
obligations of Holders of Securities under the related Purchase Contracts, or
any other amendment or waiver of any term of, or any consent to any departure
from any requirement of, the Purchase Contract Agreement or any Purchase
Contract or any other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise
constitute a defense available to, or discharge of, a borrower, a guarantor or
a pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
The AES Corporation
By: ________________________________________
Name:
Title:
Address for Notices:
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Attention: _____________
Telecopy: _____________
_______________________________, as Purchase
Contract Agent and as attorney-in-fact of the
Holders from time to time of the Securities
By: ________________________________________
Address for Notices:
______________, as Collateral Agent
By: ________________________________________
Name:
Title:
Address for Notices:
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned (other than Dennis W. Bakke and Barry J.
Sharp), acting in the capacity or capacities stated opposite their respective
names below, hereby constitute and appoint DENNIS W. BAKKE, BARRY J. SHARP and
WILLIAM R. LURASCHI and each of them severally, the attorneys-in-fact of the
undersigned with full power to them and each of them to sign for and in the
name of the undersigned in the capacities indicated below the Registration
Statement on Form S-3 relating to the securities of this Company, including
Senior Debt Securities, Junior Subordinated Debt Securities, Preferred
Securities, Guarantees of Preferred Securities, Preferred Stock and Common
Stock of the Company, and any and all amendments and supplements thereto.
Each of DENNIS W. BAKKE and BARRY J. SHARP, each acting in the capacity stated
opposite his name below, hereby constitutes and appoints WILLIAM R. LURASCHI
as his attorney-in-fact with full power to him to sign for and in his name
in the capacity indicated below the Registration Statement on Form S-3 and
any and all amendments and supplements thereto.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Roger W. Sant Chairman of the Board October , 1996
- --------------------------- and Director
Roger W. Sant
/s/ Dennis W. Bakke President and Chief vv October , 1996
- --------------------------- Executive Officer and
Dennis W. Bakke Director
- --------------------------- Vice President, Chief October , 1996
Barry J. Sharp Financial Officer and
Secretary
/s/ Vicki-Ann Assevero Director October 14, 1996
- ---------------------------
Vicki-Ann Assevero
/s/ Dr. Alice Emerson Director October 14, 1996
- ---------------------------
Dr. Alice Emerson
/s/ Frank Jungers Director October , 1996
- ---------------------------
Frank Jungers
/s/ Dr. Henry R. Linden Director October , 1996
- ---------------------------
Dr. Henry R. Linden
/s/ Russell E. Train Director October , 1996
- ---------------------------
Russell E. Train
/s/ Thomas I. Unterberg Director October , 1996
- ---------------------------
Thomas I. Unterberg
/s/ Robert H. Waterman, Jr. Director October , 1996
- ---------------------------
Robert H. Waterman, Jr.
/s/ Robert F. Hemphill, Jr. Director October , 1996
- ---------------------------
Robert F. Hemphill, Jr.
</TABLE>
EXHIBIT 25.9
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
--------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
THE AES TRUST III
(Exact name of obligor as specified in its charter)
Delaware (To be applied for)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1001 North 19th Street
Arlington, Virginia 22209
(Address of principal executive offices) (Zip Code)
Preferred Securities
(Title of Indenture Securities)
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate
trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a
part of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 14th day of
November, 1996.
The First National Bank of Chicago,
Trustee
By /s/ Richard D. Manella
Richard D. Manella
Vice President
* Exhibits 1, 2, 3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 16 of the Form T-1 of The First National
Bank of Chicago, filed as Exhibit 25.1 to the Registration Statement on Form
S-3 of SunAmerica Inc. filed with the Securities and Exchange Commission on
October 25, 1996 (Registration No. 333-14201).
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 14, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of The Amended and Restated Declaration
of Trust of AES Trust II, the undersigned, in accordance with Section 321(b)
of the Trust Indenture Act of 1939, as amended, hereby consents that the
reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request
therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ Richard D. Manella
Richard D. Manella
Vice President
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC--Balance Sheet
<CAPTION>
C400 <-
Dollar Amounts in ------------ -------
Thousands RCFD BIL MIL THOU
------------------ ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1).......... 0081 3,572,641 1.a.
b. Interest-bearing balances(2)................................... 0071 6,958,367 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)...... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)... 1773 1,448,974 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold............................................. 0276 5,020,878 3.a.
b. Securities purchased under agreements to resell................ 0277 918,688 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C).......................................................... RCFD 2122 19,125,160 4.a.
b. LESS: Allowance for loan and lease losses...................... RCFD 3123 379,232 4.b.
c. LESS: Allocated transfer risk reserve.......................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)........................... 2125 18,745,928 4.d.
5. Assets held in trading accounts................................... 3545 9,599,172 5.
6. Premises and fixed assets (including capitalized leases).......... 2145 623,289 6.
7. Other real estate owned (from Schedule RC-M)...................... 2150 8,927 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).................................... 2130 57,280 8.
9. Customers' liability to this bank on acceptances outstanding...... 2155 632,259 9.
10. Intangible assets (from Schedule RC-M)............................ 2143 156,715 10.
11. Other assets (from Schedule RC-F)................................. 2160 1,592,088 11.
12. Total assets (sum of items 1 through 11).......................... 2170 49,335,206 12.
<FN>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
<TABLE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Schedule RC-Continued
<CAPTION>
Dollar Amounts in
Thousands Bill Mil Thou
------------------ -------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 16,878,870 13.a.
(1) Noninterest-bearing(1).................................... RCON 6631 7,855,880 13.a.(1)
(2) Interest-bearing.......................................... RCON 6636 9,022,990 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II).......................... RCFN 2200 12,677,057 13.b.
(1) Noninterest bearing....................................... RCFN 6631 766,936 13.b.(1)
(2) Interest-bearing.......................................... RCFN 6636 11,910,121 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased....................................... RCFD 0278 1,318,968 14.a.
b. Securities sold under agreements to repurchase................ RCFD 0279 1,197,589 14.b.
15. a. Demand notes issued to the U.S. Treasury...................... RCON 2840 104,546 15.a.
b. Trading Liabilities........................................... RCFD 3548 6,431,784 15.b.
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 4,437,636 16.a.
b. With original maturity of more than one year................. RCFD 2333 75,308 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases........................................................... RCFD 2910 283,041 17.
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 632,259 18.
19. Subordinated notes and debentures................................ RCFD 3200 1,275,000 19.
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 892,947 20.
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 46,205,005 21.
22. Limited-Life preferred stock and related surplus................. RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23.
24. Common stock..................................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,349,164 25.
26. a. Undivided profits and capital reserves........................ RCFD 3632 584,878 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 (3,951) 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (748) 27.
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 3,130,201 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)............................ RCFD 3300 49,335,206 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for
the bank by independent external Number
auditors as of any date during 1995................................................RCFD 6724.... N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company
(but not on the bank separately)
3. = Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
4. = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5. = Review of the bank's financial statements by external
auditors
6. = Compilation of the bank's financial statements by external
auditors
7. = Other audit procedures (excluding tax preparation work)
8. = No external audit work
- -------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
EXHIBIT 25.10
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
-------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
-------------
THE AES CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 54-1163725
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1001 North 19th Street
Arlington, Virginia 22209
(Address of principal executive offices) (Zip Code)
Guarantee of Preferred Securities of
The AES Trust III
(Title of Indenture Securities)
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate
trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a
part of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 14th day of
November, 1996.
The First National Bank of Chicago,
Trustee
By /s/ Richard D. Manella
Richard D. Manella
Vice President
* Exhibits 1, 2, 3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 16 of the Form T-1 of The First National
Bank of Chicago, filed as Exhibit 25.1 to the Registration Statement on Form
S-3 of SunAmerica Inc. filed with the Securities and Exchange Commission on
October 25, 1996 (Registration No. 333-14201).
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 14, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of a Guarantee Agreement of The AES
Corporation, the undersigned, in accordance with Section 321(b) of the Trust
Indenture Act of 1939, as amended, hereby consents that the reports of
examinations of the undersigned, made by Federal or State authorities
authorized to make such examinations, may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ Richard D. Manella
Richard D. Manella
Vice President
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC--Balance Sheet
<CAPTION>
C400 <-
Dollar Amounts in ------------ -------
Thousands RCFD BIL MIL THOU
------------------ ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1).......... 0081 3,572,641 1.a.
b. Interest-bearing balances(2)................................... 0071 6,958,367 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)...... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)... 1773 1,448,974 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold............................................. 0276 5,020,878 3.a.
b. Securities purchased under agreements to resell................ 0277 918,688 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C).......................................................... RCFD 2122 19,125,160 4.a.
b. LESS: Allowance for loan and lease losses...................... RCFD 3123 379,232 4.b.
c. LESS: Allocated transfer risk reserve.......................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)........................... 2125 18,745,928 4.d.
5. Assets held in trading accounts................................... 3545 9,599,172 5.
6. Premises and fixed assets (including capitalized leases).......... 2145 623,289 6.
7. Other real estate owned (from Schedule RC-M)...................... 2150 8,927 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).................................... 2130 57,280 8.
9. Customers' liability to this bank on acceptances outstanding...... 2155 632,259 9.
10. Intangible assets (from Schedule RC-M)............................ 2143 156,715 10.
11. Other assets (from Schedule RC-F)................................. 2160 1,592,088 11.
12. Total assets (sum of items 1 through 11).......................... 2170 49,335,206 12.
<FN>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
<TABLE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Schedule RC-Continued
<CAPTION>
Dollar Amounts in
Thousands Bil Mil Thou
------------------ -------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 16,878,870 13.a.
(1) Noninterest-bearing(1).................................... RCON 6631 7,855,880 13.a.(1)
(2) Interest-bearing.......................................... RCON 6636 9,022,990 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II).......................... RCFN 2200 12,677,057 13.b.
(1) Noninterest bearing....................................... RCFN 6631 766,936 13.b.(1)
(2) Interest-bearing.......................................... RCFN 6636 11,910,121 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased....................................... RCFD 0278 1,318,968 14.a.
b. Securities sold under agreements to repurchase................ RCFD 0279 1,197,589 14.b.
15. a. Demand notes issued to the U.S. Treasury...................... RCON 2840 104,546 15.a.
b. Trading Liabilities........................................... RCFD 3548 6,431,784 15.b.
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 4,437,636 16.a.
b. With original maturity of more than one year................. RCFD 2333 75,308 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases........................................................... RCFD 2910 283,041 17.
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 632,259 18.
19. Subordinated notes and debentures................................ RCFD 3200 1,275,000 19.
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 892,947 20.
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 46,205,005 21.
22. Limited-Life preferred stock and related surplus................. RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23.
24. Common stock..................................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,349,164 25.
26. a. Undivided profits and capital reserves........................ RCFD 3632 584,878 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 (3,951) 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (748) 27.
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 3,130,201 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)............................ RCFD 3300 49,335,206 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for
the bank by independent external Number
auditors as of any date during 1995................................................RCFD 6724.... N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company
(but not on the bank separately)
3. = Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
4. = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5. = Review of the bank's financial statements by external
auditors
6. = Compilation of the bank's financial statements by external
auditors
7. = Other audit procedures (excluding tax preparation work)
8. = No external audit work
- -------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
EXHIBIT 25.11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
THE AES CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 54-1163725
(State or other jurisdiction of (I.R.S.
employer
incorporation or organization) identification number)
1001 North 19th Street
Arlington, Virginia 22209
(Address of principal executive offices) (Zip Code)
Junior Subordinated Debt Trust Securities
(Title of Indenture Securities)
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate
trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a
part of this Statement of Eligibility.
1.A copy of the articles of association of the
trustee now in effect.*
2.A copy of the certificates of authority of the
trustee to commence business.*
3.A copy of the authorization of the trustee to
exercise corporate trust powers.*
4.A copy of the existing by-laws of the trustee.*
5.Not Applicable.
6.The consent of the trustee required by
Section 321(b) of the Act.
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8.Not Applicable.
9.Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 14th day of
November, 1996.
The First National Bank of Chicago,
Trustee
By /s/ Richard D. Manella
Richard D. Manella
Vice President
* Exhibits 1, 2, 3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 16 of the Form T-1 of The First National
Bank of Chicago, filed as Exhibit 25.1 to the Registration Statement on Form
S-3 of SunAmerica Inc. filed with the Securities and Exchange Commission on
October 25, 1996 (Registration No. 333-14201).
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 14, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between The AES
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ Richard D. Manella
Richard D. Manella
Vice President
<TABLE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC--Balance Sheet
<CAPTION>
C400 <-
Dollar Amounts in ------------ -------
Thousands RCFD BIL MIL THOU
------------------ ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1).......... 0081 3,572,641 1.a.
b. Interest-bearing balances(2)................................... 0071 6,958,367 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)...... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)... 1773 1,448,974 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold............................................. 0276 5,020,878 3.a.
b. Securities purchased under agreements to resell................ 0277 918,688 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C).......................................................... RCFD 2122 19,125,160 4.a.
b. LESS: Allowance for loan and lease losses...................... RCFD 3123 379,232 4.b.
c. LESS: Allocated transfer risk reserve.......................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)........................... 2125 18,745,928 4.d.
5. Assets held in trading accounts................................... 3545 9,599,172 5.
6. Premises and fixed assets (including capitalized leases).......... 2145 623,289 6.
7. Other real estate owned (from Schedule RC-M)...................... 2150 8,927 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).................................... 2130 57,280 8.
9. Customers' liability to this bank on acceptances outstanding...... 2155 632,259 9.
10. Intangible assets (from Schedule RC-M)............................ 2143 156,715 10.
11. Other assets (from Schedule RC-F)................................. 2160 1,592,088 11.
12. Total assets (sum of items 1 through 11).......................... 2170 49,335,206 12.
<FN>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
<TABLE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Schedule RC-Continued
<CAPTION>
Dollar Amounts in
Thousands Bil Mil Thou
------------------ -------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 16,878,870 13.a.
(1) Noninterest-bearing(1).................................... RCON 6631 7,855,880 13.a.(1)
(2) Interest-bearing.......................................... RCON 6636 9,022,990 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II).......................... RCFN 2200 12,677,057 13.b.
(1) Noninterest bearing....................................... RCFN 6631 766,936 13.b.(1)
(2) Interest-bearing.......................................... RCFN 6636 11,910,121 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased....................................... RCFD 0278 1,318,968 14.a.
b. Securities sold under agreements to repurchase................ RCFD 0279 1,197,589 14.b.
15. a. Demand notes issued to the U.S. Treasury...................... RCON 2840 104,546 15.a.
b. Trading Liabilities........................................... RCFD 3548 6,431,784 15.b.
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 4,437,636 16.a.
b. With original maturity of more than one year................. RCFD 2333 75,308 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases........................................................... RCFD 2910 283,041 17.
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 632,259 18.
19. Subordinated notes and debentures................................ RCFD 3200 1,275,000 19.
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 892,947 20.
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 46,205,005 21.
22. Limited-Life preferred stock and related surplus................. RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23.
24. Common stock..................................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,349,164 25.
26. a. Undivided profits and capital reserves........................ RCFD 3632 584,878 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 (3,951) 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (748) 27.
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 3,130,201 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)............................ RCFD 3300 49,335,206 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for
the bank by independent external Number
auditors as of any date during 1995................................................RCFD 6724.... N/A M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company
(but not on the bank separately)
3. = Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
4. = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5. = Review of the bank's financial statements by external
auditors
6. = Compilation of the bank's financial statements by external
auditors
7. = Other audit procedures (excluding tax preparation work)
8. = No external audit work
- -------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
