As filed with the Securities and Exchange Commission on November 27, 1996
Registration No. 333-15487
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 2
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. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Title of Each Maximum
Class of Aggregate Amount of
Securities Offering Registration
to be Registered Price (1)(2)(3) Fee (4)
------------------- --------------- ------------
Senior Debt Securities, Senior Subordinated
Debt Securities and Junior Subordinated Debt
Securities (collectively, '"Debt Securities")
of The AES Corporation........................
Preferred Stock of The AES Corporation
("Preferred Stock")...........................
Common Stock of The AES Corporation
("Common Stock")..............................
Junior Subordinated Debt Securities of The AES
Corporation for issuance directly or to AES
Trust I, AES Trust II and AES Trust III
("Junior Subordinated Debt Trust
Securities").................................. $750,000,000 $227,273
Preferred Securities of AES Trust I, AES
Trust II and AES Trust III, severally
("Preferred Securities")......................
Guarantees of Preferred Securities of AES Trust
I, AES Trust II and AES Trust III by The AES
Corporation(5)................................
Stock Purchase Contracts to purchase Common
Stock ("Stock Purchase Contracts")............
Stock Purchase Units, each representing
ownership of a Stock Purchase Contract and
Debt Securities or debt obligations
of third parties ("Stock Purchase Units").....
__________
(1) Such indeterminate number or amount of Debt Securities, Junior
Subordinated Debt Trust Securities, Preferred Stock, Common Stock,
Stock Purchase Contracts and Stock Purchase Units of The AES
Corporation and Preferred Securities of AES Trust I, AES Trust II and
AES Trust III as may from time to time be issued at indeterminate
prices. Junior Subordinated Debt Trust Securities may be issued and
sold to AES Trust I, AES Trust II and AES Trust III, in which event such
Junior Subordinated Debt Trust Securities may later be distributed to
the holders of Preferred Securities upon a dissolution of AES Trust I,
AES Trust II and AES Trust III and the distribution of the assets
thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and dividends,
if any.
(3) The AES Corporation is also registering under this Registration Statement
all other obligations that it may have with respect to Preferred
Securities issued by AES Trust I, AES Trust II or AES Trust III. No
separate consideration will be received for any Guarantee or any other
such obligations.
(4) The filing fee of $227,273 was paid in connection with the initial
filing of this Registration Statement on November 4, 1996.
(5) Includes the rights of holders of the Preferred Securities of an AES
Trust under the Trust Preferred Securities Guarantee and back-up
undertakings, consisting of obligations by The AES Corporation to provide
certain indemnities in respect of, and pay and be responsible for certain
expenses, costs, liabilities, and debt of, as applicable, AES Trust I,
AES Trust II and AES Trust III and such other obligations of The AES
Corporation set forth in the Amended and Restated Declaration of Trust,
the Junior Subordinated Debt Trust Securities Indenture and
Supplemental Indentures thereto, in each case as further described in
the Registration Statement. No separate consideration will be received
for any Guarantees of any back-up undertakings.
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 27, 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 November 13, 1996, 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 duty 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 27, 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 fully and unconditionally guaranteed as 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 fully and unconditionally
as 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 November 13, 1996, 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. Notwithstanding the foregoing, if an
Event of Default under the applicable Declaration has occurred and is
continuing and such event is attributable to the failure of the Company to
pay interest or principal on the applicable series of Junior Subordinated
Debt Trust Securities on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities of such AES Trust may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the applicable series of Junior Subordinated Debt Trust
Securities having a principal amount equal to the aggregate liquidation
amount of the Preferred Securities of such holder (a "Holder Direct
Action") on or after the respective due date specified in the applicable
series of Junior Subordinated Debt Trust Securities. In connection with
such Holder Direct Action, the Company will be subrogated to the rights of
such holder of Preferred Securities under the applicable Declaration to the
extent of any payment made by the Company to such holder of Preferred
Securities in such Holder 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 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 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.
Notwithstanding the foregoing, if the Company has failed to make a
guarantee payment, a holder of Preferred Securities may directly institute
a proceeding against the Company for enforcement of the Preferred
Securities Guarantee for such payment.
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 duty 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+
___________
+ 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 27, 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 27, 1996.
Signature Title Date
--------- ----- ----
* Chairman of the Board November 27, 1996
- ------------------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief November 27, 1996
- ------------------------------ Executive Officer and
Dennis W. Bakke Director (Principal
Executive Officer)
* Director November 27, 1996
- ------------------------------
Vicki-Ann Assevero
* Director November 27, 1996
- ------------------------------
Dr. Alice F. Emerson
* Director November 27, 1996
- ------------------------------
Robert F. Hemphill, Jr.
* Director November 27, 1996
- ------------------------------
Frank Jungers
* Director November 27, 1996
- ------------------------------
Dr. Henry R. Linden
* Director November 27, 1996
- ------------------------------
Russell E. Train
* Director November 27, 1996
- ------------------------------
Thomas I. Unterberg
* Director November 27, 1996
- ------------------------------
Robert H. Waterman, Jr.
/s/ Barry J. Sharp Vice President and November 27, 1996
- ------------------------------ Chief Financial
Barry J. Sharp Officer (Principal
Financial and
Accounting Officer)
*By: /s/ Barry J. Sharp November 27, 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 27, 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+
___________
+ Previously filed
Exhibit 4.9
Form of
AMENDED AND RESTATED DECLARATION OF TRUST
OF
AES TRUST [ ]
_______________________________________
Dated as of ___________, 19__
_______________________________________
TABLE OF CONTENTS(*)
(*) This Table of Contents does not constitute part of the Amended and
Restated Declaration of Trust and should not have any bearing upon the
interpretation of any of its terms or provisions.
Page
----
PARTIES................................................................. 1
RECITALS:
Recitals................................................................ 1
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain terms defined; other terms defined in the Trust
Indenture Act of 1939, as amended, or by reference therein
in the Securities Act of 1933, as amended, to have the
meanings assigned therein................................ 2
Affiliate.................................................. 2
Book Entry Interest........................................ 2
Business Day............................................... 3
Business Trust Act......................................... 3
Certificate................................................ 3
Certificate of Trust....................................... 3
Clearing Agency............................................ 3
Clearing Agency Participant................................ 3
Closing Date............................................... 3
Code....................................................... 3
Commission................................................. 3
Common Security............................................ 3
Common Security Certificate................................ 3
Covered Person............................................. 4
Debenture Trustee.......................................... 4
Debentures................................................. 4
Definitive Preferred Security Certificates................. 4
Delaware Trustee........................................... 4
Depositary Agreement....................................... 4
Distribution............................................... 4
DTC........................................................ 4
Event of Default........................................... 4
Exchange Act............................................... 4
Fiscal Year................................................ 4
Global Certificate......................................... 4
Holder..................................................... 4
Indemnified Person......................................... 5
Indenture.................................................. 5
Indenture Event of Default................................. 5
Investment Company......................................... 5
Investment Company Act..................................... 5
Legal Action............................................... 5
Liquidation Distribution................................... 5
Majority in liquidation amount of the Securities........... 5
Ministerial Action......................................... 5
Option Closing Date........................................ 6
Original Declaration....................................... 6
Paying Agent............................................... 6
Person..................................................... 6
Preferred Guarantee........................................ 6
Preferred Security......................................... 6
Preferred Security Beneficial Owner........................ 6
Preferred Security Certificate............................ 6
Property Trustee........................................... 6
Property Account........................................... 6
Quorum..................................................... 6
Regular Trustee............................................ 6
Related Party.............................................. 7
Resignation Request........................................ 7
Responsible Officer........................................ 7
Rule 3a-7.................................................. 7
Securities................................................. 7
Securities Act............................................. 7
66-2/3% in liquidation amount of the Securities............ 7
Special Event.............................................. 7
Sponsor or AES............................................. 8
Successor Delaware Trustee................................. 8
Successor Property Trustee................................. 8
10% in liquidation amount of the Securities................ 8
Treasury Regulations....................................... 8
Trustee or Trustees........................................ 8
Trust Indenture Act........................................ 9
Underwriting Agreement..................................... 9
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.......................... 9
SECTION 2.2 List of Holders of Preferred Securities................... 9
SECTION 2.3 Reports by the Property Trustee........................... 10
SECTION 2.4 Periodic Reports to the Property Trustee.................. 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......... 10
SECTION 2.6 Events of Default; Waiver................................. 10
SECTION 2.7 Disclosure of Information................................. 13
ARTICLE III
ORGANIZATION
SECTION 3.1 Name...................................................... 13
SECTION 3.2 Office.................................................... 13
SECTION 3.3 Insurance of the Trust Securities......................... 13
SECTION 3.4 Purchase of Debentures.................................... 14
SECTION 3.5 Purpose................................................... 15
SECTION 3.6 Authority................................................. 15
SECTION 3.7 Title to Property of the Trust............................ 16
SECTION 3.8 Powers and Duties of the Regular Trustees................. 16
SECTION 3.9 Prohibition of Actions by Trust and Trustees.............. 19
SECTION 3.10 Powers and Duties of the Property Trustee................. 20
SECTION 3.11 Delaware Trustee.......................................... 23
SECTION 3.12 Certain Rights and Duties of the Property Trustee......... 23
SECTION 3.13 Registration Statement and Related Matters................ 26
SECTION 3.14 Filing of Amendments to Certificate of Trust.............. 27
SECTION 3.15 Execution of Documents by Regular Trustees................ 28
SECTION 3.16 Trustees Not Responsible for Recitals or Issuance of
Securities.............................................. 28
SECTION 3.17 Duration of Trust....................................... 28
ARTICLE IV
SPONSOR
SECTION 4.1 Purchase of Common Securities by Sponsor.................. 28
SECTION 4.2 Expenses.................................................. 28
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Qualifications........................ 29
SECTION 5.2 Appointment, Removal and Resignation of Trustees.......... 32
SECTION 5.3 Vacancies Among Trustees.................................. 34
SECTION 5.4 Effect of Vacancies....................................... 34
SECTION 5.5 Meetings.................................................. 34
SECTION 5.6 Delegation of Power....................................... 35
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................. 35
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities................... 36
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust...................................... 38
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.................................... 38
SECTION 9.2 Transfer of Certificates.................................. 39
SECTION 9.3 Deemed Security Holders................................... 39
SECTION 9.4 Book Entry Interests...................................... 40
SECTION 9.5 Notices to Holders of Certificates........................ 41
SECTION 9.6 Appointment of Successor Clearing Agency.................. 41
SECTION 9.7 Definitive Preferred Securities Certificates.............. 41
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates......... 42
ARTICLE X
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.1 Exculpation............................................. 42
SECTION 10.2 Indemnification......................................... 43
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year............................................. 44
SECTION 11.2 Certain Accounting Matters.............................. 44
SECTION 11.3 Banking................................................. 45
SECTION 11.4 Withholding............................................. 45
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.............................................. 46
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent............................................... 47
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee...... 49
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices................................................. 50
SECTION 14.2 Undertaking for Costs................................... 51
SECTION 14.3 Governing Law........................................... 52
SECTION 14.4 Headings................................................ 52
SECTION 14.5 Partial Enforceability.................................. 52
SECTION 14.6 Counterparts............................................ 52
SECTION 14.7 Intention of the Parties................................ 53
SECTION 14.8 Successors and Assigns.................................. 53
SIGNATURES AND SEALS................................................... 54
EXHIBIT A: CERTIFICATE OF TRUST
EXHIBIT B: TERMS OF THE PREFERRED SECURITIES
EXHIBIT C: TERMS OF THE COMMON SECURITIES
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AES TRUST [ ]
__________, 19__
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated
and effective as of __________, 199__ by the undersigned trustees (together
with all other Persons from time to time duly appointed and serving as
trustees in accordance with the provisions of this Declaration, the
"Trustees"), The AES Corporation, a Delaware corporation, as trust sponsor
("AES" or the "Sponsor"), and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration.
WHEREAS, the Sponsor and the Trustees entered into a
Declaration of Trust dated as of _________ __, 199_ (the "Original
Declaration") in order to establish a statutory business trust (the "Trust")
under the Business Trust Act (as hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust")
of the Trust was filed with the office of the Secretary of State of the State
of Delaware on _________ __, 199_;
WHEREAS, the Trustees and the Sponsor desire to continue the
Trust pursuant to the Business Trust Act for the purpose of, as described more
fully in Sections 3.3 and 3.4 hereof, (i) issuing and selling Preferred
Securities (as defined herein) representing preferred undivided beneficial
interests in the assets of the Trust for cash and investing the proceeds
thereof in Debentures (as hereinafter defined) of AES issued under the
Indenture (as hereinafter defined) to be held as assets of the Trust and (ii)
issuing and selling Common Securities (as defined herein) representing common
undivided beneficial interests in the assets of the Trust to AES in exchange
for cash and investing the proceeds thereof in additional Debentures issued
under the Indenture to be held as assets of the Trust; and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act, that
the Original Declaration be amended and restated in its entirety as provided
herein and that this Declaration constitute the governing instrument of such
business trust, the Trustees declare that all assets referred to in clauses
(i) and (ii) of the previous Whereas clause purchased by the Trust will be
held in trust for the benefit of the Holders (as defined herein) from time
to time, of the Certificates (as defined herein) representing undivided
beneficial interests in the assets of the Trust issued hereunder, subject
to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) Capitalized terms used in this Declaration but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Amended and Restated Declaration of Trust (including Exhibits A, B
and C hereto (the "Exhibits")) as modified, supplemented or amended from time
to time;
(d) all references in this Declaration to Articles and
Sections and Exhibits are to Articles and Sections of and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time.
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Certificate of Trust" has the meaning set forth in the second
Whereas clause above.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting
as depository for the Preferred Securities and in whose name or in the name of
a nominee of that organization, shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of the
Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the Closing Date as specified in the
Underwriting Agreement, which date is also the date of execution and delivery
of this Declaration.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation. A reference to a specific section
((Sec.)) of the Code refers not only to such specific section but also to any
corresponding provision of any federal tax statute enacted after the date of
this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1(b).
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Annex I to Exhibit C.
"Covered Person" means (i) any officer, director, shareholder,
partner, member, representative, employee or agent of the Trust or its
Affiliates, (ii) any officer, director, shareholder, employees,
representatives or agents of AES or its Affiliates and (iii) the Holders from
time to time of the Securities.
"Debenture Trustee" means [to come], as trustee under the
Indenture until a successor is appointed thereunder and thereafter means such
successor trustee.
"Debentures" means the series of Junior Subordinated Debentures
issued by AES under the Indenture to the Property Trustee and entitled the
"____% Junior Subordinated Debentures due [ ]".
"Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section
5.1(a)(3).
"Depositary Agreement" means the agreement among the Trust, the
Property Trustee and DTC dated as of the Closing Date, as the same may be
amended or supplemented from time to time.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in respect of the
Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiscal Year" has the meaning specified in Section 11.1.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means any Trustee, any Affiliate of any
Trustee, any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Trustee, or any employee or agent of the
Trust or its Affiliates.
"Indenture" means the Junior Subordinated Indenture dated as of
_______ __, 199__ between AES and the Debenture Trustee as supplemented by the
[ ] Supplemental Indenture thereto dated as of ____________, 199__,
pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means an event or condition
defined as an "Event of Default" with respect to the Debentures under Section
6.01(a) of the Indenture has occurred and is continuing.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time or any successor legislation.
"Legal Action" has the meaning specified in Section 3.8(g).
"Liquidation Distribution" has the meaning set forth in
Exhibits B and C hereto establishing the terms of the Securities.
"Majority in liquidation amount of the Securities" means,
except as otherwise required by the Trust Indenture Act and except as provided
in the penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context
may require, Holder(s) of outstanding Preferred Securities or Common
Securities voting separately as a class, who are the record owners of a
relevant class of Securities whose liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) represents more than 50% of the liquidation amount of all
outstanding Securities of such class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Exhibits B and C hereto.
"Option Closing Date" means the Option Closing Date as
specified in the Underwriting Agreement.
"Original Declaration" has the meaning set forth in the first
WHEREAS clause above.
"Paying Agent" has the meaning specified in Section 3.10(i).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee" means the Guarantee Agreement dated as of
__________, 199__ of AES in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section
7.1(b).
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive certificate
in fully registered form representing a Preferred Security substantially in
the form of Annex I to Exhibit B.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.1(c) and having the duties set forth for
the Property Trustee herein.
"Property Account" has the meaning specified in Section
3.10(c)(i).
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both such Regular Trustees.
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means any direct or indirect wholly owned
subsidiary of AES or any other Person which owns, directly or indirectly, 100%
of the outstanding voting securities of AES.
"Resignation Request" has the meaning specified in Section
5.2(d).
"Responsible Officer" means, with respect to the Property
Trustee, the chairman of the board of directors, the president, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Property Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or
any successor rule thereunder.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"66-2/3% in liquidation amount of the Securities" means, except
as otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context
may require, Holder(s) of outstanding Preferred Securities or Common
Securities, voting separately as a class, who are the record owners of a
relevant class of Securities whose liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) represents 66-2/3% or more of the liquidation amount of all
outstanding Securities of such class.
"Special Event" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"Sponsor" or "AES" means The AES Corporation, a Delaware
corporation, or any successor entity in a merger, in its capacity as sponsor
of the Trust.
"Successor Delaware Trustee" has the meaning specified in
Section 5.2(b)(ii).
"Successor Property Trustee" means a successor Trustee
possessing the qualifications to act as Property Trustee under Section 5.1(c).
"10% in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context
may require, Holder(s) of outstanding Preferred Securities or Common
Securities, voting separately as a class, who are the record owners of a
relevant class of Securities whose liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) represents 10% or more of the liquidation amount of all
outstanding Securities of such class.
"Treasury Regulations" means the income tax regulations
including temporary and proposed regulations, promulgated under the Code by
the United States Treasury, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees
shall refer to such Person or Persons solely in their capacity as trustees
hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
["Underwriting Agreement" means the Underwriting Agreement
dated as of __________, 199__ among the Trust, the Sponsor and [to come]
Corporation, as representative of the several underwriters named therein.]
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration and
shall, to the extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Section
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control;
(c) the Property Trustee, to the extent permitted by
applicable law and/or the rules and regulations of the Commission, shall be
the only Trustee which is a trustee for the purposes of the Trust Indenture
Act; and
(d) the application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Preferred Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide the Property Trustee with such information as is
required under Section 312(a) of the Trust Indenture Act at the times and in
the manner provided in Section 312(a); and
(b) the Property Trustee shall comply with its obligations
under Section Section 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, the Property Trustee
shall provide to the Holders of the Securities such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form, in the manner
and at the times provided by Section 313 of the Trust Indenture Act. The
Property Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee, the Commission and the Holders of
the Securities, as applicable, such documents, reports and information as
required by Section 314(a)(1)-(3) (if any) of the Trust Indenture Act and the
compliance certificates required by Section 314(a)(4) and (c) of the Trust
Indenture Act, any such certificates to be provided in the form, in the manner
and at the times required by Section 314(a)(4) and (c) of the Trust Indenture
Act (provided that any certificate to be provided pursuant to Section
314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the
end of each Fiscal Year).
SECTION 2.5 Evidence of Compliance with
Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Declaration which
relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given pursuant to
Section 314(c) shall comply with Section 314(e) of the Trust Indenture Act.
SECTION 2.6 Events of Default; Waiver.
(a) Subject to Section 2.6(c), Holders of Preferred Securities
may, by vote of at least a Majority in liquidation amount of the Preferred
Securities (A) in accordance with the terms of the Preferred Securities,
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee, or (B) on behalf of the Holders of all Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences; provided that if the Event of Default arises
out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, the Event of
Default under this Declaration shall also be not waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures, or (2) each holder of
Debentures, the Event of Default under this Declaration may only be
waived by, in the case of clause (1) above, the vote of Holders of
Preferred Securities representing such specified percentage of the
aggregate liquidation amount of the Preferred Securities or, in the
case of clause (2) above, each Holder of Preferred Securities.
Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default
with respect to the Preferred Securities or impair any right consequent
thereon.
(b) Subject to Section 2.6(c), Holders of Common Securities
may by vote of at least a Majority in liquidation amount of the Common
Securities, (A) in accordance with the terms of the Common Securities, direct
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or exercising any trust or power conferred
upon the Property Trustee or (B) on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the Event of Default arises
out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below, the Event
of Default under this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of
Debentures, except where the holders of the Common Securities are
deemed to have waived such Event of Default under this Declaration as
provided below, the Event of Default under this Declaration may only
be waived by, in the case of clause (1) above, the vote of Holders of
Common Securities representing such specified percentage of the
aggregate liquidation amount of the Common Securities or, in the case
of clause (2) above, each holder of Common Securities; and
provided, further, that each Holder of Common Securities will be deemed to
have waived any Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the Preferred
Securities have been cured, waived by the Holders of Preferred Securities as
provided in this Declaration or otherwise eliminated and until all Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Preferred Securities and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of this Declaration or the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived
by the Holders of Preferred Securities as provided in this Declaration, the
Holders of Common Securities agree that such waiver shall also constitute the
waiver of such Event of Default with respect to the Common Securities for all
purposes under this Declaration without any further act, vote or consent of
the Holders of the Common Securities. Subject to the foregoing provisions
of this Section 2.6(b), upon such waiver, any such default shall cease to
exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of
this Declaration, but no such waiver shall extend to any subsequent or
other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) The right of any Holder of Securities to receive payment
of Distributions on the Securities in accordance with this Declaration and the
terms of the Securities set forth in Exhibits B and C on or after the
respective payment dates therefor, or to institute suit for the enforcement of
any such payment on or after such payment dates, shall not be impaired without
the consent of such Holder.
(d) As provided in the terms of the Securities set forth in
Exhibits B and C hereto, a waiver of an Indenture Event of Default by the
Property Trustee at the written direction of the Holders of the Preferred
Securities constitutes a waiver of the corresponding Event of Default under
this Declaration in respect of the Securities.
SECTION 2.7 Disclosure of Information.
The disclosure of information as to the names and addresses of
the Holders of the Securities in accordance with Section 312 of the Trust
Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any law
hereafter enacted which does not specifically refer to Section 312 of the
Trust Indenture Act, nor shall the Property Trustee be held accountable by
reason of mailing any material pursuant to a request made under Section
312(b) of the Trust Indenture Act.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust continued by this Declaration is named "AES Trust [
]" as such name may be modified from time to time by the Regular Trustees
following written notice to the Holders of Securities. The Trust's activities
may be conducted under the name of the Trust or any other name deemed
advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o The AES
Corporation, 1001 North 19th Street, Arlington, Virginia 22209. Upon ten
days' written notice to the Holders, the Regular Trustees may change the
location of the Trust's principal office. The name of the registered agent
and office of the Trust in the State of Delaware is [The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801]. At any time, the
Regular Trustees may designate another registered agent and/or registered
office.
SECTION 3.3 Issuance of the Trust Securities.
On __________, 199_ the Sponsor, on behalf of the Trust and
pursuant to the Original Declaration, executed and delivered the Underwriting
Agreement. On the Closing Date and contemporaneously with the execution and
delivery of this Declaration, the Regular Trustees, on behalf of the Trust,
shall execute and deliver to (i) the underwriters named in the Underwriting
Agreement, a Global Certificate, registered in the name of the nominee of the
initial Clearing Agency as specified in Section 9.4, in an aggregate amount of
___________ Preferred Securities having an aggregate liquidation amount of
$__________, against receipt of the aggregate purchase price of such Preferred
Securities of $___________, and (ii) the Sponsor, Common Securities
Certificates, registered in the name of the Sponsor, in an aggregate amount of
________ Common Securities having an aggregate liquidation amount of
$____________, against receipt of the aggregate purchase price of such Common
Securities of $___________. In the event and to the extent the overallotment
option granted by the Trust pursuant to the Underwriting Agreement is
exercised by such underwriters, on the Option Closing Date the Regular
Trustees, on behalf of the Trust, shall execute and deliver to such
underwriters a Global Certificate, registered in the name of the nominee of
the initial Clearing Agency as specified in Section 9.4, in an aggregate
amount of up to ___________ Preferred Securities having an aggregate
liquidation amount of up to $___________, against receipt of the aggregate
purchase price of such Preferred Securities of up to $____________.
SECTION 3.4 Purchase of Debentures.
On the Closing Date and contemporaneously with the execution
and delivery of this Declaration, the Regular Trustees, on behalf of the
Trust, shall purchase from the Sponsor with the proceeds received by the Trust
from the sale of the Securities on such date pursuant to Section 3.3, at a
purchase price of 100% of the principal amount thereof, Debentures, registered
in the name of the Property Trustee and having an aggregate principal amount
equal to $___________, and, in satisfaction of the purchase price for such
Debentures, the Regular Trustee, on behalf of the Trust, shall deliver or
cause to be delivered to the Sponsor the sum of $___________. In the event
the overallotment option granted by the Trust with respect to the Preferred
Securities pursuant to the Underwriting Agreement is exercised by the
underwriters named therein, on the Option Closing Date the Regular Trustees,
on behalf of the Trust, shall purchase from the Sponsor with the proceeds
received by the Trust from the sale of the Preferred Securities on such date
pursuant to Section 3.3, at a purchase price of 100% of the principal amount
thereof, additional Debentures, registered in the name of the Property Trustee
and having an aggregate principal amount of up to $__________, and, in
satisfaction of the purchase price for such Debentures, the Regular Trustees,
on behalf of the Trust, shall deliver or cause to be delivered to the Sponsor
an amount equal to the aggregate principal amount of the Debentures being
purchased.
SECTION 3.5 Purpose.
The exclusive purposes and functions of the Trust are: (a)(i)
to issue and sell Preferred Securities for cash and use the proceeds of such
sales to acquire from AES Debentures issued under the Indenture having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities so issued and sold; (ii) to enter into such agreements
and arrangements as may be necessary in connection with the sale of Preferred
Securities to the initial purchasers thereof (including the Underwriting
Agreement) and to take all action, and exercise such discretion, as may be
necessary or desirable in connection therewith and to file such registration
statements or make such other filings under the Securities Act, the Exchange
Act or state securities or "Blue Sky" laws as may be necessary or desirable in
connection therewith and the issuance of the Preferred Securities; and (iii)
to issue and sell Common Securities to AES for cash and use the proceeds of
such sale to purchase as trust assets an equal aggregate principal amount of
Debentures issued under the Indenture; and (b) except as otherwise limited
herein, to engage in only those other activities necessary, convenient or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets or at any time
while the Securities are outstanding, otherwise undertake (or permit to be
undertaken) any activity that would result in or cause the Trust to be treated
as anything other than a grantor trust for United States federal income tax
purposes.
SECTION 3.6 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with the Trustees acting on behalf of the
Trust, no Person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to
rely conclusively on the power and authority of the Trustees as set forth in
this Declaration.
SECTION 3.7 Title to Property of the Trust.
Except as provided in Section 3.10 with respect to the
Debentures and the Property Account or unless otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of
the Trust, but shall have an individual undivided beneficial interest in the
assets of the Trust.
SECTION 3.8 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, authority
and duty to cause the Trust, and shall cause the Trust, to engage in the
following activities:
(a) to issue Preferred Securities and Common Securities, in
each case in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, that there shall
be no interests in the Trust other than the Securities and the issuance of
Securities shall be limited to (x) a one-time, simultaneous issuance of both
Preferred Securities and Common Securities on the Closing Date and (y) any
subsequent issuance of Preferred Securities on the Option Closing Date
pursuant to an exercise of the over-allotment option granted to underwriters
in the Underwriting Agreement;
(b) in connection with the issuance of the Preferred
Securities, at the direction of the Sponsor, to effect or cause to be effected
the filings, and to execute or cause to be executed, the documents, set forth
in Section 3.13 and to execute, deliver and perform on behalf of the Trust the
Depositary Agreement;
(c) to acquire as trust assets Debentures with the proceeds of
the sale of the Preferred Securities and Common Securities; provided, however,
that the Regular Trustees shall cause legal title to all of the Debentures to
be vested in, and the Debentures to be held of record in the name of, the
Property Trustee for the benefit of the Holders of the Preferred Securities
and the Common Securities;
(d) to cause the Trust to enter into the Underwriting
Agreement and such other agreements and arrangements as may be necessary or
desirable in connection with the sale of Preferred Securities to the initial
purchasers thereof and the consummation thereof, and to take all action, and
exercise all discretion, as may be necessary or desirable in connection with
the consummation thereof;
(e) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event; provided, that the
Regular Trustees shall consult with the Sponsor and the Property Trustee
before taking or refraining to take any Ministerial Action in relation to a
Special Event;
(f) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including for
the purposes of Section 316(c) of the Trust Indenture Act and with respect to
Distributions, voting rights, redemptions, and exchanges, and to issue
relevant notices to Holders of the Preferred Securities and Common Securities
as to such actions and applicable record dates;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.10(e), the Property
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate to the Property Trustee required
by Section 314(a)(4) of the Trust Indenture Act, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to
carrying out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar
and transfer agent for the Securities, the Regular Trustees hereby initially
appointing the Property Trustee for such purposes;
(m) to take all actions and perform such duties as may be
required of the Regular Trustee pursuant to the terms of the Securities set
forth in Exhibits B and C hereto;
(n) to execute all documents or instruments, perform all
duties and powers and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate
for the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under the laws
of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of the
Securities or to enable the Trust to effect the purposes for which the Trust
has been created;
(p) to take all action, not inconsistent with this
Declaration or with applicable law, which the Regular Trustees determine in
their discretion to be reasonable and necessary or desirable in carrying out
the activities of the Trust as set out in this Section 3.8, in order that:
(i) the Trust will not be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) the Trust will not be classified for United States
federal income tax purposes as an association taxable as a
corporation or a partnership and will be treated as a grantor trust
for United States federal income tax purposes; and
(iii) the Trust will comply with any requirements imposed by
any taxing authority on holders of instruments treated as
indebtedness for United States federal income tax purposes;
provided that such action does not adversely affect the interests of Holders;
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
(r) subject to the requirements of Rule 3a-7 and Section
317(b) of the Trust Indenture Act, to appoint one or more Paying Agents in
addition to the Property Trustee.
The Regular Trustees must exercise the powers set forth in this
Section 3.8 in a manner which is consistent with the purposes and functions of
the Trust set out in Section 3.5 and the Regular Trustees shall not take any
action which is inconsistent with the purposes and functions of the Trust set
forth in Section 3.5.
Subject to this Section 3.8, the Regular Trustees shall have
none of the powers nor any of the authority of the Property Trustee set forth
in Section 3.10.
SECTION 3.9 Prohibition of Actions by Trust and Trustees.
The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall
not and the Trustees (including the Property Trustee) shall not:
(a) invest any proceeds received by the Trust from holding
the Debentures but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided
herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans, other than loans represented by the
Debentures;
(e) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interests in, the Trust other than the 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 Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, (iii) exercise any right to rescind or annul any declaration
that the principal of all of the Debentures shall be due and payable or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, 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 the Trust to be
classified for United States federal income tax purposes as an association
taxable as a corporation or partnership and that the Trust will continue to be
classified as a grantor trust for United States federal income tax purposes.
SECTION 3.10 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Article V. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or, if the Property
Trustee does not also act as the Delaware Trustee, the Delaware Trustee.
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
bank account (the "Property Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of
the Securities and on the receipt of payments of funds made in
respect of the Debentures held by the Property Trustee, deposit such
funds into the Property Account and, without any further acts of the
Property Trustee or the Regular Trustees, promptly make payments to
the Holders of the Preferred Securities and Common Securities from
the Property Account in accordance with Section 6.1. Funds in the
Property Account shall be held uninvested, and without liability for
interest thereon, until disbursed in accordance with this
Declaration. The Property Account shall be an account which is
maintained with a banking institution whose long term unsecured
indebtedness is rated by a "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act, at least equal to (but in no event less
than "A" or the equivalent) the rating assigned to the Preferred
Securities by a nationally recognized statistical rating
organization;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect promptly the redemption of the
Preferred Securities and the Common Securities to the extent the
Debentures are redeemed or mature;
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Preferred Securities and
the Common Securities, engage in such ministerial activities as shall
be necessary or appropriate to effect promptly the distribution
pursuant to terms of the Securities of Debentures to Holders of
Securities upon the occurrence of a Special Event; and
(iv) have the legal power to exercise all of the rights,
powers and privileges of a holder of the Debentures under the
Indenture and, if an Event of Default occurs and is continuing, the
Property Trustee, subject to Section 2.6(b), shall for the benefit of
the Holders of the Securities, enforce its rights as holder of the
Debentures under the Indenture, subject to the rights of the Holders
of the Preferred Securities pursuant to the terms of this
Declaration, the Business Trust Act and the Trust Indenture Act.
(d) The Property Trustee shall take all actions and perform
such duties as may be specifically required of the Property Trustee pursuant
to the terms of the Securities set forth in Exhibits B and C hereto.
(e) The Property Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default or the Property
Trustee's duties and obligations under this Declaration, the Business Trust
Act or the Trust Indenture Act.
(f) All moneys deposited in the Property Account, and all
Debentures held by the Property Trustee for the benefit of the Holders of the
Securities will not be subject to any right, charge, security interest, lien
or claim of any kind in favor of, or for the benefit of the Property Trustee
or its agents or their creditors.
(g) The Property Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities, transmit by mail,
first class postage prepaid, to the holders of the Securities, as their names
and addresses appear upon the register, notice of all defaults with respect to
the Securities known to the Property Trustee, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section 3.10(g) being hereby defined to be an Indenture Event
of Default, not including any periods of grace provided for in the Indenture
and irrespective of the giving of any notice provided therein); provided,
that, except in the case of default in the payment of the principal of (or
premium, if any) or interest on any of the Debentures, the Property Trustee
shall be protected in withholding such notice if and so long as the board
of directors, the executive committee or a trust committee of directors
and/or Responsible Officers, of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities. The Property Trustee shall not be deemed to
have knowledge of any default, except (i) a default in the payment of
principal, premium or interest on the Debentures or (ii) any default as to
which the Property Trustee shall have received written notice or a
Responsible Officer charged with the administration of this Declaration
shall have obtained written notice.
(h) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and
accepted that appointment in accordance with Article V.
(i) The Property Trustee shall act as paying agent in respect
of the Common Securities and, if the Preferred Securities are not in book
entry only form, the Preferred Securities and, subject to Section 3.8(r), may
authorize one or more Persons (each, a "Paying Agent") to pay Distributions,
redemption payments or liquidation payments on behalf of the Trust with
respect to the Preferred Securities. Any such Paying Agent shall comply with
Section 317(b) of the Trust Indenture Act. Any Paying Agent may be removed
by the Property Trustee, after consultation with the Regular Trustees, at any
time and a successor Paying Agent or additional Paying Agents may be appointed
at any time by the Property Trustee, subject to Section 3.8(r).
(j) The Property Trustee shall give prompt written notice to
the Holders of the Securities of any notice received by it from AES of its
election to defer payments of interest on the Debentures by extending the
interest payment period with respect thereto.
(k) Subject to this Section 3.10, the Property Trustee shall
have none of the powers or the authority of the Regular Trustees set forth in
Section 3.8.
(l) The Property Trustee shall exercise the powers, duties and
rights set forth in this Section 3.10 and Section 3.12 in a manner which is
consistent with the purposes and functions of the Trust set out in Section
3.5, and the Property Trustee shall not take any action which is
inconsistent with the purposes and functions of the Trust set forth in
Section 3.5.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.1(a)(3), the Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees and the Property Trustee described in
this Declaration. Except as set forth in Section 5.1(a)(3), the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act. No implied covenants
or obligations shall be read into this Declaration against the Delaware
Trustee.
SECTION 3.12 Certain Rights and Duties of the Property Trustee.
(a) The Property Trustee, before the occurrence of an Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration, and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Property Trustee
shall exercise such of the rights and powers vested in it by this Declaration,
and use the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this
Declaration, and the Property Trustee shall not be liable
except for the performance of such duties and obligations
as are specifically set forth in this Declaration, and no
implied covenants or obligations shall be read into this
Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as
to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming
to the requirements of this Declaration; but in the case
of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders as provided herein
relating to the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee hereunder or under
the Indenture, or exercising any trust or power conferred upon the
Property Trustee under this Declaration; and
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
ground for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Declaration or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(c) Subject to the provisions of Section 3.12(a) and (b):
(i) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part
and, if the Trust is excluded from the definition of Investment
Company solely by means of Rule 3a-7, subject to the requirements of
Rule 3a-7, request and rely upon a certificate, which shall comply
with the provisions of Section 314(e) of the Trust Indenture Act,
signed by any two of the Regular Trustees or by an authorized officer
of the Sponsor, as the case may be;
(ii) The Property Trustee (A) may consult with counsel (which
may be counsel to the Sponsor or any of its Affiliates and may
include any of its employees) selected by it in good faith and with
due care and the written advice or opinion of such counsel with
respect to legal matters 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 and in accordance
with such advice and opinion and (B) shall have the right at any
time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(iii) The Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Property Trustee shall not
be responsible for any misconduct or negligence on the part of any
agent or attorney appointed by it in good faith and with due care;
(iv) The Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holders, unless such Holders shall
have offered to the Property Trustee reasonable security and
indemnity against the costs, expenses (including attorneys' fees and
expenses) and liabilities that might be incurred by it in complying
with such request or direction; provided that nothing contained in
this clause (iv) shall relieve the Property Trustee of the
obligation, upon the occurrence of an Event of Default (which has not
been cured or waived) to exercise such of the rights and powers
vested in it by this Declaration, and to use the same degree of care
and skill in this exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs; and
(v) Any action taken by the Property Trustee or its agents
hereunder shall bind the Holders of the Securities and the signature
of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action; and no third party shall be
required to inquire as to the authority of the Property Trustee to so
act, or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by
the Property Trustee's or its agent's taking such action.
SECTION 3.13 Registration Statement and Related Matters.
In accordance with the Original Declaration, AES and the
Trustees have authorized and directed, and hereby confirm the authorization
of, AES, as the sponsor of the Trust, (i) to file with the Commission and
execute, in each case on behalf of the Trust, (a) the Registration Statement
on Form S-3 (File No. 333-07657) (the "1933 Act Registration Statement")
including any amendments thereto and any further pre-effective or
post-effective amendments to such Registration Statement, relating to the
registration under the Securities Act of the Preferred Securities of the Trust
and (b) a Registration Statement on Form 8-A or other appropriate form (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 Exchange Act;
(ii) to 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 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 AES on behalf of the Trust, may deem
necessary or desirable and (iv) to execute on behalf of the Trust the
Underwriting Agreement. 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, the Regular Trustees, 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 Property Trustee and the
Delaware Trustee, 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, AES and each Trustee, solely in its capacity as
Trustee of the Trust, have constituted and appointed, and hereby confirm the
appointment of, [to come] and each of them, as 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 AES or such Trustee or in AES's or such
Trustee's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to the 1933 Act
Registration Statement and the 1934 Act Registration Statement and to file the
same, with all exhibits thereto, and other documents in connection therewith,
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 AES 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.
SECTION 3.14 Filing of Amendments to Certificate of Trust.
The Certificate of Trust as filed with the Secretary of State
of the State of Delaware on June 19, 1996 is attached hereto as Exhibit A. On
or after the date of execution of this Declaration, the Trustees shall cause
the filing with the Secretary of State of the State of Delaware of such
amendments to the Certificate of Trust as the Trustees shall deem necessary or
desirable.
SECTION 3.15 Execution of Documents by Regular Trustees.
Unless otherwise determined by the Regular Trustees and except
as otherwise required by the Business Trust Act with respect to the
Certificate of Trust or otherwise, a majority of, or if there are only two,
both of, the Regular Trustees are authorized to execute and deliver on behalf
of the Trust any documents which the Regular Trustees have the power and
authority to execute or deliver pursuant to this Declaration.
SECTION 3.16 Trustees Not Responsible for Recitals or
Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor and the Trustees do not assume
any responsibility for their correctness. The Trustees make no
representations as to the value or condition of the property of the Trust or
any part thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration or the Securities.
SECTION 3.17 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Article VIII hereof, shall have existence until ___________, 204_.
ARTICLE IV
SPONSOR
SECTION 4.1 Purchase of Common Securities by Sponsor.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust at the same time as the Preferred Securities to
be issued on such date are issued, such purchase to be in an amount equal to
3% of the total capital of the Trust (including for this purpose the maximum
amount of Preferred Securities, if any, which may be issued on the Option
Closing Date pursuant to the exercise of the overallotment option set forth in
the Underwriting Agreement).
SECTION 4.2 Expenses.
(a) In connection with the purchase of the Debentures by the
Trust, the Sponsor, in its capacity as Sponsor and not as a Holder, shall be
responsible for and shall pay for all debts and obligations (other than with
respect to the Securities) and all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the organization of the
Trust, the issuance of the Preferred Securities to initial purchasers thereof,
the fees and expenses (including reasonable counsel fees and expenses) of the
Trustees (including any amounts payable under Article X), the costs and
expenses relating to the operation of the Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating,
travel and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the disposition of Trust assets).
(b) In connection with the purchase of the Debentures by the
Trust, the Sponsor, in its capacity as Sponsor and not as a Holder, will pay
any and all taxes (other than United States withholding taxes attributable to
the Trust or its assets) and all liabilities, costs and expenses with respect
to such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.2 shall be
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 hereof. Any such Creditor may
enforce the Sponsor's obligations under this Section 4.2 directly against the
Sponsor and the Sponsor irrevocably waives any right or remedy to require that
any such Creditor take any action against the Trust or any other Person before
proceeding against the Sponsor. The Sponsor agrees to execute such additional
agreements as may be necessary or desirable in order to give full effect to
the provisions of this Section 4.2.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Qualifications.
(a) The number of Trustees initially shall be five (5). At
any time (i) before the issuance of the Securities, the Sponsor may, by
written instrument, increase or decrease the number of, and appoint, remove
and replace the, Trustees, and (ii) after the issuance of the Securities the
number of Trustees may be increased or decreased solely by, and Trustees may
be appointed, removed or replaced solely by, vote of Holders of Common
Securities representing a Majority in liquidation amount of the Common
Securities voting as a class; provided that in any case:
(1) the number of Trustees shall be at least five (5)
unless the Trustee that acts as the Property Trustee also acts
as the Delaware Trustee, in which cases the number of Trustees
shall be at least three (3);
(2) at least a majority of the Trustees shall at all
times be officers, directors or employees of AES;
(3) if required by the Business Trust Act, one Trustee
(the "Delaware Trustee") shall be either 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 otherwise is permitted to act as a
Trustee hereunder under the laws of the State of Delaware,
except that if the Property Trustee has its principal place of
business in the State of Delaware and otherwise is permitted to
act as a Trustee hereunder under the laws of the State of
Delaware, then the Property Trustee shall also be the Delaware
Trustee and Section 3.9 shall have no application; and
(4) there shall at all times be a Property Trustee
hereunder which shall satisfy the requirements of Section
5.1(c).
Each Trustee shall be either a natural person at least 21 years of age or a
legal entity which shall act through one or more duly appointed
representatives.
(b) The initial Regular Trustees shall be:
[to come]
c/o THE AES CORPORATION
1001 North 19th Street
Arlington, Virginia 22209
(c) There shall at all times be one Trustee which shall act as
Property Trustee. In order to act as Property Trustee hereunder, such Trustee
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 5.1(c)(ii), 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; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7 and to the extent
Rule 3a-7 requires a trustee having certain qualifications to hold
title to the "eligible assets" (as defined in Rule 3a-7) of the
Trust, the Property Trustee shall possess those qualifications.
If at any time the Property Trustee shall cease to satisfy the
requirements of clauses (i)-(iii) above, the Property Trustee shall
immediately resign in the manner and with the effect set out in Section
5.2(d). If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Property Trustee and the Holders of the Common Securities (as if such
Holders were the obligor referred to in Section 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act. The Preferred Guarantee shall be deemed to be
specifically described in this Declaration for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the Property Trustee
is The Bank of New York, a New York banking corporation, whose address is as
set forth in Section 14.1(b).
(d) The initial Trustee which shall serve as the Delaware
Trustee is [to come], Delaware banking corporation, whose address is as set
forth in Section 14.1(c).
(e) Any action taken by Holders of Common Securities pursuant
to this Article V shall be taken at a meeting of Holders of Common Securities
convened for such purpose or by written consent as provided in Section 12.2.
(f) No amendment may be made to this Section 5.1 which would
change any rights with respect to the number, existence or appointment and
removal of Trustees, except with the consent of each Holder of Common
Securities.
SECTION 5.2 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.2(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of the Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of the Securities by vote of the Holders of
a Majority in liquidation amount of the Common Securities
voting as a class.
(b) (i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.2(a) until a Successor Property
Trustee possessing the qualifications to act as Property
Trustee under Section 5.1(c) has been appointed and has
accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Regular
Trustees, the Sponsor and the Property Trustee being
removed; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.2(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Section 5.1(a)(3) (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written
instrument executed by such Successor Delaware Trustee and
delivered to the Regular Trustees, the Sponsor and the Delaware
Trustee being removed.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation.
(d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Trustee and delivered to the Sponsor and the
Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective until:
(A) a Successor Property Trustee possessing the
qualifications to act as Property Trustee
under Section 5.1(c) has been appointed and
has accepted such appointment by instrument
executed by such Successor Property Trustee
and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
(B) if the Trust is excluded from the definition
of an Investment Company solely by reason of
Rule 3a-7, until the assets of the Trust have
been completely liquidated and the proceeds
thereof distributed to the Holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted
such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this
Section 5.2 within 60 days after delivery to the Sponsor and the
Trust of a Resignation Request, the resigning Property Trustee or
Delaware Trustee may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware
Trustee. Such court may thereupon after such notice, if any, as it
may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
SECTION 5.3 Vacancies Among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1 or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by a majority of the
Regular Trustees shall be conclusive evidence of the existence of such
vacancy. The vacancy shall be filled with a Trustee appointed in accordance
with the requirements of this Article V.
SECTION 5.4 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of
a Trustee, or any one of them, shall not operate to annul the Trust. Whenever
a vacancy in the number of Regular Trustees shall occur until such vacancy is
filled as provided in this Article V, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees
by this Declaration.
SECTION 5.5 Meetings.
Meetings of the Regular Trustees shall be held from time to
time upon the call of any Trustee. Regular meetings of the Regular Trustees
may be held at a time and place fixed by resolution of the Regular Trustees.
Notice of any in-person meeting of the Regular Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 48 hours before such meeting.
Notice of any telephonic meeting of the Regular Trustees or any committee
thereof shall be hand delivered or otherwise delivered in writing (including
by facsimile, with a hard copy by overnight courier) not less than 24 hours
before such meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority of the
Regular Trustees present (whether in person or by telephone) and eligible to
vote with respect to such matter; provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees.
SECTION 5.6 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any registration statement or
amendment thereto or other document or schedule filed with the Commission or
making any other governmental filing (including, without limitation to filings
referred to in Section 3.13).
(b) The Regular Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not prohibited
by applicable law or contrary to the provisions of the Trust, as set forth
herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive periodic distributions, redemption
payments and liquidation distributions in accordance with the applicable terms
of the relevant Holder's Securities ("Distributions"). Distributions shall
be made to the Holders of Preferred Securities and Common Securities in
accordance with the terms of the Securities as set forth in Exhibits B and C
hereto. If and to the extent that AES makes a payment of interest (including
Compounded Interest (as defined in the Indenture)), premium and principal on
the Debentures held by the Property Trustee (the amount of any such payment
being a "Payment Amount"), the Property Trustee shall and is directed to
promptly make a Distribution of the Payment Amount to Holders in accordance
with the terms of the Securities as set forth in Exhibits B and C hereto.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall issue on behalf of the Trust
securities in fully registered form representing undivided beneficial
interests in the assets of the Trust in accordance with Section 7.1(b) and for
the consideration specified in Section 3.3.
(b) The Regular Trustees shall issue on behalf of the Trust
one class of preferred securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth in Exhibit B
(the "Preferred Securities") which terms are incorporated by reference in,
and made a part of, this Declaration as if specifically set forth herein, and
one class of common securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Exhibit C (the
"Common Securities") which terms are incorporated by reference in, and made a
part of, this Declaration as if specifically set forth herein. The Trust
shall have no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by
the Regular Trustees (or if there are more than two Regular Trustees by any
two of the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and
other minor errors or defects in any such reproduction of any such signature
shall not affect the validity of any Certificate. In case any Regular Trustee
of the Trust who shall have signed any of the Certificates shall cease to be
such Regular Trustee before the Certificate so signed shall be delivered by
the Trust, such Certificate nevertheless may be delivered as though the person
who signed such Certificate had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons as, at the
actual date of the execution of such Certificate, shall be the Regular
Trustees of the Trust, although at the date of the execution and delivery of
the Declaration any such person was not such a Regular Trustee. Certificates
shall be printed, lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees, as evidenced by
their execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage. Pending the preparation of definitive Certificates, the
Regular Trustees on behalf of the Trust may execute temporary Certificates
(printed, lithographed or typewritten), in substantially the form of the
definitive Certificates in lieu of which they are issued, but with such
omissions, insertions and variations as may be appropriate for temporary
Certificates, all as may be determined by the Regular Trustees. Each
temporary Certificate shall be executed by the Regular Trustees on behalf of
the Trust upon the same conditions and in substantially the same manner, and
with like effect, as definitive Certificates. Without unnecessary delay, the
Regular Trustees on behalf of the Trust will execute and furnish definitive
Certificates and thereupon any or all temporary Certificates may be
surrendered to the transfer agent and registrar in exchange therefor (without
charge to the Holders). Each Certificate whether in temporary or definitive
form shall be countersigned by the manual or facsimile signature of an
authorized signatory of the Person acting as registrar and transfer agent for
the Securities, which shall initially be the Property Trustee.
(d) The consideration received by the Trust for the issuance
of the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(f) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by this Declaration.
(g) Upon issuance of the Securities as provided in this
Declaration, the Regular Trustees on behalf of the Trust shall return to AES
the $10 constituting initial trust assets as set forth in the Original
Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
This Declaration and the Trust shall terminate and be of no
further force or effect when:
(i) all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders of Securities in accordance with the
terms of the Securities; or
(ii) all of the Debentures shall have been distributed to the
Holders of Securities in exchange for all of the Securities in
accordance with the terms of the Securities; or
(iii) upon the expiration of the term of the Trust as set forth
in Section 3.17,
and a certificate of cancellation is filed by the Trustees with the Secretary
of State of the State of Delaware. The Trustees shall so file such a
certificate as soon as practicable after the occurrence of an event referred
to in this Section 8.1.
The provisions of Sections 3.12 and 4.2 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part,
in accordance with the terms and conditions set forth in this Declaration.
Any transfer or purported transfer of any Security not made in accordance with
this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be
freely transferable.
(c) Subject to this Article IX, AES and any Related Party may
only transfer Common Securities to AES or a Related Party; provided that any
such transfer shall be subject to the condition that the transferor shall have
obtained (1) either a ruling from the Internal Revenue Service or an
unqualified written opinion addressed to the Trust and delivered to the
Trustees of nationally recognized independent tax counsel experienced in such
matters to the effect that such transfer will not (i) cause the Trust to be
treated as issuing a class of interests in the Trust differing from the class
of interests represented by the Common Securities originally issued to AES,
(ii) result in the Trust acquiring or disposing of, or being deemed to have
acquired or disposed of, an asset, or (iii) result in or cause the Trust to be
treated as anything other than a grantor trust for United States federal
income tax purposes and (2) an unqualified written opinion addressed to the
Trust and delivered to the Trustees of a nationally recognized independent
counsel experienced in such matters that such transfer will not cause the
Trust to be an Investment Company or controlled by an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges which may be
imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by
this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder
of such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trustees shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance
(including Preferred Securities, if any, issued on the Option Closing Date
pursuant to the exercise of the overallotment option set forth in the
Underwriting Agreement), will be issued in the form of one or more, fully
registered, global Preferred Security Certificates (each a "Global
Certificate"), to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Trust. Such Global Certificates shall initially be registered
on the books and records of the Trust in the name of Cede & Co., the nominee
of DTC, and no Preferred Security Beneficial Owner will receive a definitive
Preferred Security Certificate representing such Preferred Security Beneficial
Owner's interests in such Global Certificates, except as provided in Section
9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been
issued to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(i) the provisions of this Section 9.4 shall be in full force
and effect;
(ii) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including
the payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the
Preferred Securities and the sole holder of the Global Certificates
and, except as set forth herein or in Rule 3a-7 with respect to the
Property Trustee, shall have no obligation to the Preferred Security
Beneficial Owners;
(iii) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(iv) the rights of the Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants and receive and transmit
payments of Distributions on the Global Certificates to such Clearing
Agency Participants.
SECTION 9.5 Notices to Holders of Certificates.
Whenever a notice or other communication to the Holders is
required to be given under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued pursuant to Section
9.7, the relevant Trustees shall give all such notices and communications,
specified herein to be given to Preferred Securities Holders, to the Clearing
Agency and, with respect to any Preferred Security Certificate registered in
the name of a Clearing Agency or the nominee of a Clearing Agency, the
Trustees shall, except as set forth herein or in Rule 3a-7 with respect to the
Property Trustee, have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to the Preferred Securities.
SECTION 9.7 Definitive Preferred Securities Certificates.
If (i) a Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 9.6 or (ii) the Regular Trustees elect after consultation
with the Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Preferred Securities, then (x) Definitive Preferred
Security Certificates shall be prepared by the Regular Trustees on behalf of
the Trust with respect to such Preferred Securities and (y) upon surrender of
the Global Certificates by the Clearing Agency, accompanied by registration
instructions, the Regular Trustees shall cause definitive Preferred Security
Certificates to be delivered to Preferred Security Beneficial Owners in
accordance with the instructions of the Clearing Agency. Neither the Trustees
nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in relying
on, such instructions.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b)
there shall be delivered to the Regular Trustees such security or indemnity as
may be required by them to keep each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide
purchaser, any two Regular Trustees on behalf of the Trust shall execute and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Property Trustee, negligence) or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
(c) Pursuant to Section 3803(a) of the Business Trust Act,
the Holders of Securities, in their capacities as Holders, shall be entitled
to the same limitation of liability that is extended to stockholders of
private corporations for profit organized under the General Corporation Law
of the State of Delaware.
SECTION 10.2 Indemnification.
(a) To the fullest extent permitted by applicable law, the
Sponsor shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person
in good faith on behalf of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Declaration, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of gross negligence (or, in the
case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Sponsor prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Sponsor of an undertaking by or
on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized in Section 10.2(a).
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on
the accrual method of accounting, in accordance with generally accepted
accounting principles, consistently applied. The Trust shall use the accrual
method of accounting for United States federal income tax purposes. The books
and records of the Trust, together with a copy of this Declaration and a
certified copy of the Certificate of Trust, or any amendment thereto, shall at
all times be maintained at the principal office of the Trust and shall be open
for inspection for any examination by any Holder or its duly authorized
representative for any purpose reasonably related to its interest in the Trust
during normal business hours.
(b) The Regular Trustees shall, as soon as available after the
end of each Fiscal Year of the Trust, cause to be prepared and mailed to each
Holder of Securities unaudited financial statements of the Trust for such
Fiscal Year, prepared in accordance with generally accepted accounting
principles; provided that if the Trust is required to comply with the periodic
reporting requirements of Sections 13(a) or 15(d) of the Exchange Act, such
financial statements for such Fiscal Year shall be examined and reported on by
a firm of independent certified public accountants selected by the Regular
Trustees (which firm may be the firm used by the Sponsor).
(c) The Regular Trustees shall cause to be prepared and mailed
to each Holder of Securities, an annual United States federal income tax
information statement, on such form as is required by the Code, containing
such information with regard to the Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after
the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on such form as is required by the Code, and any other annual
income tax returns required to be filed by the Regular Trustees on behalf of
the Trust with any state or local taxing authority, such returns to be filed
as soon as practicable after the end of each Fiscal Year of the Trust.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Account and no other funds from the Trust shall be
deposited in the Property Account. The sole signatories for such accounts
shall be designated by the Regular Trustees; provided, however, that the
Property Trustee shall designate the sole signatories for the Property
Account.
SECTION 11.4 Withholding.
The Trust and the Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust
shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Trust shall file required forms
with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder, shall remit amounts withheld with respect to
the Holder to applicable jurisdictions. To the extent that the Trust is
required to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be
deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount to be withheld was
not withheld from a Distribution, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be amended by, and
only by, a written instrument executed by a majority of the Regular Trustees;
provided, however, that (i) no amendment to this Declaration shall be made
unless the Regular Trustees shall have obtained (A) either a ruling from the
Internal Revenue Service or a written unqualified opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that such amendment will not cause the Trust to be classified for United
States federal income tax purposes as an association taxable as a corporation
or a partnership and to the effect that the Trust will continue to be treated
as a grantor trust for purposes of United States federal income taxation and
(B) a written unqualified opinion of nationally recognized independent counsel
experienced in such matters to the effect that such amendment will not cause
the Trust to be an Investment Company which is required to be registered under
the Investment Company Act, (ii) at such time after the Trust has issued any
Securities which remain outstanding, any amendment which would adversely
affect the rights, privileges or preferences of any Holder of Securities may
be effected only with such additional requirements as may be set forth in the
terms of such Securities, (iii) Section 4.2, Section 9.1(c) and this Section
12.1 shall not be amended without the consent of all of the Holders of the
Securities, (iv) no amendment which adversely affects the rights, powers and
privileges of the Property Trustee shall be made without the consent of the
Property Trustee, (v) Article IV shall not be amended without the consent of
the Sponsor, and (vi) the rights of Holders of Common Securities under Article
V to increase or decrease the number of, and to appoint, replace or remove,
Trustees shall not be amended without the consent of each Holder of Common
Securities.
(b) Notwithstanding Section 12.2(a)(ii), this Declaration may
be amended without the consent of the Holders of the Securities to (i) cure
any ambiguity, (ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration, (iii) to add to the covenants, restrictions or obligations of the
Sponsor, and (iv) to conform to any changes in Rule 3a-7 or any change in
interpretation or application of Rule 3a-7 by the Commission, which amendment
does not adversely affect the rights, preferences or privileges of the
Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of Preferred Securities and/or
Common Securities may be called at any time by the Regular Trustees (or as
provided in the terms of the Securities) to consider and act on any matter on
which Holders of such class of Securities are entitled to act under the terms
of this Declaration, the terms of the Securities or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for trading.
The Regular Trustees shall call a meeting of Holders of Preferred Securities
or Common Securities, if directed to do so by Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall be given
by delivering to the Regular Trustees one or more calls in a writing stating
that the signing Holders of Securities wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those specified Certificates shall be counted for purposes of
determining whether the required percentage set forth in the second sentence
of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provision shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given by mail to all
the Holders of Securities having a right to vote thereat not less
than 7 days nor more than 60 days prior to the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any
stock exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given at
a meeting of the Holders of Securities. Any action that may be taken
at a meeting of the Holders of Securities may be taken without a
meeting if a consent in writing setting forth the action so taken is
signed by Holders of Securities owning not less than the minimum
aggregate liquidation amount of Securities that would be necessary to
authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting.
Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any
written ballot submitted to the Holders of Securities for the
purpose of taking any action without a meeting shall be returned
to the Trust within the time specified by the Regular Trustees.
(ii) Each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of a Security is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the
pleasure of the Holder of the Security executing it. Except as
otherwise provided herein or in the terms of the Securities, all
matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate.
(iv) Unless otherwise provided in the Business Trust Act, this
Declaration or the rules of any stock exchange on which the Preferred
Securities are then listed or admitted for trading, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy
or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
(a) The Trustee which acts as initial Property Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Property Trustee represents and warrants to
the Trust and the Sponsor at the time of the Successor Property Trustee's
acceptance of its appointment as Property Trustee that:
(i) The Property Trustee is a banking corporation with
trust powers, duly organized, validly existing and in good
standing under the laws of the State of its incorporation, with
trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this
Declaration.
(ii) The execution, delivery and performance by the
Property Trustee of this Declaration has been duly authorized
by all necessary corporate action on the part of the Property
Trustee. The Declaration has been duly executed and delivered
by the Property Trustee, and constitutes a legal, valid and
binding obligation of the Property Trustee, enforceable against
it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(iii) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or
constitute a breach of the Charter or By-laws of the Property
Trustee.
(iv) No consent, approval or authorization of, or
registration with or notice to, any banking authority which
supervises or regulates the Property Trustee is required for
the execution, delivery or performance by the Property Trustee,
of this Declaration.
(v) The Property Trustee satisfies the qualifications
set forth in Section 5.1(c).
(b) The Trustee which acts as initial Delaware Trustee
represents and warrants to the Trust and the Sponsor at the date of this
Declaration, and each Successor Delaware Trustee represents and warrants to
the Trust and the Sponsor at the time of the Successor Delaware Trustee's
acceptance of its appointment as Delaware Trustee, that it satisfies the
qualifications set forth in Section 5.1(a)(3).
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such other address as
the Regular Trustees on behalf of the Trust may give notice of to the
Holders of the Securities):
AES Trust [ ]
c/o The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Attention:
[Trustees]
Facsimile No: (212) 892-7272
(b) if given to the Property Trustee, at the mailing address
of the Property Trustee set forth below (or such other address as the
Property Trustee may give notice of to the Holders of the
Securities):
[to come]
Facsimile No:
(c) if given to the Delaware Trustee, at the mailing address
of the Delaware Trustee set forth below (or such other address as the
Delaware Trustee may give notice of to the Holders of the
Securities):
[to come]
With a copy to:
[to come]
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address
as the Holder of the Common Securities may give notice to the Trust):
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Attention: Corporate Secretary
Facsimile No:
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
A copy of any notice to the Property Trustee or the Delaware
Trustee shall also be sent to the Trust. All notices shall be deemed to have
been given, when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or inability to
deliver.
SECTION 14.2 Undertaking for Costs.
All parties to this Declaration agree, and each Holder of any
Securities by his or her acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement
of any right or remedy under this Declaration, or in any suit against the
Property Trustee for any action taken or omitted by it as Property Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 14.2 shall not apply to any suit instituted by the Property Trustee,
to any suit instituted by any Holder of Preferred Securities, or group of
Holders of Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities, or to any suit
instituted by any Holder of Preferred Securities for the enforcement of the
payment of the principal of (or premium, if any) or interest on the
Debentures, on or after the respective due dates expressed in such Debentures.
SECTION 14.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.6 Counterparts.
This Declaration may contain more than one counterpart of the
signature pages and this Declaration may be executed by the affixing of the
signature of the Sponsor and each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
SECTION 14.7 Intention of the Parties.
It is the intention of the parties hereto that the Trust not be
classified for United States federal income tax purposes as an association
taxable as a corporation or partnership but that the Trust be treated as a
grantor trust for United States federal income tax purposes. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 14.8 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
THE AES Corporation
as Sponsor
By:______________________________
Name:
Title:
_________________________________
William R. Luraschi
as Trustee
_________________________________
Willard Hoagland
as Trustee
_________________________________
Barry J. Sharp
as Trustee
The First National Bank of Chicago
as Property Trustee
By:______________________________
Name:
Title:
First Chicago Delaware Inc.
as Delaware Trustee
By:______________________________
Name:
Title:
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, on this day of
_____________, 199_, personally appeared _______________ (on behalf of The AES
Corporation and _____________, each known to me (or proved to me by
introduction upon the oath of a person known to me) to be the person and
officer, as the case may be, whose name is subscribed to the foregoing
instrument, and each acknowledged to me that he executed the same as the act
of such are for the purposes and consideration herein expressed and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL THIS _____ day of _________, 199_.
________________________________
NOTARY PUBLIC, STATE OF NEW YORK
Print Name:_____________________
Commission Expires:_____________
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, on this day of
_____________, 199_, personally appeared ________________ of __________ known
to me (or proved to me by introduction upon the oath of a person known to me)
to be the person and officer whose names are subscribed to the foregoing
instrument, and acknowledged to me that she executed the same as the act of
such trust for the purposes and consideration herein expressed and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL THIS _____ day of _________, 199_.
(SEAL)
________________________________
NOTARY PUBLIC, STATE OF NEW YORK
Print Name:_____________________
Commission Expires:_____________
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, on this day of
_____________, 199_, personally appeared ________________ of ___________ known
to me (or proved to me by introduction upon the oath of a person known to me)
to be the person and officer whose names are subscribed to the foregoing
instrument, and acknowledged to me that she executed the same as the act of
such trust for the purposes and consideration herein expressed and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL THIS _____ day of _________, 199_.
(SEAL)
________________________________
NOTARY PUBLIC, STATE OF NEW YORK
Print Name:_____________________
Commission Expires:_____________
EXHIBIT A
CERTIFICATE OF TRUST
OF
AES TRUST [ ]
THIS Certificate of Trust of AES Capital Trust [ ] (the
"Trust"), dated _____ __, 199__, 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 [ ].
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 [Delaware Trustee]
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
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:______________________________
Name:
Title:
The First National Bank of Chicago
as Property Trustee
By:______________________________
Name:
Title:
_________________________________
William R. Luraschi
as Trustee
_________________________________
Willard Hoagland
as Trustee
_________________________________
Barry J. Sharp
as Trustee
EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration
of Trust of AES Trust [ ] dated as of ____________, 199__ (as amended from
time to time, the "Declaration"), the designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities are set forth below (each capitalized term used but not defined
herein having the meaning set forth in the Declaration):
1. Designation and Number. Preferred Securities of the Trust
with an aggregate liquidation amount in the assets of the Trust of
___________________________________________ Dollars ($___________) (including
up to _______________________________________________ Dollars ($___________)
issuable upon exercise of the overallotment option set forth in the
Underwriting Agreement) and a liquidation amount in the assets of the Trust of
$25 per Preferred Security, are hereby designated as "____% Preferred Trust
Securities". The Preferred Security Certificates evidencing the Preferred
Securities shall be substantially in the form attached hereto as Annex I, with
such changes and additions thereto or deletions therefrom as may be required
by ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Preferred Securities are listed. In connection with the
issuance and sale of the Preferred Securities and the Common Securities, the
Trust will purchase as trust assets Debentures of AES having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities so issued and bearing interest at an annual
rate equal to the annual Distribution rate on the Preferred Securities and
Common Securities and having payment and redemption provisions which
correspond to the payment and redemption provisions of the Preferred
Securities and Common Securities.
2. Distributions. (a) Distributions payable on each
Preferred Security will be fixed at a rate per annum of ____% (the "Coupon
Rate") of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one calendar quarter will bear interest
at the rate per annum of ____% thereof (to the extent permitted by law),
compounded monthly. The term "Distributions" as used in these terms means
such periodic cash distributions and any such interest payable unless
otherwise stated. A Distribution will be made by the Property Trustee only to
the extent that interest payments are made in respect of the Debentures held
by the Property Trustee. The amount of Distributions payable for any period
will be computed for any monthly Distribution period on the basis of a 365-day
year of four calendar quarters, viz: March 31, June 30, September 30 and
December 31.
(b) Distributions on the Preferred Securities will be
cumulative, will accrue from ___________, 199__ and will be payable quarterly
in arrears, on the last day of each quarter commencing on ________________,
199__, except as otherwise described below, but only if and to the extent that
interest payments are made in respect of the Debentures held by the Property
Trustee. So long as AES shall not be in default in the payment of interest on
the Debentures, AES has the right under the Indenture for the Debentures to
defer payments of interest by extending the interest payment period from time
to time on the Debentures for a period not exceeding [to come] consecutive
quarterly interest periods (each, an "Extension Period") and, as a
consequence, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of ____%
per annum, compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, AES may further extend such
Extension Period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed [to come]
consecutive quarterly interest periods. Upon the termination of any
Extension Period and the payment of all amounts then due, AES may commence
a new Extension Period, subject to the above requirements. Payments of
accrued Distributions will be payable to Holders of Preferred Securities as
they appear on the books and records of the Trust on the first record date
after the end of the Extension Period.
(c) Distributions on the Preferred Securities will be payable
promptly by the Property Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the books
and records of the Trust on the relevant record dates. While the Preferred
Securities remain in book-entry only form, the relevant record dates shall be
one business day prior to the relevant Distribution date, and if the Preferred
Securities are no longer in book-entry only form, the relevant record dates
will be the fifteenth (15th) day of the month prior to the relevant
Distribution date, which record and payment dates correspond to the record and
interest payment dates on the Debentures. Distributions payable on any
Preferred Securities that are not punctually paid on any Distribution payment
date as a result of AES having failed to make the corresponding interest
payment on the Debentures will forthwith cease to be payable to the person in
whose name such Preferred Security is registered on the relevant record date,
and such defaulted Distribution will instead be payable to the person in whose
name such Preferred Security is registered on the special record date
established by the Regular Trustees, which record date shall correspond to the
special record date or other specified date determined in accordance with the
Indenture; provided, however, that Distributions shall not be considered
payable on any Distribution payment date falling within an Extension Period
unless AES has elected to make a full or partial payment of interest accrued
on the Debentures on such Distribution payment date. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
payment in respect of the Preferred Securities will be made as described
paragraph 9 hereof. If any date on which Distributions are payable on the
Preferred Securities is not a Business Day, then payment of the Distribution
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) All Distributions paid with respect to the Preferred
Securities and the Common Securities will be paid Pro Rata to the Holders
thereof entitled thereto. If an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to Distributions.
(e) In the event that there is any money or other property
held by or for the Trust that is not accounted for under the Declaration, such
money or property shall be distributed Pro Rata among the Holders of the
Preferred Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In the event of
any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Preferred Securities and Common Securities at the
date of the dissolution, winding-up or termination, as the case may be, will
be entitled to receive Pro Rata solely out of the assets of the Trust
available for distribution to Holders of Preferred Securities and Common
Securities after satisfaction of liabilities to creditors, an amount equal to
the aggregate of the stated liquidation amount of $25 per Preferred Security
and Common Security plus accrued and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination, and after
satisfaction of liabilities to creditors, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Preferred
Securities and Common Securities and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Preferred
Securities and Common Securities, shall be distributed Pro Rata to the Holders
of the Preferred Securities and Common Securities in exchange for such
Securities.
If, upon any such dissolution, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and Common Securities shall
be paid, subject to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive
Liquidation Distributions upon any such dissolution Pro Rata with Holders of
Preferred Securities, except that if an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures. The Preferred
Securities and Common Securities may only be redeemed if Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities are repaid, redeemed or distributed
as set forth below:
(a) Upon the repayment of the Debentures, in whole or in
part, whether at maturity, upon redemption at any time or from time to time on
or after _________, 200_, the proceeds of such repayment will be promptly
applied to redeem Pro Rata Preferred Securities and Common Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid or redeemed, upon not less than 30 nor more than 60 days'
notice, at a redemption price of $25 per Preferred and Common Security plus an
amount equal to accrued and unpaid Distributions thereon to the date of
redemption, payable in cash (the "Redemption Price"). The date of any such
repayment or redemption of Preferred Securities and Common Securities shall be
established to coincide with the repayment or redemption date of the
Debentures.
(b) If fewer than all the outstanding Preferred Securities
and Common Securities are to be so redeemed, the Preferred Securities and the
Common Securities will be redeemed Pro Rata and the Preferred Securities to be
redeemed as described in paragraph 4(f)(ii) below. If a partial redemption
would result in the delisting of the Preferred Securities by any national
securities exchange or other organization on which the Preferred Securities
are then listed, AES pursuant to the Indenture will only redeem Debentures
in whole and, as a result, the Trust may only redeem the Preferred
Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as hereinafter defined, and each a "Special Event") shall occur
and be continuing, the Regular Trustees shall, unless the Debentures are
redeemed in the limited circumstances described below, dissolve the Trust and,
after satisfaction of creditors, cause Debentures held by the Property Trustee
having an aggregate principal amount equal to the aggregate stated liquidation
amount of and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the Preferred
Securities and Common Securities, to be distributed to the Holders of the
Preferred Securities and Common Securities on a Pro Rata basis in liquidation
of such Holders' interests in the Trust, within 90 days following the
occurrence of such Special Event (the "90 Day Period"; provided, however, that
in the case of the occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on any then
applicable published revenue ruling of the Internal Revenue Service, to the
effect that the Holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and provided,
further, that, if and as long as at the time there is available to the Trust
the opportunity to eliminate, within the 90 Day Period, the Special Event by
taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure that has no adverse effect
on the Trust, AES or the Holders of the Preferred Securities ("Ministerial
Action"), the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the
Regular Trustees have received an opinion (a "Redemption Tax Opinion") of
nationally recognized independent tax counsel experienced in such matters
that, as a result of a Tax Event, there is more than an insubstantial risk
that AES would be precluded from deducting the interest on the Debentures for
United States federal income tax purposes even if the Debentures were
distributed to the Holders of Preferred Securities and Common Securities in
liquidation of such Holder's interest in the Trust as described in this
paragraph 4(c) or (ii) the Regular Trustees shall have been informed by such
tax counsel that a No Recognition Opinion cannot be delivered to the Trust,
AES shall have the right at any time, upon not less than 30 nor more than 60
days' notice, to redeem the Debentures in whole or in part for cash at the
Redemption Price within 90 days following the occurrence of such Tax Event,
and promptly following such redemption Preferred Securities and Common
Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so redeemed will be redeemed by the Trust
at the Redemption Price on a Pro Rata basis; provided, however, that, if at
the time there is available to AES or the Regular Trustees on behalf of the
Trust the opportunity to eliminate, within such 90 day period, the Tax Event
by taking some Ministerial Action, AES or the Regular Trustees on behalf of
the Trust will pursue such measure in lieu of redemption and; provided,
further, that AES shall have no right to redeem the Debentures while the
Regular Trustees on behalf of the Trust are pursuing such Ministerial Action.
The Common Securities will be redeemed Pro Rata with the Preferred Securities,
except that if an Event of Default under the Indenture has occurred and is
continuing, the Preferred Securities will have a priority over the Common
Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained
an opinion of nationally recognized independent tax counsel experienced in
such matters (a "Dissolution Tax Opinion") to the effect that on or after
____________, 199_ as a result of (a) any amendment to, or change (including
any announced prospective 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 announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after _________, 199_, there is more than an insubstantial risk that (i)
the 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
Debentures, (ii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by AES to the Trust on the
Debentures is not, or within 90 days of the date thereof will not be,
deductible by AES 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 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 the Trust is or will be
considered an Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after _________, 199_.
On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Preferred Securities will no longer be
deemed to be outstanding and (ii) certificates representing Preferred
Securities will be deemed to represent beneficial interests in the Debentures
having an aggregate principal amount equal to the stated liquidation amount
of, and bearing accrued and unpaid interest equal to accrued and unpaid
Distributions on, such Preferred Securities until such certificates are
presented to AES or its agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all the outstanding
Preferred Securities unless all accrued and unpaid Distributions have been
paid on all Preferred Securities for all monthly Distribution periods
terminating on or prior to the date of redemption.
(e) If Debentures are distributed to Holders of the Preferred
Securities, AES, pursuant to the terms of the Indenture, will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on
such other exchange as the Preferred Securities were listed immediately prior
to the distribution of the Debentures.
(f) (i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for, the Preferred Securities and
Common Securities (a "Redemption/Distribution Notice") will be given by the
Regular Trustees on behalf of the Trust by mail to each Holder of Preferred
Securities and Common Securities to be redeemed or exchanged not less than 30
nor more than 60 days prior to the date fixed for redemption or exchange
thereof. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this paragraph
(f)(i), a Redemption/Distribution Notice shall be deemed to be given on the
day such notice is first mailed by first-class mail, postage prepaid, to
Holders of Preferred Securities and Common Securities. Each Redemption/
Distribution Notice shall be addressed to the Holders of Preferred Securities
and Common Securities at the address of each such Holder appearing in the
books and records of the Trust. No defect in the Redemption/Distribution
Notice or in the mailing of either thereof with respect to any Holder shall
affect the validity of the redemption or exchange proceedings with respect to
any other Holder.
(ii) In the event that fewer than all the outstanding
Preferred Securities are to be redeemed, the Preferred Securities to be
redeemed will be redeemed Pro Rata from each Holder of Preferred Securities,
it being understood that, in respect of Preferred Securities registered in the
name of and held of record by DTC (or successor Clearing Agency) or any other
nominee, the Preferred Securities will be redeemed from, and the distribution
of the proceeds of such redemption will be made to, each Clearing Agency
Participant (or person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(iii) Subject to paragraph 9 hereof, if the Trust gives a
Redemption/ Distribution Notice in respect of a redemption of Preferred
Securities as provided in this paragraph 4 (which notice will be irrevocable)
then (A) while the Preferred Securities are in book-entry only form, with
respect to the Preferred Securities, by 12:00 noon, New York City time, on the
redemption date, provided that AES has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, the Property Trustee
will deposit irrevocably with DTC (or successor Clearing Agency) funds
sufficient to pay the applicable Redemption Price with respect to the
Preferred Securities and will give DTC (or successor Clearing Agency)
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Preferred Securities and (B) if the Preferred Securities are
issued in definitive form, with respect to the Preferred Securities and
provided that AES has paid the Property Trustee, in immediately available
funds, a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such Preferred Securities
by check mailed to the address of the relevant Holder appearing on
the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on
the redemption date, Distributions will cease to accrue on the Preferred
Securities called for redemption, such Preferred Securities will no longer
be deemed to be outstanding and all rights of Holders of such Preferred
Securities so called for redemption will cease, except the right of the
Holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Trustees nor the
Trust shall be required to register or cause to be registered the transfer
of any Preferred Securities which have been so called for redemption. If
any date fixed for redemption of Preferred Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on
the immediately preceding Business Day, in each case with the same force
and effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of Preferred Securities is improperly withheld
or refused and not paid either by the Property Trustee or by AES pursuant
to the Preferred Securities Guarantee, Distributions on such Preferred
Securities will continue to accrue, from the original redemption date to
the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to DTC or its nominee (or any
successor Clearing Agency or its nominee) if the Global Certificates have been
issued or, if Definitive Preferred Security Certificates have been issued, to
the Holders of the Preferred Securities.
(v) Upon the date of dissolution of the Trust and distribution
of Debentures as a result of the occurrence of a Special Event, Preferred
Security Certificates shall be deemed to represent beneficial interests in the
Debentures so distributed, and the Preferred Securities will no longer be
deemed outstanding and may be canceled by the Regular Trustees. The
Debentures so distributed shall have an aggregate principal amount equal to
the aggregate liquidation amount of the Preferred Securities so distributed.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), AES or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. Voting Rights. (a) Except as provided under paragraph
5(b) below and as otherwise required by law and the Declaration, the Holders
of the Preferred Securities will have no voting rights.
(b) If any proposed amendment to the Declaration provides for,
or the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of
Preferred Securities as a consequence of a redemption of Debentures, then the
Holders of outstanding Securities will be entitled to vote on such amendment
or proposal as a class and such amendment or proposal shall not be effective
except with the approval of the Holders of Securities representing 66-2/3% in
liquidation amount of such Securities; provided, however, that (A) if any
amendment or proposal referred to in clause (i) above would adversely affect
only the Preferred Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of
66-2/3% in liquidation amount of such class of Securities and (B) amendments
to the Declaration shall be subject to such further requirements as are set
forth in Sections 12.1 and 12.2 of the Declaration.
In the event the consent of the Property Trustee, as the holder
of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Property Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination. The
Property Trustee shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of the Securities
voting together as a single class; provided that where such amendment,
modification or termination of the Indenture requires the consent or vote of
(1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of
Debentures, the Property Trustee may only vote with respect to that amendment,
modification or termination as directed by, in the case of clause (1) above,
the vote of Holders of Securities representing such specified percentage of
the aggregate liquidation amount of the Securities, or, in the case of
clause (2) above, each Holder of Securities; and provided, further, that
the Property Trustee shall be under no obligation to take any action in
accordance with the directions of the Holders of Securities unless the
Property Trustee shall have received, at the expense of the Sponsor, an
opinion of nationally recognized independent tax counsel recognized as
expert in such matters to the effect that the Trust will not be classified
for United States federal income tax purposes as an association taxable as
a corporation or a partnership on account of such action and will be
treated as a grantor trust for United States federal income tax purposes
following such action.
Subject to Section 2.6 of the Declaration, and the provisions
of this and the next succeeding paragraph, the Holders of a Majority in
liquidation amount of the Preferred Securities, voting separately as a class
shall have the right to (A) on behalf of all Holders of Preferred Securities,
waive any past default that is waivable under the Declaration (subject to, and
in accordance with the Declaration) and (B) direct the time, method and place
of conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as the holder
of the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising
any trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; provided
that where the taking of any action under the Indenture requires the consent
or vote of (1) holders of Debentures representing a specified percentage
greater than a majority in principal amount of the Debentures or (2) each
holder of Debentures, the Property Trustee may only take such action if
directed by, in the case of clause (1) above, the vote of Holders of Preferred
Securities representing such specified percentage of the aggregate liquidation
amount of the Preferred Securities, or, in the case of clause (2) above, each
Holder of Preferred Securities. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method
and place of conducting any proceeding for any remedy available to the
Property Trustee or the Debenture Trustee as set forth above, the Property
Trustee shall be under no obligation to take any of the foregoing actions at
the direction of the Holders of Preferred Securities unless the Property
Trustee shall have received, at the expense of the Sponsor, an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust
for United States federal income tax purposes following such action. If the
Property Trustee fails to enforce its rights under the Declaration (including,
without limitation, its rights, powers and privileges as a holder of the
Debentures under the Indenture), any Holder of Preferred Securities may, to
the extent permitted by law, after a period of 30 days has elapsed from
such Holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against AES to enforce the
Property Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Property Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to
pay interest or principal on the Junior Subordinated Debentures on the date
such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then the registered holder of the
Preferred Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder (a "Holder
Direct Action") on or after the respective due date specified in the Junior
Subordinated Debentures. In connection with such Holder 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 holder of Preferred Securities in such Holder Direct
Action. The holders of Preferred Securities will not be able to exercise
any other remedy available to the holders of the Junior Subordinated
Debentures.
A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Preferred Securities will
constitute a waiver of the corresponding Event of Default under the
Declaration in respect of the Securities.
Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders of Preferred
Securities convened for such purpose, at a meeting of all of the Holders of
Securities of the Trust or pursuant to written consent. The Regular Trustees
will cause a notice of any meeting at which Holders of Preferred Securities
are entitled to vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to each Holder of record of
Preferred Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such action is to
be taken, (ii) a description of any resolution proposed for adoption at
such meeting on which such Holders are entitled to vote or of such matter
upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities in
accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above,
any of the Preferred Securities at such time that are owned by AES or by any
entity directly or indirectly controlling or controlled by or under direct or
indirect common control with AES shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
Except as provided in this paragraph 5, Holders of the
Preferred Securities will have no rights to increase or decrease the number of
Trustees or to appoint, remove or replace a Trustee, which voting rights are
vested solely in the Holders of the Common Securities.
6. Pro Rata Treatment. A reference in these terms of the
Preferred Securities to any payment, distribution or treatment as being "Pro
Rata" shall mean pro rata to each Holder of Securities according to the
aggregate liquidation amount of the Securities held by the relevant Holder in
relation to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default 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 pro rata according to
the aggregate liquidation amount of Preferred Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Preferred
Securities outstanding, and only after satisfaction of all amounts owed to
the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding.
7. Ranking. The Preferred Securities rank pari passu and
payment thereon will be made Pro Rata with the Common Securities except that
where an Event of Default occurs and is continuing, the rights of Holders of
Preferred Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise rank in priority to the rights of Holders
of the Common Securities.
8. Mergers, Consolidations or Amalgamations. The Trust may
not consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other body.
9. Transfer, Exchange, Method of Payments. Payment of
Distributions and payments on redemption of the Preferred Securities will be
payable, the transfer of the Preferred Securities will be registrable, and
Preferred Securities will be exchangeable for Preferred Securities of other
denominations of a like aggregate liquidation amount, at the principal
corporate trust office of the Property Trustee in The City of New York;
provided that payment of Distributions may be made at the option of the
Regular Trustees on behalf of the Trust by check mailed to the address of
the persons entitled thereto and that the payment on redemption of any
Preferred Security will be made only upon surrender of such Preferred
Security to the Property Trustee.
10. Acceptance of Indenture and Preferred Guarantee. Each
Holder of Preferred Securities, by the acceptance thereof, agrees to the
provisions of (i) the Preferred Guarantee, including the subordination
provisions therein and (ii) the Indenture and the Debentures, including the
subordination provisions of the Indenture.
11. No Preemptive Rights. The Holders of Preferred Securities
shall have no preemptive rights to subscribe to any additional Preferred
Securities or Common Securities.
12. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the
Indenture to a Holder without charge on written request to the Trust at its
principal place of business.
Annex I
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT
- - This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company ("DTC") or a nominee of DTC. This Preferred Security
is exchangeable for Preferred Securities registered in the name of a person
other than DTC or its nominee only in the limited circumstances described in
the Declaration and no transfer of this Preferred Security (other than a
transfer of this Preferred Security as a whole by DTC to a nominee of DTC or
by a nominee of DTC to DTC or another nominee of DTC) may be registered except
in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York) to
the Trust or its agent for registration of transfer, exchange or payment, and
any Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository
Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest herein.]
Number ___________ Preferred Securities
___________
CUSIP NO. ____________
Certificate Evidencing Preferred Securities
of
AES Trust [ ]
____% Preferred Trust Securities
(liquidation amount $25 per Preferred Security)
AES Trust [ ], a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that _________
(the "Holder") is the registered owner of _____ (______) preferred securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the ____% Preferred Trust Securities (liquidation amount $25
per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person
or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities are set forth in, and this certificate and the Preferred
Securities represented hereby are issued and shall in all respects be subject
to the terms and provisions of, the Amended and Restated Declaration of Trust
of the Trust dated as of ___________, 199_, as the same may be amended from
time to time (the "Declaration") including the designation of the terms of
Preferred Securities as set forth in Exhibit B thereto. The Preferred
Securities and the Common Securities issued by the Trust pursuant to the
Declaration represent undivided beneficial interests in the assets of the
Trust, including the Debentures (as defined in the Declaration) issued by The
AES Corporation, a Delaware corporation ("AES"), to the Trust pursuant to the
Indenture referred to in the Declaration. The Holder is entitled to the
benefits of the Guarantee Agreement of AES dated as of __________, 199_ (the
"Guarantee") to the extent provided therein. The Trust will furnish a copy of
the Declaration, the Guarantee and the Indenture to the Holder without charge
upon written request to the Trust at its principal place of business or
registered office.
The Holder of this Certificate, by accepting this Certificate,
is deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of
payment to all Senior Debt (as defined in the Indenture) as and to the
extent provided in the Indenture and (ii) agreed to the terms of the
Guarantee, including that the Guarantee is subordinate and junior in right
of payment to all other liabilities of AES, including the Debentures,
except those made pari passu or subordinate by their terms, and senior to
all capital stock now or hereafter issued by AES and to any guarantee now
or hereafter entered into by AES in respect of any of its capital stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trustees of the Trust have executed
this certificate this ____ day of __________, 199_.
AES TRUST [ ]
By:_________________________, as Trustee
Name:
Title: Trustee
By:_________________________, as Trustee
Name:
Title: Trustee
Dated:
Countersigned and Registered:
Transfer Agent and Registrar
By:___________________________
Authorized Signature
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date: _________________________
Signature: ____________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S)
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration
of Trust of AES Capital Trust [ ] dated as of ____________, 199__ (as amended
from time to time, the "Declaration"), the designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth below (each capitalized term used but not defined
herein having the meaning set forth in the Declaration):
1. Designation and Number. Common Securities of the Trust
with an aggregate liquidation amount in the assets of the Trust of
__________________________________________ Dollars ($____________) and a
liquidation amount in the assets of the Trust of $25 per Common Security, are
hereby designated as "____% Common Trust Securities". The Common Security
Certificates evidencing the Common Securities shall be substantially in the
form attached hereto as Annex I, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
The Common Securities are to be issued and sold to The AES Corporation ("AES")
in consideration of $_____________ in cash. In connection with the issuance
and sale of the Preferred Securities and the Common Securities, the Trust will
purchase as trust assets Debentures of AES having an aggregate principal
amount equal to the aggregate liquidation amount of the Preferred Securities
and Common Securities so issued, and bearing interest at an annual rate equal
to the annual Distribution rate on the Preferred Securities and Common
Securities and having payment and redemption provisions which correspond to
the payment and redemption provisions of the Preferred Securities and Common
Securities.
2. Distributions. (a) Distributions payable on each Common
Security will be fixed at a rate per annum of ____% (the "Coupon Rate") of the
stated liquidation amount of $25 per Common Security. Distributions in
arrears for more than one calendar quarter will bear interest at the rate per
annum of ____% thereof (to the extent permitted by applicable law), compounded
quarterly. The term "Distributions" as used in these terms means such
periodic cash distributions and any such interest payable unless otherwise
stated. A Distribution will be made by the Property Trustee only to the
extent that interest payments are made in respect of the Debentures held by
the Property Trustee. The amount of Distributions payable for any period
will be computed for any monthly Distribution period on the basis of a 365-day
year of 4 calendar quarters, viz: March 31, June 30, September 30 and
December 31.
(b) Distributions on the Common Securities will be cumulative,
will accrue from _________, 199__ and will be payable quarterly in arrears, on
the last day of each month commencing on __________, 199__, except as
otherwise described below, but only if and to the extent that interest
payments are made in respect of the Debentures held by the Property
Trustee. So long as AES shall not be in default in the payment of interest
on the Debentures, AES has the right under the Indenture for the Debentures
to defer payments of interest by extending the interest payment period from
time to time on the Debentures for a period not exceeding [to come]
consecutive quarterly interest periods (each, an "Extension Period") and,
as a consequence, monthly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at the rate of
____% per annum, compounded quarterly during any such Extension Period.
Prior to the termination of any such Extension Period, AES may further
extend such Extension Period; provided that such Extension Period together
with all such previous and further extensions thereof may not exceed [to
come] consecutive quarterly interest periods. Upon the termination of any
Extension Period and the payment of all amounts then due, AES may commence
a new Extension Period, subject to the above requirements. Payments of
accrued Distributions will be payable to Holders of Common Securities as
they appear on the books and records of the Trust on the first record date
after the end of the Extension Period.
(c) Distributions on the Common Securities will be payable
promptly by the Property Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the books
and records of the Trust on the relevant record dates which will be one
business day prior to the relevant Distribution date unless the Preferred
Securities are no longer in book-entry only form in which event the relevant
record dates will be the fifteenth (15th) day of the month prior to the
relevant Distribution date, which record and payment dates correspond to the
record and interest payment dates on the Debentures. Distributions payable on
any Common Securities that are not punctually paid on any Distribution date as
a result of AES having failed to make the corresponding interest payment on
the Debentures will forthwith cease to be payable to the person in whose name
such Common Security is registered on the relevant record date, and such
defaulted Distribution will instead be payable to the person in whose name
such Common Security is registered on the special record date established
by the Regular Trustees, which record date shall correspond to the special
record date or other specified date determined in accordance with the
Indenture; provided, however, that Distributions shall not be considered
payable on any Distribution payment date falling within an Extension Period
unless AES has elected to make a full or partial payment of interest
accrued on the Debentures on such Distribution payment date. Subject to
any applicable laws and regulations and the provisions of the Declaration,
each payment in respect of the Common Securities will be made as described
in paragraph 9 hereof. If any date on which Distributions are payable on
the Common Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if
made on such date.
(d) All Distributions paid with respect to the Common
Securities and the Preferred Securities will be paid Pro Rata to the Holders
thereof entitled thereto. If an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to Distributions.
(e) In the event that there is any money or other property held
by or for the Trust that is not accounted for under the Declaration, such
money or property shall be distributed Pro Rata among the Holders of the
Preferred Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In the event of
any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Preferred Securities and Common Securities at the
date of the dissolution, winding-up or termination, as the case may be, will
be entitled to receive Pro Rata solely out of the assets of the Trust
available for distribution to Holders of Preferred Securities and Common
Securities, after satisfaction of liabilities to creditors, an amount equal to
the aggregate of the stated liquidation amount of $25 per Preferred Security
and Common Security plus accrued and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination, and after
satisfaction of liabilities to creditors, Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of such Preferred
Securities and Common Securities bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Preferred
Securities and Common Securities, shall be distributed Pro Rata to the Holders
of the Preferred Securities and Common Securities in exchange for such
Securities.
If, upon any such dissolution, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and Common Securities shall
be paid, subject to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive
Liquidation Distributions upon any such dissolution Pro Rata with Holders of
Preferred Securities, except that if an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures. The Preferred
Securities and Common Securities may only be redeemed if Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities are repaid, redeemed or distributed
as set forth below:
(a) Upon the repayment of the Debentures, in whole or in
part, whether at maturity, upon redemption at any time or from time to time on
or after __________, 200_, the proceeds of such repayment will be promptly
applied to redeem Pro Rata Preferred Securities and Common Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid or redeemed, upon not less than 30 nor more than 60 days'
notice, at a redemption price of $25 per Preferred and Common Security plus an
amount equal to accrued and unpaid Distributions thereon to the date of
redemption, payable in cash (the "Redemption Price"). The date of any such
repayment or redemption of Preferred Securities and Common Securities shall be
established to coincide with the repayment or redemption date of the
Debentures.
(b) If fewer than all the outstanding Preferred Securities
and Common Securities are to be so redeemed, the Preferred Securities and the
Common Securities will be redeemed Pro Rata and the Common Securities to be
redeemed will be redeemed as described in paragraph 4(e)(ii) below. If a
partial redemption would result in the delisting of the Preferred Securities
by any national securities exchange or other organization on which the
Preferred Securities are then listed, AES pursuant to the Indenture will only
redeem Debentures in whole and, as a result, the Trust may only redeem the
Common Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as hereinafter defined, and each a "Special Event") shall occur
and be continuing, the Regular Trustees shall, unless the Debentures are
redeemed in the limited circumstances described below, dissolve the Trust and,
after satisfaction of creditors, cause Debentures held by the Property Trustee
having an aggregate principal amount equal to the aggregate stated liquidation
amount of and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the Preferred
Securities and Common Securities, to be distributed to the Holders of the
Preferred Securities and Common Securities on a Pro Rata basis in liquidation
of such Holders' interests in the Trust, within 90 days following the
occurrence of such Special Event (the "90 Day Period"); provided, however,
that in the case of the occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on any then
applicable published revenue rulings of the Internal Revenue Service, to the
effect that the Holders of the Preferred Securities will not recognize any
gain or loss for United States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and provided,
further, that, if and as long as at the time there is available to the Trust
the opportunity to eliminate, within such 90 Day Period, the Special Event by
taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure that has no adverse effect
on the Trust, AES or the Holders of the Preferred Securities ("Ministerial
Action") the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the
Regular Trustees have received an opinion (a "Redemption Tax Opinion") of
nationally recognized independent tax counsel experienced in such matters
that, as a result of a Tax Event, there is more than an insubstantial risk
that AES would be precluded from deducting the interest on the Debentures for
United States federal income tax purposes even if the Debentures were
distributed to the Holders of Preferred Securities and Common Securities in
liquidation of such Holder's interest in the Trust as described in this
paragraph 4(c) or (ii) the Regular Trustees shall have been informed by such
tax counsel that a No Recognition Opinion cannot be delivered to the Trust,
AES shall have the right at any time, upon not less than 30 nor more than
60 days' notice, to redeem the Debentures in whole or in part for cash at
the Redemption Price within 90 days following the occurrence of such Tax
Event, and promptly following such redemption Preferred Securities and
Common Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed will be redeemed
by the Trust at the Redemption Price on a Pro Rata basis: provided,
however, that, if at the time there is available to AES or the Regular
Trustees on behalf of the Trust the opportunity to eliminate, within such
90 day period, the Tax Event by taking some Ministerial Action, AES or the
Holders of the Preferred Securities, AES or the Regular Trustees on behalf
of the Trust will pursue such measure in lieu of redemption; and provided,
further, that AES shall have no right to redeem the Debentures while the
Regular Trustees on behalf of the Trust are pursuing such Ministerial
Action. The Common Securities will be redeemed Pro Rata with the Preferred
Securities, except that if an Event of Default under the Indenture has
occurred and is continuing, the Preferred Securities will have a priority
over the Common Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained
an opinion of nationally recognized independent tax counsel experienced in
such matters (a "Dissolution Tax Opinion") to the effect that on or after
__________, 199_ as a result of (a) any amendment to, or change (including any
announced prospective 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
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after __________, 199_, there is
more than an insubstantial risk that (i) the 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 Debentures, (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest
payable by AES to the Trust on the Debentures is not, or within 90 days of the
date thereof will not be, deductible by AES 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 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 the Trust is or will be
considered an Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after __________, 199_.
On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Common Securities will no longer be deemed
to be outstanding and (ii) any certificates representing Common Securities
will be deemed to represent beneficial interests in the Debentures having an
aggregate principal amount equal to the stated liquidation amount of, and
bearing accrued and unpaid interest equal to accrued and unpaid Distributions
on, such Common Securities until such certificates are presented to AES or its
agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all the outstanding
Common Securities unless all accrued and unpaid Distributions have been paid
on all Common Securities for all monthly Distribution periods terminating on
or prior to the date of redemption.
(e)(i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for, the Preferred Securities and Common Securities
(a "Redemption/Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of
the calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this paragraph (e)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities and
Common Securities. Each Redemption/Distribution Notice shall be addressed to
the Holders of Preferred Securities and Common Securities at the address of
each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.
(ii) In the event that fewer than all the outstanding Common
Securities are to be redeemed, the Common Securities to be redeemed will be
redeemed Pro Rata from each Holder of Common Securities (subject to adjustment
to eliminate fractional Common Securities).
(iii) If the Trust gives a Redemption/ Distribution Notice in
respect of a redemption of Common Securities as provided in this paragraph 4
(which notice will be irrevocable) then immediately prior to the close of
business on the redemption date, provided that AES has paid to the Property
Trustee in immediately available funds a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures,
Distributions will cease to accrue on the Common Securities called for
redemption, such Common Securities will no longer be deemed to be outstanding
and all rights of Holders of such Common Securities so called for redemption
will cease, except the right of the Holders of such Common Securities to
receive the Redemption Price, but without interest on such Redemption Price.
Neither the Trustees nor the Trust shall be required to register or cause to
be registered the transfer of any Common Securities which have been so called
for redemption. If any date fixed for redemption of Common Securities is not
a Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of Common Securities is improperly withheld or
refused and not paid by the Property Trustee, Distributions on such Common
Securities will continue to accrue, from the original redemption date to the
date of payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to the Holders of the Common
Securities.
(v) Upon the date of dissolution of the Trust and distribution
of Debentures as a result of the occurrence of a Special Event, Common
Security Certificates shall be deemed to represent beneficial interests in the
Debentures so distributed, and the Common Securities will no longer be deemed
outstanding and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Common Securities so distributed.
5. Voting Rights. (a) Except as provided under paragraph
5(b) below and as otherwise required by law and the Declaration, the Holders
of the Common Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under the
Declaration to increase or decrease the number of Trustees, and to appoint,
remove or replace a Trustee, any such increase, decrease, appointment, removal
or replacement to be approved by Holders of Common Securities representing a
Majority in liquidation amount of the Common Securities.
If any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Common
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal
as a class and such amendment or proposal shall not be effective except with
the approval of the Holders of Securities representing 66-2/3% in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of 66-2/3% in
liquidation amount of such class of Securities, (B) the rights of Holders of
Common Securities under Article V of the Declaration to increase or decrease
the number of, and to appoint, replace or remove, Trustees shall not be
amended without the consent of each Holder of Common Securities, and (C)
amendments to the Declaration shall be subject to such further requirements
as are set forth in Sections 12.1 and 12.2 of the Declaration.
In the event the consent of the Property Trustee as the holder
of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Property Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination. The
Property Trustee shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of the Securities
voting together as a single class; provided that where such amendment,
modification or termination of the Indenture requires the consent or vote of
(1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of
Debentures, the Property Trustee may only vote with respect to that amendment,
modification or termination as directed by, in the case of clause (1) above,
the vote of Holders of Securities representing such specified percentage of
the aggregate liquidation amount of the Securities, or, in the case of
clause (2) above, each Holder of Securities; and provided, further, that
the Property Trustee shall be under no obligation to take any action in
accordance with the directions of the Holders of the Securities unless the
Property Trustee shall have received, at the expense of the Sponsor, an
opinion of nationally recognized independent tax counsel recognized as an
expert in such matters to the effect that the Trust will not be classified
for United States federal income tax purposes as an association taxable as
a corporation or a partnership on account of such action and will be
treated as a grantor trust for United States federal income tax purposes
following such action.
Subject to Section 2.6 of the Declaration, and the provisions
of this and the next succeeding paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class
shall have the right to (A) on behalf of all Holders of Common Securities,
waive any past default that is waivable under the Declaration (subject to, and
in accordance with the Declaration) and (B) direct the time, method, and place
of conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as holder of
the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising
any trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default and its consequences that is waivable
under Section 6.06 of the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and
payable; provided that where the taking of any action under the Indenture
requires the consent or vote of (1) holders of Debentures representing a
specified percentage greater than a majority in principal amount of the
Debentures or (e) each holder of Debentures, the Property Trustee may only
take such action if directed by, in the case of clause (1) above, the vote
of Holders of Common Securities representing such specified percentage of
the aggregate liquidation amount of the Common Securities, or, in the case
of clause (2) above, each Holder of Common Securities. Pursuant to this
paragraph, the Property Trustee shall not revoke, or take any action
inconsistent with, any action previously authorized or approved by a vote
of the Holders of the Preferred Securities, and shall not take any action
in accordance with the direction of the Holders of the Common Securities
under this paragraph if the action is prejudicial to the Holders of
Preferred Securities. Other than with respect to directing the time,
method and place of conducting any proceeding for any remedy available to
the Property Trustee or the Debenture Trustee as set forth above, the
Property Trustee shall be under no obligation to take any of the foregoing
actions at the direction of the Holders of Common Securities unless the
Properties Trustee shall have received, at the expense of the Sponsor, an
opinion of nationally recognized independent tax counsel recognized as
expert in such matters to the effect that the Trust will not be classified
for United States federal income tax purposes as an association taxable as
a corporation or a partnership on account of such action and will be
treated as a grantor trust for United States income tax purposes following
such action.
Notwithstanding any other provision of these terms, each Holder
of Common Securities will be deemed to have waived any Event of Default with
respect to the Common Securities and its consequences until all Events of
Default with respect to the Preferred Securities have been cured, waived by
the Holders of Preferred Securities as provided in the Declaration or
otherwise eliminated, and until all Events of Default with respect to the
Preferred Securities have been so cured, waived by the Holders of Preferred
Securities or otherwise eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the Holders of Preferred Securities and only the
Holders of the Preferred Securities will have the right to direct the Property
Trustee in accordance with the terms of the Declaration or of the Securities.
In the event that any Event of Default with respect to the Preferred
Securities is waived by the Holders of Preferred Securities as provided in the
Declaration, the Holders of Common Securities agree that such waiver shall
also constitute the waiver of such 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.
A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Preferred Securities will
constitute a waiver of the corresponding Event of Default under the
Declaration in respect of the Securities.
Any required approval of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities of the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the
date by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of Common Securities will be
required for the Trust to redeem and cancel Common Securities in accordance
with the Declaration.
6. Pro Rata Treatment. A reference in these terms of the
Common Securities to any payment, distribution or treatment as being "Pro
Rata" shall mean pro rata to each Holder of Securities according to the
aggregate liquidation amount of the Securities held by the relevant Holder in
relation to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default 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 pro rata according to
the aggregate liquidation amount of Preferred Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Preferred
Securities outstanding, and only after satisfaction of all amounts owed to
the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Securities outstanding.
7. Ranking. The Common Securities rank pari passu and payment
thereon will be made Pro Rata with the Preferred Securities except that where
an Event of Default occurs and is continuing, the rights of Holders of Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise are subordinate to the rights of Holders
of the Preferred Securities.
8. Mergers, Consolidations or Amalgamations. The Trust may
not consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other body.
9. Transfers, Exchanges, Method of Payments. Payment of
Distributions and payments on redemption of the Common Securities will be
payable, the transfer of the Common Securities will be registrable, and Common
Securities will be exchangeable for Common Securities of other denominations
of a like aggregate liquidation amount, at the principal corporate trust
office of the Property Trustee in The City of New York; provided that payment
of Distributions may be made at the option of the Regular Trustees on behalf
of the Trust by check mailed to the address of the persons entitled thereto
and that the payment on redemption of any Common Security will be made only
upon surrender of such Common Security to the Property Trustee.
Notwithstanding the foregoing, transfers of Common Securities are subject to
conditions set forth in Section 9.1(c) of the Declaration.
10. Acceptance of Indenture. Each Holder of Common
Securities, by the acceptance thereof, agrees to the provisions of the
Indenture and the Debentures, including the subordination provisions thereof.
11. No Preemptive Rights. The Holders of Common Securities
shall have no preemptive rights to subscribe to any additional Common
Securities or Preferred Securities.
12. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the
Indenture to a Holder without charge on written request to the Trust at its
principal place of business.
Annex I
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
__________ ______________
Certificate Evidencing Common Securities
of
AES Trust [ ]
____% Common Trust Securities
(liquidation amount $25 per Common Security)
AES Trust [ ], a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that The AES
Corporation (the "Holder") is the registered owner of
____________________________ (_________) common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the "____% Common Trust Securities" (liquidation amount $25 per
Common Security) (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer and satisfaction of the other conditions set forth in
the Declaration (as defined below) including, without limitation Section
9.1(c) thereof. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions
of, the Amended and Restated Declaration of Trust of the Trust dated as of
__________, 199__, as the same may be amended from time to time (the
"Declaration") including the designation of the terms of Common Securities as
set forth in Exhibit C thereto. The Common Securities and the Preferred
Securities issued by the Trust pursuant to the Declaration represent undivided
beneficial interests in the assets of the Trust, including the Debentures (as
defined in the Declaration) issued by The AES Corporation, a Delaware
corporation, to the Trust pursuant to the Indenture referred to in the
Declaration. The Trust will furnish a copy of the Declaration and the
Indenture to the Holder without charge upon written request to the Trust at
its principal place of business or registered office.
The Holder of this Certificate, by accepting this Certificate,
is deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment
to all Senior Debt (as defined in the Indenture) as and to the extent provided
in the Indenture.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trustees of the Trust have executed
this certificate this ___ day of _____________, 199_.
AES TRUST [ ]
By________________________, as Trustee
Name:
Title: Trustee
By_________________________, as Trustee
Name:
Title: Trustee
Dated:
Countersigned and Registered:
______________________________
Transfer Agent and Registrar
By:___________________________
Authorized Signature
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________________________________________
______________________________________________________________________________
_______________________________________________________ agent to transfer this
Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date:___________________________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
==============================================================================
EXHIBIT 4.13
THE AES CORPORATION
GUARANTEE AGREEMENT
____________________________________
Dated as of __________, 199_
____________________________________
==============================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
SECTION 1.1 Definitions.................................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............................... 5
SECTION 2.2 Lists of Holders of Preferred Securities....................... 5
SECTION 2.3 Reports by the Guarantee Trustee............................... 5
SECTION 2.4 Periodic Reports to Guarantee Trustee.......................... 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent............... 6
SECTION 2.6 Events of Default; Waiver...................................... 6
SECTION 2.7 Disclosure of Information...................................... 6
SECTION 2.8 Conflicting Interest........................................... 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee..................... 7
SECTION 3.2 Certain Rights and Duties of the Guarantee Trustee............. 8
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee......... 10
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Qualifications................................................ 10
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee..... 11
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee..................................................... 12
SECTION 5.2 Waiver of Notice.............................................. 12
SECTION 5.3 Obligations Not Affected...................................... 12
SECTION 5.4 Enforcement of Guarantee...................................... 13
SECTION 5.5 Guarantee of Payment.......................................... 14
SECTION 5.6 Subrogation................................................... 14
SECTION 5.7 Independent Obligations....................................... 14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.................................... 14
SECTION 6.2 Subordination................................................. 15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination................................................... 15
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1 Exculpation................................................... 16
SECTION 8.2 Indemnification............................................... 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns........................................ 17
SECTION 9.2 Amendments.................................................... 17
SECTION 9.3 Notices....................................................... 17
SECTION 9.4 Genders....................................................... 18
SECTION 9.5 Benefit....................................................... 18
SECTION 9.6 Governing Law................................................. 18
SECTION 9.7 Counterparts.................................................. 18
SECTION 9.8 Exercise of Overallotment Option.............................. 19
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of , 199 , is executed and
delivered by The AES Corporation, a Delaware corporation (the "Guarantor"),
and The First National Bank of Chicago, a national banking association, as
the initial Guarantee Trustee (as defined herein) for the benefit of the
Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of AES Trust , a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of , 199 among the trustees of the Issuer
named therein, The AES Corporation, as Sponsor, and the Holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer may issue up to aggregate liquidation amount of its % Preferred
Trust Securities (the "Preferred Securities") representing undivided
beneficial interests in the assets of the Issuer and having the terms set
forth in Exhibit B to the Declaration, of which $ liquidation amount of
Preferred Securities are being issued as of the date hereof. Up to the
remaining $ liquidation amount of Preferred Securities may be issued by the
Issuer if and to the extent that the over-allotment option granted by the
Guarantor and the Issuer pursuant to the Underwriting Agreement (as defined
in the Declaration) is exercised by the Underwriters named in the
Underwriting Agreement.
WHEREAS, as incentive for the Holders to purchase Preferred Securities,
the Guarantor desires to irrevocably and unconditionally agree, to the
extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by the initial
purchasers thereof of Preferred Securities, which purchase the Guarantor
hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee Agreement for the benefit of the Holders from time
to time of the Preferred Securities.
ARTICLE I
SECTION 1.1 Definitions.
(a) Capitalized terms used in this Guarantee Agreement but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing undivided
beneficial interests in the assets of the Issuer, having the terms set
forth in Exhibit C to the Declaration.
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of Junior Subordinated Debentures issued
by the Guarantor under the Indenture to the Property Trustee and entitled
the " % Junior Subordinated Debentures due ".
"Distributions" means the periodic distributions and other payments
payable to Holders of Preferred Securities in accordance with the terms of
the Preferred Securities set forth in Exhibit B to the Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred
Securities, to the extent not paid or made by the Issuer: (i) any accrued
and unpaid Distributions and the redemption price, including all accrued
and unpaid Distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by
the Issuer but only if and to the extent that in each case the Guarantor
has made a payment to the Property Trustee of interest or principal on the
Debentures and (ii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Issuer (other than in connection with the
distribution of Debentures to Holders or the redemption of all the
Preferred Securities upon the maturity or redemption of the Debentures as
provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, to the extent the Issuer has
funds available therefor, or (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The First National Bank of Chicago, a
national banking association, until a Successor Guarantee Trustee has been
appointed and accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Guarantee
Trustee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, and any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
, 1996 between the Guarantor and [NAME OF TRUSTEE] as trustee, as
supplemented by the [ ] Supplemental Indenture thereto dated as of 199 ,
pursuant to which the Debentures are to be issued.
"Majority in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class, who are
the record owners of Preferred Securities whose liquidation amount
(including the stated amount that would be paid on redemption, liquidation
or otherwise, plus accrued and unpaid Distributions to the date upon which
the voting percentages are determined) represents more than 50% of the
liquidation amount of all outstanding Preferred Securities.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated association, or government
or any agency or political subdivision thereof, or any other entity of
whatever nature.
"Preferred Securities" has the meaning set forth in the first WHEREAS
clause above.
"Property Trustee" means the Person acting as Property Trustee under
the Declaration.
"Redemption Price" means the amount payable on redemption of the
Preferred Securities in accordance with the terms of the Preferred Securities.
"Responsible Officer" means, with respect to the Guarantee Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Guarantee Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of
that officer's knowledge of and familiarity with the particular subject.
"66-2/3% in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class who are
the record owners of Preferred Securities whose liquidation amount
(including the stated amount that would be paid on redemption, liquidation
or otherwise, plus accrued and unpaid Distributions to the date upon which
the voting percentages are determined) represents 66-2/3% or more of the
liquidation amount of all Preferred Securities.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Section Section
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control; and
(c) the application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing undivided beneficial interests in the assets of the
Issuer.
SECTION 2.2 Lists of Holders of Preferred Securities.
(a) The Guarantor shall provide the Guarantee Trustee with such
information as is required under Section 312(a) of the Trust Indenture Act
at the times and in the manner provided in Section 312(a); and
(b) the Guarantee Trustee shall comply with its obligations under
Section Section 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee.
Within 60 days after May 15 of each year, the Guarantee Trustee shall
provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form, in
the manner and at the times provided by Section 313 of the Trust Indenture
Act. The Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Commission
and the Holders of the Preferred Securities, as applicable, such documents,
reports and information as required by Section 314(a)(1)-(3) (if any) of
the Trust Indenture Act and the compliance certificates required by Section
314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be
provided in the form, in the manner and at the times required by Section
314(a)(4) and (c) of the Trust Indenture Act (provided that any certificate
to be provided pursuant to Section 314(a)(4) of the Trust Indenture Act
shall be provided within 120 days of the end of each fiscal year of the
Issuer).
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this
Guarantee Agreement which relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to
be given pursuant to Section 314(c) shall comply with Section 314(e) of the
Trust Indenture Act.
SECTION 2.6 Events of Default; Waiver.
(a) Subject to Section 2.6(b), Holders of Preferred Securities may by
vote of at least a Majority in liquidation amount of the Preferred
Securities, (A) direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or exercising
any trust or power conferred upon by the Guarantee Trustee or (B) on behalf
of the Holders of all Preferred Securities waive any past Event of Default
and its consequences. Upon such waiver, any such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon.
(b) The right of any Holder of Preferred Securities to receive payment
of the Guarantee Payments in accordance with this Guarantee Agreement, or
to institute suit for the enforcement of any such payment, shall not be
impaired without the consent of each such Holder.
SECTION 2.7 Disclosure of Information.
The disclosure of information as to the names and addresses of the
Holders of the Preferred Securities in accordance with Section 312 of the
Trust Indenture Act, regardless of the source from which such information
was derived, shall not be deemed to be a violation of any existing law, or
any law hereafter enacted which does not specifically refer to Section 312
of the Trust Indenture Act, nor shall the Guarantee Trustee be held
accountable by reason of mailing any material pursuant to a request made
under Section 312(b) of the Trust Indenture Act.
SECTION 2.8 Conflicting Interest.
The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
in trust for the benefit of the Holders of the Preferred Securities. The
Guarantee Trustee shall not transfer its right, title and interest in the
Guarantee Agreement to any Person except a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee or to a Holder of Preferred Securities exercising his or
her rights pursuant to Section 5.4. The right, title and interest of the
Guarantee Trustee to the Guarantee Agreement shall vest automatically in
each Person who may hereafter be appointed as Guarantee Trustee in
accordance with Article IV. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered.
(b) If an Event of Default occurs and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Preferred Securities.
(c) This Guarantee Agreement and all moneys received by the Property
Trustee hereunder in respect of the Guarantee Payments will not be subject
to any right, charge, security interest, lien or claim of any kind in favor
of, or for the benefit of that Guarantee Trustee or its agents or their
creditors.
(d) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to
the holders of the Preferred Securities, as their names and addresses
appear upon the register, notice of all Events of Default known to the
Guarantee Trustee, unless such defaults shall have been cured before the
giving of such notice; provided, that, the Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors
and/or Responsible Officers, of the Guarantee Trustee in good faith
determine that the withholding of such notice is in the interests of the
Holders of the Preferred Securities. The Guarantee Trustee shall not be
deemed to have knowledge of any default except any default as to which the
Guarantee Trustee shall have received written notice or a Responsible
Officer charged with the administration of this Guarantee Agreement shall
have obtained written notice.
(e) The Guarantee Trustee shall not resign as a Trustee unless a
Successor Guarantee Trustee has been appointed and accepted that
appointment in accordance with Article IV.
SECTION 3.2 Certain Rights and Duties of the Guarantee Trustee.
(a) The Guarantee Trustee, before the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6(a)), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(b) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except
that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be
read into this Guarantee Agreement against the Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of
any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Preferred Securities
as provided herein relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.2(a) and (b):
(i) whenever in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon a certificate, which shall comply
with the provisions of Section 314(e) of the Trust Indenture Act,
signed by any authorized officer of the Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel (which
may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees) selected by it in good faith and with
due care and the written advice or opinion of such counsel with
respect to legal matters 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 and in
accordance with such advice and opinion and (B) shall have the right
at any time to seek instructions concerning the administration of
this Guarantee Agreement from any court of competent jurisdiction;
(iii) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed by it in good faith and with due
care;
(iv) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holders of Preferred
Securities, unless such Holders shall have offered to the Guarantee
Trustee reasonable security and indemnity against the costs,
expenses (including its attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such
request or direction; provided that nothing contained in this clause
(iv) shall relieve the Guarantee Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured or
waived) to exercise such of the rights and powers vested in it by
this Guarantee Agreement, and to use the same degree of care and
skill in this exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs;
and
(v) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the
signature of the Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action; and no third
party shall be required to inquire as to the authority of the
Guarantee Trustee to so act, or as to its compliance with any of the
terms and provisions of this Guarantee Agreement, both of which
shall be conclusively evidenced by the Guarantee Trustee's or its
agent's taking such action.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Qualifications.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted
by the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000,
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then for the purposes of this Section 4.1(a)(ii), 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 Guarantee Trustee shall cease to satisfy the
requirements of clauses (i)-(ii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
4.2. If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and the Guarantor shall in all respects comply with
the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.1(a)
has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor and the Guarantee Trustee being
removed.
(c) The Guarantee Trustee appointed to office shall hold office until
his successor shall have been appointed or until its removal or
resignation.
(d) The Guarantee Trustee may resign from office (without need for prior
or subsequent accounting) by an instrument (a "Resignation
Request") in writing signed by the Guarantee Trustee and delivered
to the Guarantor, which resignation shall take effect upon such
delivery or upon such later date as is specified therein;
provided, however, that no such resignation of the Guarantee
Trustee shall be effective until a Successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under
Section 4.1(a) has been appointed and has accepted such
appointment by instrument executed by such Successor Guarantee
Trustee and delivered to Guarantor and the resigning Guarantee
Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of a Resignation Request, the
resigning Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon after such notice, if any, as it may deem
proper and prescribe, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer) regardless of any defense, right of set-off
or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment
of the required amounts by the Guarantor to the Holders or by causing the
Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions (other than an extension of time
for payment of Distributions that results from the extension of any
interest payment period on the Debentures), Redemption Price,
Liquidation Distribution (as defined in the Declaration) or any
other sums payable under the terms of the Preferred Securities or
the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of
the Preferred Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition
or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 Enforcement of Guarantee.
The Guarantor and the Guarantee Trustee expressly acknowledge that (i)
this Guarantee Agreement will be deposited with the Guarantee Trustee to be
held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii)
Holders representing not less than a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of this
Guarantee Agreement including the giving of directions to the Guarantee
Trustee, or exercising any trust or other power conferred upon the
Guarantee Trustee under this Guarantee Agreement, and (iv) notwithstanding
the foregoing, any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding against
the Issuer, the Guarantee Trustee, or any other Person.
SECTION 5.5 Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not merely
of collection. This Guarantee Agreement will not be discharged except by
payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer).
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire
by way of subrogation or any indemnity, reimbursement or other agreement,
in all cases as a result of payment under this Guarantee Agreement, if, at
the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, the Guarantor
will not 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 or make any guarantee payment with respect thereto
if at such time (i) the Guarantor shall be in default with respect to its
Guarantee Payments or other payment obligations hereunder, (ii) there shall
have occurred any event of default under the Declaration or (iii) the
Guarantor shall have given notice of its selection of an Extension Period
(as defined in the Indenture) and such period, or any extension thereof, is
continuing; provided that (a) the Guarantor will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the
conversion of any preferred stock of the Guarantor as may be outstanding
from time to time, in each case in accordance with the terms of such stock
and (b) the foregoing will not apply to any stock dividends paid by the
Guarantor. In addition, so long as any Preferred Securities remain
outstanding, the Guarantor (i) will remain the sole direct or indirect
owner of all of the outstanding Common Securities and shall not cause or
permit the Common Securities to be transferred except to the extent such
transfer is permitted under Section 9.1(c) of the Declaration; provided
that any permitted successor of the Guarantor under the Indenture may
succeed to the Guarantor's ownership of the Common Securities and (ii) will
use reasonable efforts to cause the Issuer to continue to be treated as a
grantor trust for United States federal income tax purposes except in
connection with a distribution of Debentures as provided in the
Declaration.
SECTION 6.2 Subordination.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including the Debentures, except
those made pari passu or subordinate by their terms, and (ii) senior to all
capital stock now or hereafter issued by the Guarantor and to any guarantee
now or hereafter entered into by the Guarantor in respect of any of its
capital stock. The Guarantor's obligations under this Guarantee Agreement
will rank pari passu with respect to obligations under other guarantee
agreements which it may enter into from time to time to the extent that
such agreements shall be entered into in substantially the form hereof and
provide for comparable guarantees by the Guarantor of payment on preferred
securities issued by other DLJ Capital Trusts.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon full payment of the Redemption Price of all Preferred
Securities, or upon the distribution of Debentures to Holders of Preferred
Securities and Common Securities in exchange for all of the Preferred
Securities and Common Securities, or upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to the Preferred
Securities or this Guarantee Agreement.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith and in a manner such
Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Guarantee Agreement
or by law, except that an Indemnified Person shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Preferred
Securities might properly be paid.
SECTION 8.2 Indemnification.
(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and against
any loss, damage or claim incurred by such Indemnified Person by reason of
any act or omission performed or omitted by such Indemnified Person in good
faith and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Guarantee Agreement, except that no Indemnified Person shall be entitled to
be indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount
if it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assignees, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding. Except in connection
with a consolidation, merger or sale involving the Guarantor that is
permitted under Article Ten of the Indenture, the Guarantor shall not
assign its obligations hereunder.
SECTION 9.2 Amendments.
Except with respect to any changes which do not adversely affect the
rights of Holders (in which case no consent of Holders will be required),
this Guarantee Agreement may only be amended with the prior approval of the
Holders of not less than 66-2/3% in liquidation amount of the Preferred
Securities. The provisions of Section 12.2 of the Declaration concerning
meetings of Holders shall apply to the giving of such approval.
SECTION 9.3 Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Facsimile No.:
Attention: General Counsel and Secretary
(b) if given to the Guarantee Trustee, to the address set forth below
or such other address as the Guarantee Trustee may give notice to the
Holders:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administration
Telecopy: (312) 407-1718
(c) if given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
SECTION 9.4 Genders.
The masculine, feminine and neuter genders used herein shall include
the masculine, feminine and neuter genders.
SECTION 9.5 Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
subject to Section 3.1(a) is not separately transferable from the Preferred
Securities.
SECTION 9.6 Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 9.7 Counterparts.
This Guarantee Agreement may be executed in counterparts, each of which
shall be an original; but such counterparts shall together constitute one
and the same instrument.
SECTION 9.8 Exercise of Overallotment Option.
If and to the extent that Preferred Securities are issued by the Issuer
upon exercise of the overallotment option referred to the second WHEREAS
clause, the Guarantor agrees to give prompt notice thereof to the Guarantee
Trustee but the failure to give such notice shall not relieve the Guarantor
of any of its obligations hereunder.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
The AES Corporation
By:
Name:
Title:
The First National Bank of Chicago
As Guarantee Trustee
By:
Name:
Title:
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, on this day of , 199 ,
personally appeared of The AES Corporation known to me (or proved to me by
introduction upon the oath of a person known to me) to be the person and
officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that he/she executed the same as the act of such trust
for the purposes and consideration herein expressed and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL THIS DAY OF
, 199 .
[SEAL]
________________________________
NOTARY PUBLIC, STATE OF NEW YORK
Print Name: ____________________
Commission Expires:_____________
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, on this day of , 199 ,
personally appeared of The First National Bank of Chicago, known to me (or
proved to me by introduction upon the oath of a person known to me) to be
the person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that he/she executed the same as the act
of such trust for the purposes and consideration herein expressed and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL THIS DAY OF
, 199 .
[SEAL]
________________________________
NOTARY PUBLIC, STATE OF NEW YORK
Print Name:_____________________
Commission Expires: ____________
EXHIBIT 5.1
[Davis Polk & Wardwell Letterhead]
November 27, 1996
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Ladies and Gentlemen:
We have acted as counsel in connection with the Company's
Registration Statement on Form S-3 (the "Registration Statement") filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended, for the registration of the sale by the AES Corporation (the
"Company") from time to time of up to $750,000,000 aggregate principal amount
of senior debt securities, senior subordinated debt securities and junior
subordinated debt securities (collectively, the "Debt Securities"),
preferred stock, no par value, (the "Preferred Stock") of the Company,
common stock, par value $0.01 per share, (the "Common Stock") of the Company
and preferred securities (the "Preferred Securities") of AES Trust I, AES
Trust II and AES Trust III, each a statutory business trust created under the
Business Trust Act of the State of Delaware (each, a "Trust" and,
collectively, the "Trusts") and guarantees of the Preferred Securities by the
Company (the "Guarantees") and stock purchase contracts to purchase Common
Stock (the "Stock Purchase Contracts") and stock purchase units, each
representing ownership of a Stock Purchase Contract and Debt Securities or
debt obligations of third parties (the "Stock Purchase Units"). The senior
Debt Securities are to be issued pursuant to an Indenture (the "Senior Debt
Indenture") between the Company and The First National Bank of Chicago, as
trustee. The senior subordinated Debt Securities are to be issued pursuant to
an Indenture dated as of July 1, 1996 (the "Senior Subordinated Debt
Indenture") between the Company and The First National Bank of Chicago, as
trustee. The junior subordinated Debt Securities are to be issued pursuant to
an Indenture (the "Junior Subordinated Debt Indenture") between the Company
and The First National Bank of Chicago, as trustee. The First National Bank
of Chicago in its capacity as trustee under the Senior Indenture, the
Subordinated Indenture and the Junior Subordinated Indenture is referred to
herein as the "Trustee" and the Senior Indenture, Subordinated Indenture and
Junior Subordinated Indenture are referred to herein collectively as the
"Indentures".
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary for the purposes of rendering this opinion.
On the basis of the foregoing, we are of the opinion that:
1. When the Indentures and any supplemental indenture to be
entered into in connection with the issuance of any Debt Security
have been duly authorized, executed and delivered by the Trustee and
the Company, the specific terms of a particular Debt Security have
been duly authorized and established in accordance with the
applicable Indenture and such Debt Security has been duly authorized,
executed, authenticated, issued and delivered in accordance with the
applicable Indenture and the applicable underwriting or other
agreement, such Debt Security will constitute a valid and binding
obligation of the Company, enforceable in accordance with its terms,
except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar laws now or hereinafter in effect relating to
or affecting the enforcement of creditors' rights generally and (b)
the availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether considered
in a proceeding at law or in equity).
2. Upon designation of the relative rights, preferences and
limitations of any series of Preferred Stock by the Board of
Directors of the Company and the proper filing with the Secretary of
State of the State of Delaware of a Certificate of Designation
relating to such series of Preferred Stock, all necessary corporate
action on the part of the Company will have been taken to authorize
the issuance and sale of such series of Preferred Stock proposed to
be sold by the Company, and when such shares of Preferred Stock are
issued and delivered in accordance with the applicable underwriting
or other agreement, such shares of Preferred Stock will be validly
issued, fully paid and non-assessable, enforceable in accordance with
their terms, except as (a) the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar laws now or hereinafter in effect relating to
or affecting the enforcement of creditors' rights generally and (b)
the availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether considered
in a proceeding at law or in equity).
3. When all necessary corporate action on the part of the
Company has been taken to authorize the issuance and sale of such
shares of Common Stock proposed to be sold by the Company, and
when such shares of Common Stock are issued and delivered in
accordance with the applicable underwriting or other agreement,
such shares of Common Stock will be validly issued, fully paid and
non-assessable.
4. When the Guarantees have been duly authorized by the
Company, the applicable Guarantee Agreement has been duly executed
and delivered and the Preferred Securities have been duly issued and
delivered by the applicable Trust as contemplated by the Registration
Statement and any prospectus supplement relating thereto, the
Guarantees will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws now
or hereinafter in effect relating to or affecting the enforcement of
creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general
applicability (regardless of whether considered in a proceeding at
law or in equity).
5. When the Stock Purchase Units and Stock Purchase
Contracts have been duly authorized by the Company, the applicable
Purchase Contract Agreement and Pledge Agreement have been duly
executed and delivered, the Stock Purchase Units and Stock Purchase
Contracts will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, except as (a)
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or
similar laws now or hereinafter in effect relating to or affecting
the enforcement of creditors' rights generally and (b) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether
considered in a proceeding at law or in equity).
In connection with the opinions expressed above, we have
assumed that, at or prior to the time of the delivery of any such security,
(i) the Board of Directors shall have duly established the terms of such
security and duly authorized the issuance and sale of such security and such
authorization shall not have been modified or rescinded; (ii) the Registration
Statement shall have been declared effective and such effectiveness shall not
have been terminated or rescinded; and (iii) there shall not have occurred any
change in law affecting the validity or enforceability of such security. We
have also assumed that none of the terms of any security to be established
subsequent to the date hereof, nor the issuance and delivery of such security,
nor the compliance by the Company with the terms of such security will violate
any applicable law or will result in a violation of any provision of any
instrument or agreement then binding upon the Company, or any restriction
imposed by any court or governmental body having jurisdiction over the Company.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. In addition, we consent to the reference to us
under the caption "Legal Matters" in the prospectus.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other
purpose or relied upon by or furnished to any other person without our prior
written consent.
Very truly yours,
/s/ Davis Polk & Wardwell
---------------------------
Davis Polk & Wardwell
EXHIBIT 5.2
Richard, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
Telephone (302) 658-6541
Telecoppier (302) 658-6549
Writer's Direct Dial Number
November 26, 1996
AES Trust I
AES Trust II
AES Trust III
c/o The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Re: AES Trust I, AES Trust II and AES Trust III
Ladies and Gentlemen:
We have acted as special Delaware counsel for The AES
Corporation, a Delaware corporation ("AES"), AES Trust I, a Delaware business
trust ("Trust I"), AES Trust II, a Delaware business trust ("Trust II"), and
AES Trust III, a Delaware business trust ("Trust III")(Trust I, Trust II and
Trust III are hereinafter collectively referred to as the "Trusts" and
sometimes hereinafter individually referred to as a "Trust"), in connection
with the matters set forth herein. At your request, this opinion is being
furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of Trust I, dated as of November 1,
1996, as filed with the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on November 1, 1996;
(b) The Certificate of Trust of Trust II, dated as of November
1, 1996, as filed with the Secretary of State on November 1, 1996;
(c) The Certificate of Trust of Trust III, dated as of November
13, 1996, as filed with the Secretary of State on November 14, 1996;
(d) The Declaration of Trust of Trust I, dated as of November 1,
1996, between AES and the trustees of Trust I named therein;
(e) The Declaration of Trust of Trust II, dated as of
November 1, 1996, between AES and the trustees of Trust II named therein;
(f) The Declaration of Trust of Trust III, dated as of November
13, 1996, between AES and the trustees of Trust III named therein;
(g) The Registration Statement (the "Registration Statement") on
Form S-3, including a preliminary prospectus (the "Prospectus"), relating to
the Preferred Securities of the Trusts representing preferred undivided
beneficial interests in the assets of the Trusts (each, a "Preferred Security"
and collectively, the "Preferred Securities"), filed by AES and the Trusts
with the Securities and Exchange Commission on or about November 27, 1996;
(h) A form of Amended and Restated Declaration of Trust for each
of the Trusts, to be entered into between AES, the trustees of the Trust named
therein, and the holders, from time to time, of the undivided beneficial
interests in the assets of the Trust (including the exhibits
thereto)(collectively, the "Declarations" and individually, a "Declaration"),
attached as an exhibit to the Registration Statement; and
(i) A Certificate of Good Standing for each of the Trusts, dated
November 26, 1996, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Declarations.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (i) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (i) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that
is inconsistent with the opinions stated herein. We have conducted no
independent factual investigation of our own but rather have relied solely
upon the foregoing documents, the statements and information set forth therein
and the additional matters recited or assumed herein, all of which we have
assumed to be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that each of
the Declarations constitutes the entire agreement among the parties thereto
with respect to the subject matter thereof, including with respect to the
creation, operation and termination of the applicable Trust, and that the
Declarations and the Certificates of Trust are in full force and effect and
have not been amended, (ii) except to the extent provided in paragraph 1
below, the due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its organization or formation, (iii)
the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Preferred Security is to be issued by the
Trusts (collectively, the "Preferred Security Holders") of a Preferred
Security Certificate for such Preferred Security and the payment for such
Preferred Security, in accordance with the Declarations and the Registration
Statement, and (vii) that the Preferred Securities are issued and sold to the
Preferred Security Holders in accordance with the Declarations and the
Registration Statement. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our
opinions are rendered only with respect to Delaware laws and rules,
regulations and orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. Each of the Trusts has been duly created and is validly
existing in good standing as a business trust under the Business Trust Act.
2. The Preferred Securities of each Trust will represent valid
and, subject to the qualifications set forth in paragraph 3 below, fully paid
and nonassessable undivided beneficial interests in the assets of the
applicable Trust.
3. The Preferred Security Holders, as beneficial owners of the
applicable 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. We
note that the Preferred Security Holders may be obligated pursuant to the
applicable Declaration, to (i) provide indemnity and security in connection
with and pay taxes or governmental charges arising from transfers of
Preferred Security Certificates and the issuance of replacement Preferred
Security Certificates, (ii) provide security and indemnity in connection
with requests of or directions to the Property Trustee to exercise its
rights and remedies under the applicable Declaration, and (iii) undertake
as a party litigant to pay costs in any suit for the enforcement of any
right or remedy under the applicable Declaration or against the Property
Trustee, to the extent provided in the applicable Declaration.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. We
hereby consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above,
without our prior written consent, this opinion may not be furnished or
quoted to, or relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
------------------------------
Richards, Layton & Finger
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2
to the Registration Statement of The AES Corporation on Form S-3 of our
report dated February 20, 1996, except for Note 14, as to which the date is
May 30, 1996, appearing in Registration Statement No. 333-01286 of The AES
Corporation on Form S-3, as amended, and of our report on the consolidated
financial statement schedules dated February 20, 1996, appearing in the
Annual Report on Form 10-K of The AES Corporation, for the year ended
December 31, 1995 and to the reference to us under the heading "Experts" in
each Prospectus, which are part of such Registration Statement.
Washington, DC
November 27, 1996
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2
to the Registration Statement of The AES Corporation on Form S-3 of our
report (based on our audit which was performed in accordance with auditing
standards generally accepted in Brazil) on the financial statements of
LIGHT - Servicos de Electricidade S.A. as of December 31, 1995 and 1994 and
for the years then ended, prepared in conformity with accounting principles
generally accepted in Brazil, dated January 24, 1996, except for Note 27,
for which the date is May 1996 (which expresses an unqualified opinion and
includes a reference to other auditors who audited the financial statements
of Eletropaulo Electricidade de Sao Paulo S.A. as of and for the years
ended December 31, 1995 and 1994, whose report thereon has been furnished
to us, and our opinion on LIGHT - Servicos de Electricidade S.A., insofar
as it relates to the amounts included for such company, is based solely on
the report of such other auditors) appearing in the Current Report on Form
8-K of The AES Corporation dated May 30, 1996, and to the reference to us
under the heading "Experts" in each Prospectus, which are part of such
Registration Statement.
Additores Independentes
Rio de Janiero, Brazil
November 27, 1996
