As filed with the Securities and Exchange Commission on November 19, 1997
Registration No. 333-39857
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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AMENDMENT NO.1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE AES CORPORATION DELAWARE 54-1163725
AES TRUST III DELAWARE 54-1840550
AES TRUST IV DELAWARE 54-1872293
AES TRUST V DELAWARE 54-1872355
(Exact name of Registrant as (State or other jurisdiction of (I.R.S. employer
specified in its charter) incorporation or organization) identification number)
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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)
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Copies to:
RICHARD D. TRUESDELL, JR.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
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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. [ ]
THE 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.
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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 III, AES Trust IV or AES Trust V,
severally, Junior Subordinated Debt Trust Securities of The AES
Corporation and Guarantees by The AES Corporation of Preferred
Securities issued by AES Trust III, AES Trust IV or AES Trust V.
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.
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SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1997
PROSPECTUS
[LOGO]
THE AES CORPORATION
$1,500,000,000
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.
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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.
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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
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 OR 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.
<PAGE>
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, three 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 $1,500,000,000.
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 , 1997.
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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, 1996; (ii) the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997; (iii) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997; (iv) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997; (v) the
Company's Current Reports on Form 8-K filed on November 10, 1997, November 6,
1997, October 24, 1997, August 18, 1997, July 16, 1997, July 15, 1997, July 14,
1997, July 3, 1997, March 24, 1997, March 13, 1997, February 19, 1997 and
January 30, 1997 and the Company's Current Report's on Form 8-K/A filed on
November 7, 1997 and August 5, 1997.
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.
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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.
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NINE-MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
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1992 1993 1994 1995 1996 1997
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Ratio of earnings to fixed charges..... 1.37 1.62 2.08 2.18 1.83 1.45
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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, 1992 until June 30, 1997, no shares of
Preferred Stock were issued or outstanding, and during that period the Company
did not pay any Preferred Stock dividends.
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THE COMPANY
AES is a global power company committed to supplying electricity to
customers world-wide in a socially responsible way. The Company 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. AES
markets power principally from electricity generating facilities that it
develops, acquires, owns and operates.
Over the last five 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
generating plants and distribution companies, through competitively bid
privatization initiatives outside of the United States or negotiated
acquisitions. Since 1992, the Company's total generating capacity in megawatts
has grown from 1,829 MW to 18,538 MW (an increase of 914%), with the total
number of plants in operation increasing from eight to 74. Additionally, the
Company's total revenues have increased at a compound annual growth rate of 20%
from $401 million in 1992 to $835 million in 1996, while net income has
increased at a compound annual growth rate of 22% from $56 million to $125
million over the same period.
AES operates and owns (entirely or in part), through subsidiaries and
affiliates, power plants in ten countries with a capacity of approximately
18,538 MW (including 4,000 MW attributable to Ekibastuz which currently has a
capacity factor of approximately 20%). AES is also constructing nine additional
power plants in seven countries with a capacity of approximately 4,921 MW. The
Company's total ownership in plants in operation and under construction
aggregates approximately 23,459 MW and its net equity ownership in such plants
is approximately 11,882 MW. In addition, AES has numerous projects in advanced
stages of development, including seven projects with design capacity of
approximately 3,398 MW that have executed or been awarded power sales
agreements.
The Company is also engaged (entirely or in part) in electric power
distribution businesses in Latin America through its subsidiaries and
affiliates. These subsidiaries and affiliates serve approximately eight million
commercial, industrial and residential customers using approximately 63,000
gigawatt hours per year.
As a result of the Company's significant growth in recent years, the
Company's operations have become more diverse with regard to both geography and
fuel source and it has reduced its dependence upon any single project or
customer. During 1996, four of the Company's projects individually contributed
more than 10% of the Company's total revenues, Shady Point which represented
approximately 20%, San Nicolas which represented approximately 16%, Thames which
represented approximately 16% and Barbers Point which represented approximately
15%.
OUTLOOK
The global trend of electricity market restructuring has created
significant new business opportunities for companies like AES. Both domestic and
international electricity markets are being restructured and there is a trend
away from government-owned electricity systems toward deregulated, competitive
market structures. Many countries have rewritten their laws and regulations to
allow foreign investment and private ownership of electricity generation,
transmission or distribution systems. Some countries have or are in the process
of "privatizing" their electricity systems by selling all or part of such
systems to private investors. With 69 of its operating plants and distribution
companies having been acquired or commenced commercial operations since 1992,
AES has been an active participant in both the international privatization
process and the development process. The Company is currently pursuing over 90
projects including acquisitions, the expansion of existing plants and new
projects.
AES believes that there is significant demand for both new and more
efficiently operated electric generating capacity in many regions around the
world. In an effort to further grow and diversify the Company's portfolio of
electric generating plants, AES is pursuing, through its integrated divisions,
additional greenfield developments and
3
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acquisitions in many countries. Several of these acquisitions, if consummated,
would require the Company to obtain substantial additional financing, in the
form of both debt and equity financing, in the short term.
STRATEGY
The Company's strategy in helping meet the world's need for electricity is
to participate in competitive power markets as they develop either by greenfield
development or by acquiring and operating existing facilities or distribution
systems in these markets. The Company generally operates electric generating
facilities that utilize natural gas, coal, oil, hydro power, or combinations
thereof. In addition, the Company participates in the electric power
distribution and retail supply businesses in certain limited instances, and will
continue to review opportunities in such markets in the future.
Other elements of the Company's strategy include:
o Supplying energy to customers at the lowest cost possible, taking
into account factors such as reliability and environmental
performance;
o Constructing or acquiring projects of a relatively large size
(generally larger than 100 MW);
o When available, entering into power sales contracts with electric
utilities or other customers with significant credit strength; and
o Participating in electric power distribution and retail supply
markets that grant concessions with long-term pricing
arrangements.
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.
Where possible, AES attempts to sell electricity under long-term power
sales contracts. The Company attempts, whenever possible, to structure the
revenue provisions of such power sales contracts such that changes in the cost
components of a facility (primarily fuel costs) correspond, as effectively as
possible, to changes in the revenue components of the contract. The Company also
attempts to provide fuel for its operating plants generally under long-term
supply agreements, either through contractual arrangements with third parties
or, in some instances, through acquisition of a dependable source of fuel.
As electricity markets become more competitive, it may be more difficult
for AES (and other power generation companies) to obtain long-term power sales
contracts. In markets where long-term contracts are not available, AES will
pursue methods to hedge costs and revenues to provide as much assurance as
possible of a project's profitability. In these situations, AES might choose to
purchase a project with a partial hedge or with no hedge, with the strategy that
its diverse portfolio of projects provides some hedge to the increased
volatility of the project's earnings and cash flow. Additionally, AES may choose
not to participate in these markets.
The Company attempts to finance each domestic and foreign plant primarily
under loan agreements and related documents which, except as noted below,
require the loans to be repaid solely from the project's revenues and provide
that the repayment of the loans (and interest thereon) is secured solely by the
capital stock, physical assets, contracts and cash flow of that plant subsidiary
or affiliate. This type of financing is generally referred to as "project
financing." The lenders under these project financing structures cannot look to
AES or its other projects for repayment, unless such entity explicitly agrees to
undertake liability. AES has explicitly agreed to undertake certain limited
obligations and
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contingent liabilities, most of which by their terms will only be effective or
will be terminated upon the occurrence of future events. In certain
circumstances, the Company may incur indebtedness which is recourse to the
Company or to more than one project.
5
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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 $3.9 billion of outstanding indebtedness at September 30, 1997. 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,
1997, the Company had a consolidated ratio of total debt to total book
capitalization (including current debt) of approximately 70%.
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, 1997, the Company had
approximately $207 million in aggregate principal amount of Senior Debt and $782
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, 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, 1997, the indebtedness and obligations of the Company's
subsidiaries aggregated approximately $3.7 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.
6
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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 76 power plants outside the United States in
operation or under construction. Thirty-nine of such power plants are located in
Brazil; nine in the People's Republic of China; seven in Kazakhstan; six in
Argentina; five in the United Kingdom; three in Hungary; two in each of
Australia and Pakistan; and one in each of the Netherlands, Canada and the
Dominican Republic.
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 credit quality, liquidity or
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
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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."
Risks Associated with Acquisitions. The Company has achieved a significant
portion of its growth through acquisitions and expects that it will continue to
grow, in part, through acquisitions. During 1997 alone the Company consummated
several major acquisitions in which the Company invested an aggregate of $1.9
billion (excluding non-recourse debt). Although each of the acquired businesses
had a significant operating history at the time of its acquisition by the
Company, the Company has a limited history of owning and operating these
businesses. In addition, most of these businesses were government owned and some
were operated as part of a larger integrated utility prior to their acquisition
by the Company. There can be no assurances that the Company will be successful
in transitioning these to private ownership, that such businesses will perform
as expected or that the returns from such businesses will support the
indebtedness incurred to acquire them or the capital expenditures needed to
develop them.
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.
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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 1996, five customers,
including Connecticut Light & Power Company, a subsidiary of Northeast
Utilities, accounted for 73% of the Company's consolidated total 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 39% of
AES's consolidated total assets at December 31, 1996 and generated approximately
67% of AES's consolidated total revenues for the year ended December 31, 1996.
Sales to Connecticut Light & Power Company ("CL&P") represented 16% of the
Company's total revenues in 1996. Moody's Investor Service Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P") have recently downgraded CL&P's senior
secured long-term debt from Baa3/BBB- to Ba1/BB+, Both Moody's and S&P have
placed CL&P under review for possible downgrade or on credit watch. In March
1997, as a result of regulatory action by the Public Service Commission of New
Hampshire, Moody's and S&P downgraded the senior unsecured debt of Northeast
Utilities, the parent of CL&P, from Ba2/BB to Ba3/BB- and placed Northeast
Utilities on watch for possible downgrade.
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.
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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, 1997, AES's two
founders, Roger W. Sant and Dennis W. Bakke, and their immediate families
together owned beneficially approximately 22.1% 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, 1997, all
of AES's officers and directors and their immediate families together owned
beneficially approximately 29.2% 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.
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Shares Eligible for Future Sale. Certain credit facilities of AES
subsidiaries are secured by the pledge of 34.6 million shares of the AES Common
Stock held by a subsidiary of AES. The sale of a substantial number of such
shares in the public market upon any foreclosure or otherwise could have an
adverse effect on the market price of the AES Common Stock.
Risk of Fraudulent Transfer. Various fraudulent conveyance laws have been
enacted for the protection of creditors and may be applied by a court on behalf
of any unpaid creditor or a representative of AES's creditors in a lawsuit to
subordinate or avoid Debt Securities in favor of other existing or future
creditors of AES. Under applicable provisions of the U.S. Bankruptcy code or
comparable provisions of state fraudulent transfer or conveyance laws, if AES at
the time of issuance of Debt Securities , (i) incurred such indebtedness with
intent to hinder, delay or defraud any present or future creditor of AES or
contemplated insolvency with a design to prefer one or more creditors to the
exclusion in whole or in part of others or (ii) received less than reasonably
equivalent value or fair consideration for issuing Debt Securities and AES (a)
was insolvent, (b) was rendered insolvent by reason of the issuance of the Debt
Securities, (c) was engaged or about to engage in business or a transaction for
which the remaining assets of AES constitute unreasonably small capital to carry
on its business or (d) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they mature, then, in each case, a court
of competent jurisdiction could void, in whole or in part, the Debt Securities.
Among other things, a legal challenge of the Debt Securities on fraudulent
conveyance grounds may focus on the benefits, if any, realized by AES as a
result of the issuance by AES of the Debt Securities.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law applied in such case. Generally, however, AES would be considered
insolvent if the sum of its debts, including contingent liabilities, were
greater than all of its assets at fair valuation or if the present fair market
value of its assets were less than the amount that would be required to pay the
probable liability on its existing debts, including contingent liabilities, as
they become absolute and mature. There can be no assurance that, after providing
for all prior claims, there will be sufficient assets to satisfy the claims of
the holders of the Debt Securities.
Management believes that, for purposes of all such insolvency, bankruptcy
and fraudulent transfer or conveyance laws, the Debt Securities are being
incurred without the intent to hinder, delay or defraud creditors and for proper
purposes and in good faith, and that AES after the issuance of the Debt
Securities will be solvent, will have sufficient capital for carrying on its
business and will be able to pay its debts as they mature. There can be no
assurance, however, that a court passing on such questions would agree with
management's view.
No Prior Public Market--Possible Price Volatility of Debt Securities, Stock
Purchase Contracts, Stock Purchase Units and Preferred Stock. Prior to the
offering, there has been no public market for the Senior Debt Securities, the
Junior Subordinated Debt Securities, the Preferred Stock, the Stock Purchase
Contracts and the Stock Purchase Units. There can be no assurance that an active
trading market for the Senior Debt Securities, the Junior Subordinated Debt
Securities, the Preferred Stock, the Stock Purchase Contracts or the Stock
Purchase Units will develop or be sustained. If such a market were to develop,
the Senior Debt Securities, the Junior Subordinated Debt Securities, the
Preferred Stock, the Stock Purchase Contracts or the Stock Purchase Units 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.
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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 500,000,000 shares of Common Stock, par value $.01 per
share, and 50,000,000 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 June 30, 1997, there were, after giving effect to the stock split
discussed below, 165,309,292 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 on the NYSE Composite Tape and
by NASDAQ/NMS. In July 1997, the Company announced a two for one stock split, in
the form of a stock dividend, for holders of record on July 28, 1997 of its
Common Stock, par value $.01 per share, which was paid on August 28, 1997. The
prices set forth below are adjusted for such stock split.
HIGH LOW
------------ ------------
1995
- ----
First Quarter...................................... $ 9.88 $ 8.00
Second Quarter..................................... 9.63 8.00
Third Quarter...................................... 10.81 9.25
Fourth Quarter..................................... 12.00 9.38
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HIGH LOW
------------ ------------
1996
- ----
First Quarter...................................... $ 12.63 $ 10.50
Second Quarter..................................... 14.81 11.13
Third Quarter...................................... 20.25 13.94
Fourth Quarter..................................... 25.06 19.63
HIGH LOW
------------ ------------
1997
- ----
First Quarter...................................... $ 34.13 $ 22.38
Second Quarter..................................... 37.75 27.50
Third Quarter ..................................... 45.25 34.63
Fourth Quarter (through November 6, 1997).......... 49.63 38.94
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 June 30, 1997, 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,
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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.
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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.
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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;
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(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
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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
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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 Indenture; provided that
Senior Debt shall not include (i) the Company's 8.875% Senior Subordinated
Debentures due 2027, 8.50% Senior Subordinated Notes due 2007, 8.375% Senior
Subordinated Notes Due 2007 and the Company's 10.25% 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.
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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
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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; (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
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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 the terms in "Restriction
on Mergers, Consolidations and Sales of Assets" described below; (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
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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
23
<PAGE>
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.
24
<PAGE>
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.
25
<PAGE>
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, New York, New York.
EXPERTS
The financial statements as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996 incorporated by reference
in this Prospectus from the Company's Current Report on Form 8-K filed November
6, 1997 and the related financial statement schedules incorporated by reference
in the Registration Statement from the Company's Annual Report on Form 10-K have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated by reference herein, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
26
<PAGE>
The financial statements of Companhia Energetica de Minas Gerais -- CEMIG
for the years ended December 31, 1996 and 1995, prepared in accordance with
accounting principles generally accepted in Brazil, incorporated by reference in
this Prospectus from Item 7 of the Current Report on Form 8-K of The AES
Corporation filed July 16, 1997, have been audited by Price Waterhouse Auditores
Independentes, Belo Horizonte, Brazil, independent accountants, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
27
<PAGE>
====================================== ======================================
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
SUPPLEMENT, IN CONNECTION WITH ANY $1,500,000,000
OFFERING CONTEMPLATED HEREBY, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY UNDERWRITER, AGENT OR
DEALER. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS THE AES CORPORATION
SUPPLEMENT NOR ANY 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 DEBT SECURITIES
PROSPECTUS NOR ANY PROSPECTUS COMMON STOCK
SUPPLEMENT SHALL CONSTITUTE AN OFFER PREFERRED STOCK
TO SELL OR A SOLICITATION OF AN OFFER STOCK PURCHASE CONTRACTS
TO BUY ANY SECURITIES BY ANYONE IN ANY STOCK PURCHASE UNITS
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.
-----------------------
-----------------------
PROSPECTUS
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...................... 5
Description of Capital Stock...... 11
Description of Debt Securities.... 15
Description of Stock Purchase
Contracts and Stock Purchase
Units.......................... 24
Plan of Distribution.............. 25
Legal Matters..................... 25
Experts........................... 25 , 1997
====================================== ======================================
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1997
PROSPECTUS
[LOGO]
THE AES CORPORATION
$1,500,000,000
JUNIOR SUBORDINATED DEBT SECURITIES
AES TRUST III
AES TRUST IV
AES TRUST V
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 5 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 III, AES Trust IV and AES Trust V (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
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 OR 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.
<PAGE>
"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 $1,500,000,000.
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 , 1997.
<PAGE>
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, 1996; (ii) the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997; (iii) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997; (iv) the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997; (v) the
Company's Current Reports on Form 8-K filed on filed on November 10, 1997,
November 6, 1997, October 24, 1997, August 18, 1997, July 16, 1997, July 15,
1997, July 14, 1997, July 3, 1997, March 24, 1997, March 13, 1997, February 19,
1997 and January 30, 1997 and the Company's Current Reports on Form 8-K/A filed
on November 7, 1997 and August 5, 1997.
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.
<PAGE>
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>
YEAR ENDED DECEMBER 31,
----------------------------------------------- NINE MONTHS
ENDED
1992 1993 1994 1995 1996 SEPTEMBER 30, 1997
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges ..................... 1.37 1.62 2.08 2.18 1.83 1.45
</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, 1992 until June 30, 1997, no shares of
Preferred Stock were issued or outstanding, and during that period the Company
did not pay any Preferred Stock dividends.
2
<PAGE>
THE COMPANY
AES is a global power company committed to supplying electricity to
customers world-wide in a socially responsible way. The Company 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. AES
markets power principally from electricity generating facilities that it
develops, acquires, owns and operates.
Over the last five 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
generating plants and distribution companies, through competitively bid
privatization initiatives outside of the United States or negotiated
acquisitions. Since 1992, the Company's total generating capacity in megawatts
has grown from 1,829 MW to 18,538 MW (an increase of 914%), with the total
number of plants in operation increasing from eight to 74. Additionally, the
Company's total revenues have increased at a compound annual growth rate of 20%
from $401 million in 1992 to $835 million in 1996, while net income has
increased at a compound annual growth rate of 22% from $56 million to $125
million over the same period.
AES operates and owns (entirely or in part), through subsidiaries and
affiliates, power plants in ten countries with a capacity of approximately
18,538 MW (including 4,000 MW attributable to Ekibastuz which currently has a
capacity factor of approximately 20%). AES is also constructing nine additional
power plants in seven countries with a capacity of approximately 4,921 MW. The
Company's total ownership in plants in operation and under construction
aggregates approximately 23,459 MW and its net equity ownership in such plants
is approximately 11,882 MW. In addition, AES has numerous projects in advanced
stages of development, including seven projects with design capacity of
approximately 3,398 MW that have executed or been awarded power sales
agreements.
The Company is also engaged (entirely or in part) in electric power
distribution businesses in Latin America through its subsidiaries and
affiliates. These subsidiaries and affiliates serve approximately eight million
commercial, industrial and residential customers using approximately 63,000
gigawatt hours per year.
As a result of the Company's significant growth in recent years, the
Company's operations have become more diverse with regard to both geography and
fuel source and it has reduced its dependence upon any single project or
customer. During 1996, four of the Company's projects individually contributed
more than 10% of the Company's total revenues, Shady Point which represented
approximately 20%, San Nicolas which represented approximately 16%, Thames which
represented approximately 16% and Barbers Point which represented approximately
15%.
OUTLOOK
The global trend of electricity market restructuring has created
significant new business opportunities for companies like AES. Both domestic and
international electricity markets are being restructured and there is a trend
away from government-owned electricity systems toward deregulated, competitive
market structures. Many countries have rewritten their laws and regulations to
allow foreign investment and private ownership of electricity generation,
transmission or distribution systems. Some countries have or are in the process
of "privatizing" their electricity systems by selling all or part of such
systems to private investors. With 69 of its operating plants and distribution
companies having been acquired or commenced commercial operations since 1992,
AES has been an active participant in both the international privatization
process and the development process. The Company is currently pursuing over 90
projects including acquisitions, the expansion of existing plants and new
projects.
AES believes that there is significant demand for both new and more
efficiently operated electric generating capacity in many regions around the
world. In an effort to further grow and diversify the Company's portfolio of
electric generating plants, AES is pursuing, through its integrated divisions,
additional greenfield developments and
3
<PAGE>
acquisitions in many countries. Several of these acquisitions, if consummated,
would require the Company to obtain substantial additional financing, in the
form of both debt and equity financing, in the short term.
STRATEGY
The Company's strategy in helping meet the world's need for electricity is
to participate in competitive power markets as they develop either by greenfield
development or by acquiring and operating existing facilities or distribution
systems in these markets. The Company generally operates electric generating
facilities that utilize natural gas, coal, oil, hydro power, or combinations
thereof. In addition, the Company participates in the electric power
distribution and retail supply businesses in certain limited instances, and will
continue to review opportunities in such markets in the future.
Other elements of the Company's strategy include:
o Supplying energy to customers at the lowest cost possible, taking
into account factors such as reliability and environmental
performance;
o Constructing or acquiring projects of a relatively large size
(generally larger than 100 MW);
o When available, entering into power sales contracts with electric
utilities or other customers with significant credit strength; and
o Participating in electric power distribution and retail supply
markets that grant concessions with long-term pricing
arrangements.
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.
Where possible, AES attempts to sell electricity under long-term power
sales contracts. The Company attempts, whenever possible, to structure the
revenue provisions of such power sales contracts such that changes in the cost
components of a facility (primarily fuel costs) correspond, as effectively as
possible, to changes in the revenue components of the contract. The Company also
attempts to provide fuel for its operating plants generally under long-term
supply agreements, either through contractual arrangements with third parties
or, in some instances, through acquisition of a dependable source of fuel.
As electricity markets become more competitive, it may be more difficult
for AES (and other power generation companies) to obtain long-term power sales
contracts. In markets where long-term contracts are not available, AES will
pursue methods to hedge costs and revenues to provide as much assurance as
possible of a project's profitability. In these situations, AES might choose to
purchase a project with a partial hedge or with no hedge, with the strategy that
its diverse portfolio of projects provides some hedge to the increased
volatility of the project's earnings and cash flow. Additionally, AES may choose
not to participate in these markets.
The Company attempts to finance each domestic and foreign plant primarily
under loan agreements and related documents which, except as noted below,
require the loans to be repaid solely from the project's revenues and provide
that the repayment of the loans (and interest thereon) is secured solely by the
capital stock, physical assets, contracts and cash flow of that plant subsidiary
or affiliate. This type of financing is generally referred to as "project
financing." The lenders under these project financing structures cannot look to
AES or its other projects for repayment, unless such entity explicitly agrees to
undertake liability. AES has explicitly agreed to undertake certain limited
obligations and
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contingent liabilities, most of which by their terms will only be effective or
will be terminated upon the occurrence of future events. In certain
circumstances, the Company may incur indebtedness which is recourse to the
Company or to more than one project.
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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 $3.9 billion of outstanding indebtedness at June 30, 1997. 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,
1997, the Company had a consolidated ratio of total debt to total book
capitalization (including current debt) of approximately 70%.
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. The obligations of AES under the
Preferred Securities Guarantee are subordinate and junior in right of payment to
all liabilities of AES and pari passu in right of payment with the most senior
preferred stock issued, from time to time, if any, by AES. As of September 30,
1997, the Company had approximately $782 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, 1997, the indebtedness
and obligations of the Company's subsidiaries aggregated approximately $3.7
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).
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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."
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 76 power plants outside the United States in operation or
under construction. Thirty-nine of such power plants are located in Brazil; nine
in the People's Republic of China; seven in Kazakhstan; six in Argentina; five
in the United Kingdom; three in Hungary; two in each of Australia and Pakistan;
and one in each of the Netherlands, Canada and the Dominican Republic.
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 credit quality, liquidity or 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
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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."
Risks Associated with Acquisitions. The Company has achieved a significant
portion of its growth through acquisitions and expects that it will continue to
grow, in part, through acquisitions. During 1997 alone the Company consummated
several major acquisitions in which the Company invested an aggregate of $1.9
billion (excluding non-recourse debt). Although each of the acquired businesses
had a significant operating history at the time of its acquisition by the
Company, the Company has a limited history of owning and operating these
businesses. In addition, most of these businesses were government owned and some
were operated as part of a larger integrated utility prior to their acquisition
by the Company. There can be no assurances that the Company will be successful
in transitioning these to private ownership, that such businesses will perform
as expected or that the returns from such businesses will support the
indebtedness incurred to acquire them or the capital expenditures needed to
develop them.
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
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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 1996, five customers,
including Connecticut Light & Power Company, a subsidiary of Northeast
Utilities, accounted for 73% of the Company's consolidated total 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 39% of
AES's consolidated total assets at December 31, 1996 and generated approximately
67% of AES's consolidated total revenues for the year ended December 31, 1996.
Sales to Connecticut Light & Power Company ("CL&P") represented 16% of the
Company's total revenues in 1996. Moody's Investor Service Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P") have recently downgraded CL&P's senior
secured long-term debt from Baa3/BBB- to Ba1/BB+. Both Moody's and S&P have
placed CL&P under review for possible downgrade or credit watch. In March 1997,
as a result of regulatory action by the Public Service Commission of New
Hampshire, Moody's and S&P downgraded the senior unsecured debt of Northeast
Utilities, the parent of CL&P, from Ba2/BB to Ba3/BB- and placed Northeast
Utilities on watch for possible downgrade.
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
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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, 1997, AES's two
founders, Roger W. Sant and Dennis W. Bakke, and their immediate families
together owned beneficially approximately 22.1% 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, 1997, all
of AES's officers and directors and their immediate families together owned
beneficially approximately 29.2% 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
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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.
Shares Eligible for Future Sale. Certain credit facilities of AES
subsidiaries are secured by the pledge of 34.6 million shares of the AES Common
Stock held by a subsidiary of AES. The sale of a substantial number of such
shares in the public market upon any foreclosure or otherwise could have an
adverse effect on the market price of the AES Common Stock and thereby an
adverse effect on the market price of any Preferred Securities that are
convertible to AES Common Stock.
Risk of Fraudulent Transfer. Various fraudulent conveyance laws have been
enacted for the protection of creditors and may be applied by a court on behalf
of any unpaid creditor or a representative of AES's creditors in a lawsuit to
subordinate or avoid the Junior Subordinated Debentures in favor of other
existing or future creditors of AES. Under applicable provisions of the U.S.
Bankruptcy code or comparable provisions of state fraudulent transfer or
conveyance laws, if AES at the time of issuance of the Junior Subordinated
Debentures, (i) incurred such indebtedness with intent to hinder, delay or
defraud any present or future creditor of AES or contemplated insolvency with a
design to prefer one or more creditors to the exclusion in whole or in part of
others or (ii) received less than reasonably equivalent value or fair
consideration for issuing the Junior Subordinated Debentures and AES (a) was
insolvent, (b) was rendered insolvent by reason of the issuance of the Junior
Subordinated Debentures, (c) was engaged or about to engage in business or a
transaction for which the remaining assets of AES constitute unreasonably small
capital to carry on its business or (d) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as they mature, then, in
each case, a court of competent jurisdiction could void, in whole or in part,
the Junior Subordinated Debentures. Among other things, a legal challenge of the
Junior Subordinated Debentures on fraudulent conveyance grounds may focus on the
benefits, if any, realized by AES as a result of the issuance by AES of the
Junior Subordinated Debentures.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law applied in such case. Generally, however, AES would be considered
insolvent if the sum of its debts, including contingent liabilities, were
greater than all of its assets at fair valuation or if the present fair market
value of its assets were less than the amount that would be required to pay the
probable liability on its existing debts, including contingent liabilities, as
they become absolute and mature. There can be no assurance that, after providing
for all prior claims, there will be sufficient assets to satisfy the claims of
the holders of the Junior Subordinated Debentures.
[JAY]
Management believes that, for purposes of all such insolvency, bankruptcy
and fraudulent transfer or conveyance laws, the Junior Subordinated Debentures
are being incurred without the intent to hinder, delay or defraud creditors and
for proper purposes and in good faith, and that AES after the issuance of the
Junior Subordinated Debentures will be solvent, will have sufficient capital for
carrying on its business and will be able to pay its debts as they mature. There
can be no assurance, however, that a court passing on such questions would agree
with management's view.
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.
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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 50,000,000 shares of preferred stock. As of June
30, 1997, 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 --
Distributions") 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
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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.
There can be no assurance that future federal legislative proposals will
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
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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.
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THE AES TRUSTS
Each of the AES Trust III, AES Trust IV and AES Trust V is a statutory
business trust formed, in the case of AES Trust III, on November 13, 1996, and
in the case of AES Trust IV and AES Trust V, on November 5, 1997, in each case
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 incorporated by reference 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 incorporated by reference 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
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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.
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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 rights,
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
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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
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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.
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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.
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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 incorporated by reference 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.
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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 662/3% 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
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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.
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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
incorporated by reference 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
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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.
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.
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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, 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 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.
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"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.
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
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installments of interest and principal otherwise than by acceleration and any
premium has been deposited with the Indenture Trustee.
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. 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.
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.
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)
28
<PAGE>
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.
GOVERNING LAW
The Indenture and the Junior Subordinated Debt Trust Securities will be
governed by the laws of the State of New York.
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. 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. 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.
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.
29
<PAGE>
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, New
York, New York.
EXPERTS
The financial statements as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996 incorporated by reference
in this Prospectus from the Company's Current Report on Form 8-K filed on
November 6, 1997 and the related financial statement schedules incorporated by
reference in the Registration
30
<PAGE>
Statement from the Company's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports which
are incorporated by reference herein, and 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 Companhia Energetica de Minas Gerais -- CEMIG
for the years ended December 31, 1996 and 1995, prepared in accordance with
accounting principles generally accepted in Brazil, incorporated by reference in
this Prospectus from Item 7 of the Current Report on Form 8-K of The AES
Corporation filed July 16, 1997, have been audited by Price Waterhouse Auditores
Independentes, Belo Horizonte, Brazil, independent accountants, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
31
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE $1,500,000,000
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE THE AES CORPORATION
CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR ANY PROSPECTUS JUNIOR SUBORDINATED
SUPPLEMENT, IN CONNECTION WITH ANY DEBT SECURITIES
OFFERING CONTEMPLATED HEREBY, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR AES TRUST III
REPRESENTATIONS MUST NOT BE RELIED UPON AES TRUST IV
AS HAVING BEEN AUTHORIZED BY THE AES TRUST V
COMPANY, ANY UNDERWRITER, AGENT OR
DEALER. NEITHER THE DELIVERY OF THIS PREFERRED SECURITIES
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE HEREUNDER OR -----------------------
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS PROSPECTUS
BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR -----------------------
THEREOF. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT SHALL CONSTITUTE
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.......................... 6
The AES Trusts........................14
Description of Preferred Securities...19
Description of Preferred Securities
Guarantees...........................20
Description of Junior Subordinated
Debt Trust Securities................23
Plan of Distribution..................29
Legal Matters.........................29
Experts...............................29 ,1997
================================================================================
<PAGE>
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............................$ 454,545
Printing and engraving expenses........................$ 150,000
Blue sky fees and expenses (including counsel).........$ 10,000
Legal fees and expenses................................$ 500,000
Fees of accountants....................................$ 150,000
Fees of trustee........................................$ 15,000
------------
Total...............................................$ 1,279,545
============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Company's By-Laws, and in accordance with Section 145 of the
Delaware General Corporation Law ("GCL"), the Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than any action or suit by or in the
right of the Company to procure a judgment in its favor, which is hereinafter
referred to as a "derivative action") by reason of the fact that such person is
or was a director, officer or employee of the Company, or is or was serving in
such capacity or as an agent at the request of the Company for another entity,
to the full extent authorized by Delaware law, against expenses (including, but
not limited to, attorneys' fees), judgments, fines and amounts actually and
reasonably incurred in connection with the defense or settlement of such action,
suit or proceeding if such person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe was unlawful. Agents of the Company may be similarly
indemnified, at the discretion of the Board of Directors.
Under Section 145 of the GCL, a similar standard of care is applicable in
the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such an action and then, where the person is adjudged to be liable
to the Company, only if and to the extent that the Court of Chancery of the
State of Delaware or the court in which such action was brought determines that
such person is fairly and reasonably entitled to such indemnity and only for
such expenses as the court shall deem proper.
Pursuant to Company's By-Laws, a person eligible for indemnification may
have the expenses incurred in connection with any matter described above paid in
advance of a final disposition by the Company. However, such advances will only
be made upon the delivery of an undertaking by or on behalf of the indemnified
person to repay all amounts so advanced if it is ultimately determined that such
person is not entitled to indemnification.
In addition, under the Company's By-Laws, the Company may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Company or of another corporation against any liability
asserted against and incurred by such person in such capacity, or arising out of
the person's status as such
II-1
<PAGE>
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) (incorporated by
reference to Exhibit 1.1 of Amendment No. 1 to Registration
Statement No. 333-15487 on Form S-3 filed on November 18, 1996)
1.2 Form of Underwriting Agreement (Common Stock and Preferred Stock)
(incorporated by reference to Exhibit 1.2 of Amendment No. 1 to
Registration Statement No. 333-15487 on Form S-3 filed on November
18, 1996)
1.3 Form of Underwriting Agreement (Stock Purchase Contracts and Stock
Purchase Units) (incorporated by reference to Exhibit 1.3 of
Amendment No. 1 to Registration Statement No. 333-15487 on Form S-3
filed on November 18, 1996)
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 (incorporated by reference to
Exhibit 4.1 of Registration Statement No. 333-15487 on Form S-3
filed on November 4, 1996)
4.2 Senior Subordinated Debt Securities Indenture dated as of July 1,
1996 between the Company and The First National Bank of Chicago
(incorporated by reference to Exhibit 4.2 of Registration Statement
No. 333-15487 on Form S-3 filed on November 4, 1996)
4.2.1 Second Supplemental Indenture dated as of October 13, 1997 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 (incorporated by
reference to Exhibit 4.3 of Registration Statement No. 333-15487 on
Form S-3 filed on November 4, 1996)
4.4 Form of Junior Subordinated Debt Trust Securities Indenture between
the Company and The First National Bank of Chicago (incorporated by
reference to Exhibit 4.4 of Registration Statement No. 333-15487 on
Form S-3 filed on November 4, 1996)
4.5 Declaration of Trust of AES Trust III (incorporated by reference to
Exhibit 4.14 of Amendment No. 1 to Registration Statement No.
333-15487 on Form S-3 filed on November 18, 1996)
4.6 Certificate of Trust of AES Trust III (incorporated by reference to
Exhibit 4.15 of Amendment No. 1 to Registration Statement No.
333-15487 on Form S-3 filed on November 18, 1996)
4.7 Form of Amended and Restated Declaration of Trust for AES Trust
III, AES Trust IV and AES Trust V (incorporated by reference to
Exhibit 4.9 of Amendment No. 2 to Registration Statement No. 333-
15487 on Form S-3 filed on November 27, 1996)
4.8 Form of Preferred Security (included in Exhibit 4.7)
4.9 Form of Supplemental Indenture to be used in connection with
issuance of Junior Subordinated Debt Trust Securities and Preferred
Securities (incorporated by reference to Exhibit 4.11 of
Registration Statement No. 333-15487 on Form S-3 filed on November
4, 1996)
4.10 Form of Junior Subordinated Debt Trust Security (included in
Exhibit 4.9)
4.11 Form of Preferred Securities Guarantee with respect to Preferred
Securities (incorporated by reference to Exhibit 4.13 of Amendment
No. 2 to Registration Statement No. 333-15487 on Form S-3 filed on
November 27, 1996)
4.12 Declaration of Trust of AES Trust IV*
4.13 Certificate of Trust of AES Trust IV*
4.14 Declaration of Trust of AES Trust V*
4.15 Certificate of Trust of AES Trust V*
4.16 Form of Purchase Contract Agreement (incorporated by reference to
Exhibit 41.6 of Amendment No. 1 to Registration Statement No.
333-15487 on Form S-3 filed on November 18, 1996)
4.17 Form of Pledge Agreement (incorporated by reference to Exhibit 4.17
of Amendment No. 1 to Registration Statement No. 333-15487 on Form
S-3 filed on November 18, 1996)
5.1 Opinion of Davis Polk & Wardwell
II-2
<PAGE>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
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 Price Waterhouse*
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 III, AES Trust IV and
AES Trust V (included in Exhibits 4.5, 4.7, 4.12 and 4.14)
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 III
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 IV
25.7 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 V
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 III
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 Guarantee of the Company with
respect to the Preferred Securities of AES Trust IV
25.10 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 V
- ---------------------------
* 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;
II-3
<PAGE>
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.
II-4
<PAGE>
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 19,
1997.
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 19, 1997.
SIGNATURE TITLE DATE
--------- ----- -----
*
- ------------------------- Chairman-of-the-Board November 19, 1997
Roger W. Sant
/s/ Dennis W. Bakke
- ------------------------- President,-Chief-Executive November 19, 1997
Dennis W. Bakke Officer and Director
(Principal Executive Officer)
*
- ------------------------- Director November 19, 1997
Vicki-Ann Assevero
II-5
<PAGE>
*
- ------------------------- Director November 19, 1997
Dr. Alice F. Emerson
*
- ------------------------- Director November 19, 1997
Robert F. Hemphill, Jr.
*
- ------------------------- Director November 19, 1997
Frank Jungers
*
- ------------------------- Director November 19, 1997
Dr. Henry R. Linden
*
- ------------------------- Director November 19, 1997
John H. McArthur
*
- ------------------------- Director November 19, 1997
Hazel O'Leary
*
- ------------------------- Director November 19, 1997
Thomas I. Unterberg
*
- ------------------------- Director November 19, 1997
Robert H. Waterman, Jr.
/s/ Barry J. Sharp
- ------------------------- Vice-President and November 19, 1997
Barry J. Sharp Chief Financial Officer
(Principal Financial and
Accounting Officer)
By: /s/ William R. Luraschi
---------------------- November 19, 1997
William R. Luraschi
Attorney-in-Fact
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AES Trust III,
AES Trust IV and AES Trust V 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 19, 1997.
AES TRUST III
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
------------------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
AES TRUST IV
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
-----------------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
AES TRUST V
By: The AES Corporation, as Sponsor
By: /s/ William R. Luraschi
-----------------------------------------
Name: William R. Luraschi
Title: General Counsel and Secretary
II-7
<PAGE>
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*
4.2.1 Second Supplemental Indenture dated as of October 13,
1997 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 III*
4.6 Certificate of Trust of AES Trust III*
4.7 Form of Amended and Restated Declaration of Trust
for each of AES Trust III, AES Trust IV and AES
Trust V*
4.8 Form of Preferred Security (included in Exhibit 4.7)
4.9 Form of Supplemental Indenture to be used in
connection with issuance of Junior Subordinated Debt
Trust Securities and Preferred Securities*
4.10 Form of Junior Subordinated Debt Trust Security
(included in Exhibit 4.9)
4.11 Form of Preferred Securities Guarantee with respect
to Preferred Securities*
4.12 Declaration of Trust of AES Trust IV +
4.13 Certificate of Trust of AES Trust IV +
4.14 Declaration of Trust of AES Trust V +
4.15 Certificate of Trust of AES Trust V +
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 Price Waterhouse+
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 III, AES Trust IV and AES Trust V (included in
Exhibits 4.5, 4.7, 4.12 and 4.14)
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
II-8
<PAGE>
SEQUENTIALLY
EXHIBITS DESCRIPTION OF EXHIBIT NUMBERED PAGE
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 III
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 IV
25.7 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 V
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 III
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 Guarantee of the Company with
respect to the Preferred Securities of AES Trust IV
25.10 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 V
- ---------------------------
* Incorporated by reference to other documents (see Item 16) and not included
herein.
+ Previously filed
II-9
EXHIBIT 4.2.1
THE AES CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
---------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of October 13, 1997
(Supplemental to Indenture Dated as of July 1, 1996)
10 1/4% Senior Subordinated Notes Due 2006
<PAGE>
SECOND SUPPLEMENTAL INDENTURE dated as of October 13, 1997 between The AES
Corporation, a Delaware corporation (hereinafter called the "COMPANY") and The
First National Bank of Chicago, a national banking association, as Trustee
(hereinafter called the "TRUSTEE").
WHEREAS, the Company executed and delivered an Indenture dated as of July
1, 1996, as may be amended or supplemented from time to time, (hereinafter
called the "ORIGINAL INDENTURE") between the Company and the Trustee providing
for the issue from time to time of its unsecured debentures, notes or other
evidences of indebtedness in one or more series (hereinafter called the
"SECURITIES"); and
WHEREAS, the Company executed and delivered a First Supplemental Indenture
(the "FIRST SUPPLEMENTAL INDENTURE"), supplemental to the Original Indenture,
between the Company and the Trustee providing for the issuance of $250,000,000
aggregate principal amount of the Company's 10 1/4% Senior Subordinated Notes
due 2006 (the "10 1/4% NOTES"); and
WHEREAS, Section 9.2 of the Original Indenture provides that the Original
Indenture may be amended by the Company and the Trustee with the consent of the
holders of not less than a majority in aggregate principal amount of the 10 1/4%
Notes; and
WHEREAS, holders of not less than a majority in aggregate principal amount
of the 10 1/4% Notes outstanding on August 19, 1997 have given and not revoked
their consent to the execution by the Company and the Trustee of an amendment
changing the provisions of, and modifying the rights of holders of the 10 1/4%
Notes under, the Original Indenture, as amended or supplemented, as set forth in
this Second Supplemental Indenture; and
WHEREAS, all conditions and requirements necessary to make this Second
Supplemental Indenture a valid and binding instrument in accordance with its
terms and the terms of the Original Indenture have been satisfied.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Company and the Trustee hereby covenant and
agree as follows:
SECTION 1. Defined Terms. For all purposes of this Second Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires, all capitalized terms defined herein and defined in the
Original Indenture or First Supplemental Indenture shall have the meanings
assigned to them herein.
<PAGE>
Unless otherwise expressly specified, all references to a "SECTION" herein refer
to a section of the Second Supplemental Indenture.
SECTION 2. Amendment of Section 1.1 of First Supplemental Indenture.
Section 1.1 of the First Supplemental Indenture is hereby amended to read in its
entirety as follows:
"SECTION 1.1. The words "herein", "hereof" and "hereunder" and other
words of similar import refer to this First Supplemental Indenture as a whole
and not to any particular Section or other subdivision. The following terms
shall, unless the context otherwise clearly requires, for all purposes of this
First Supplemental Indenture have the respective meanings specified in this
Section:
"ACQUISITION DEBT" means Debt of any Person existing at the time such
Person became a Restricted Subsidiary of the Company (or such Person is
merged into the Company or one of its Restricted Subsidiaries) or assumed
in connection with the acquisition of assets from any such Person (other
than assets acquired in the ordinary course of business), including Debt
Incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary of the Company (but excluding Debt of such Person
which is extinguished, retired or repaid in connection with such Person
becoming a Restricted Subsidiary of the Company).
"ADJUSTED CONSOLIDATED NET INCOME" means, for any period, for any
Person the aggregate Net Income (or loss) of such Person and its
Consolidated Subsidiaries for such period determined in conformity with
GAAP plus the Net Income of any Restricted Subsidiary of such Person for
prior periods to the extent such Net Income is actually paid in cash to
such Person during such period plus the Net Income of any Person (other
than a Restricted Subsidiary) in which such Person has a joint interest
with a third party for prior periods to the extent such Net Income is
actually paid in cash to such Person during such period; provided that the
following items shall be excluded in computing Adjusted Consolidated Net
Income (without duplication): (i) the Net Income (or loss) of any Person
(other than a Restricted Subsidiary) in which such Person has a joint
interest with a third party, except to the extent such Net Income is
actually paid in cash to such Person during such period; (ii) solely for
the purposes of calculating the amount of Restricted Payments that may be
made pursuant to clauses (c)(1) or (c)(2) of Section 3.8 (and in such case,
except to the extent includible pursuant to clause (i) above), the Net
Income (if positive) of such Person accrued prior to the date it becomes a
Restricted Subsidiary of any other Person or is merged into or consolidated
with such other Person or any of its Restricted Subsidiaries or
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all or substantially all of the property and assets of such Person are
acquired by such other Person or any of its Restricted Subsidiaries; (iii)
the Net Income (or loss) of any Restricted Subsidiary of such Person,
except to the extent such Net Income (if positive) is actually paid in cash
to such Person during such period; (iv) any gains or losses (on an
after-tax basis) attributable to Asset Sales; (v) the cumulative effect of
a change in accounting principle; and (vi) any amounts paid or accrued as
dividends on Preferred Stock of such Person or Preferred Stock of any
Restricted Subsidiary of such Person.
"AES HAWAII" means AES Hawaii Management Co., Inc., a Delaware
corporation and a Subsidiary of the Company, and its successors.
"AES OKLAHOMA" means AES Oklahoma Management Co., Inc., a Delaware
corporation and a Subsidiary of the Company, and its successors.
"AFFILIATE" means, as applied to any Person, any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition,
"CONTROL" (including, with correlative meanings, the terms "CONTROLLING",
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") when used with respect to
any Person is defined to mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"ASSET ACQUISITION" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any of its
Restricted Subsidiaries or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries or (ii) an acquisition by the
Company or any of its Restricted Subsidiaries of the Property of any Person
other than the Company or any of its Restricted Subsidiaries that
constitutes substantially all of an operating unit or business of such
Person.
"ASSET DISPOSITION" means, with respect to any Person, any sale,
transfer, conveyance, lease or other disposition (including by way of
merger, consolidation or sale-leaseback) by such Person or any of its
Restricted Subsidiaries to any Person (other than to such Person or a
Consolidated Subsidiary of such Person and other than in the ordinary
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course of business) of (i) any assets (excluding cash and cash equivalents)
of such Person or any of its Restricted Subsidiaries or (ii) any shares of
Capital Stock of such Person's Restricted Subsidiaries. For purposes of
this definition, any disposition in connection with directors' qualifying
shares or investments by foreign nationals mandated by applicable law shall
not constitute an Asset Disposition. In addition, the term "ASSET
DISPOSITION" shall not include any sale, transfer, conveyance, lease or
other disposition of assets governed by Section 5.1. The term "ASSET
DISPOSITION" also shall not include (i) any sale of shares of Preferred
Stock of a Restricted Subsidiary, (ii) the grant of a security interest by
any Person in any assets or shares of Capital Stock securing a borrowing
by, or contractual performance obligation of, such Person or any Restricted
Subsidiary of such Person, (iii) a sale-leaseback transaction involving
substantially all of the assets of a Power Supply Business where a
Restricted Subsidiary of the Company sells the Power Supply Business to a
Person in exchange for the assumption by that Person of the Debt financing
the Power Supply Business and the Restricted Subsidiary leases the Power
Supply Business from such Person, (iv) dispositions of contract rights,
development rights and resource data made in connection with the initial
development of a Power Supply Business, made prior to the commencement of
commercial operation of such Power Supply Business or (v) transactions made
in order to enhance the repatriation of cash proceeds in connection with a
Foreign Asset Disposition or in order to increase the after-tax proceeds
thereof available for immediate distribution.
"ASSET SALE" means the sale or other disposition by the Company or any
of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary of the Company) of (i) all or substantially all of
the Capital Stock of any Restricted Subsidiary of the Company or (ii) all
or substantially all of the Property that constitutes an operating unit or
business of the Company or any of its Restricted Subsidiaries.
"AVERAGE LIFE" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the product
of (A) the number of years from such date of determination to the dates of
each successive scheduled principal payment of such debt security
multiplied by (B) the amount of such principal payment by (ii) the sum of
all such principal payments.
"BANK AGENT" means Morgan Guaranty Trust Company of New York, as agent
for the Banks pursuant to the Bank Credit Agreement, and any successor or
successors thereto in such capacity.
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"BANK CREDIT AGREEMENT" means the Credit Agreement dated as of August
2, 1996 among the Company, the Banks named on the signature pages thereof
and the Bank Agent, as such agreement has been and may be amended,
restated, supplemented or otherwise modified from time to time, and
includes any agreement extending the maturity of, or restructuring
(including, but not limited to, the inclusion of additional borrowers
thereunder that are Restricted Subsidiaries of the Company and whose
obligations are guaranteed by the Company thereunder) all or any portion
of, the Debt under such agreement or any successor agreements and includes
any agreement with one or more banks or other lending institutions
refinancing all or any portion of the Debt under such agreement or any
successor agreements.
"BANKS" means the lenders who are from time to time parties to the
Bank Credit Agreement.
"BOARD OF DIRECTORS" means either the Board of Directors of the
Company or (except for the purposes of clause (iii) of the definition of
"Change of Control") any committee of such Board duly authorized to act
hereunder.
"BOARD RESOLUTION" means one or more resolutions of the Board of
Directors, certified by the secretary or an assistant secretary to have
been duly adopted and to be in full force and effect on the date of
certification, and delivered to the Trustee.
"BUSINESS DAY" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in The City of New
York.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of, or interests in (however designated), the equity
of such Person which is outstanding or issued on or after the Closing Date,
including, without limitation, all Common Stock and Preferred Stock and
partnership and joint venture interests of such Person.
"CAPITALIZED LEASE" means, as applied to any Person, any lease of any
Property of which the discounted present value of the rental obligations of
such Person as lessee, in conformity with GAAP, is required to be
capitalized on the balance sheet of such Person; and "Capitalized
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Lease Obligation" is defined to mean the rental obligations, as aforesaid,
under such lease.
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially
all, of the assets of the Company to any Person or group (as that term is
used in Section 13(d)(3) of the Exchange Act) of Persons, (ii) a Person or
group (as so defined) of Persons (other than management of the Company on
the date of the Original Indenture or their Affiliates) shall have become
the beneficial owner of more than 35% of the outstanding Voting Stock of
the Company, or (iii) during any one-year period, individuals who at the
beginning of such period constitute the Board of Directors (together with
any new director whose election or nomination was approved by a majority of
the directors then in office who were either directors at the beginning of
such period or who were previously so approved) cease to constitute a
majority of the Board of Directors.
"CHANGE OF CONTROL OFFER" has the meaning provided in Section 3.6.
"CLOSING DATE" means July 17, 1997, the date on which the Company's
83/8% Senior Subordinated Notes due 2007 were originally issued under the
indenture relating to such notes.
"COMMON STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of common stock of such Person which is outstanding
or issued on or after the Closing Date, including, without limitation, all
series and classes of such common stock.
"CONSOLIDATED EBITDA" of any Person for any period means the Adjusted
Consolidated Net Income of such Person, plus (without duplication) (i)
income taxes (other than income taxes (x) (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or Asset
Sales and (y) actually payable with respect to such period) determined on a
consolidated basis for such Person and its Consolidated Subsidiaries in
accordance with GAAP to the extent payable by such Person, (ii)
Consolidated Fixed Charges, (iii) depreciation and amortization expense for
such period and prior periods, all determined on a consolidated basis for
such Person and its Consolidated Subsidiaries in accordance with GAAP, but
only to the extent that the positive cash flow associated with such
depreciation and amortization expense is actually
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received in cash by such Person during such period and (iv) all other
non-cash items reducing Net Income for such period and prior periods, all
determined on a consolidated basis for such Person and its Consolidated
Subsidiaries in accordance with GAAP, but only to the extent that the
positive cash flow associated with such non-cash items is actually received
in cash by such Person during such period, and less (without duplication)
(i) all non-cash items increasing Net Income of such Person during such
period and prior periods, but only to the extent that positive cash flow
associated with such non-cash items in not actually received in cash by
such Person during such period, and (ii) the aggregate amount of any
capitalized expenses (including capitalized interest) paid by such Person
during such period which have the effect of increasing Net Income for such
period.
"CONSOLIDATED FIXED CHARGES" of any Person means, for any period, the
aggregate of (i) Consolidated Interest Expense, (ii) the interest component
of Capitalized Leases, determined on a consolidated basis for such Person
and its Consolidated Subsidiaries in accordance with GAAP, excluding any
interest component of Capitalized Leases in respect of that portion of a
Capitalized Lease Obligation of a Restricted Subsidiary that is
Non-Recourse to such Person and (iii) cash and non-cash dividends due
(whether or not declared) on any Redeemable Stock of such Person.
"CONSOLIDATED INTEREST EXPENSE" of any Person means, for any period,
the aggregate interest expense in respect of Debt (including amortization
of original issue discount and non-cash interest payments or accruals) of
such Person and its Consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP, including all commissions, discounts, other
fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs associated with Interest Rate Agreements
and any amounts paid during such period in respect of such interest
expense, commissions, discounts, other fees and charges that have been
capitalized; provided that Consolidated Interest Expense of the Company
shall not include any interest expense (including all commissions,
discounts, other fees and charges owed with respect to letters of credit
and bankers' acceptance financing and net costs associated with Interest
Rate Agreements) in respect of that portion of Debt of a Restricted
Subsidiary of the Company that is Non-Recourse to the Company; and provided
further that Consolidated Interest Expense of the Company in respect of a
Guarantee by the Company of Debt of a Restricted Subsidiary shall be equal
to the commissions, discounts, other fees and charges that would be due
with respect to a hypothetical letter of credit issued under the Bank
Credit Agreement that can be drawn by the
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beneficiary thereof in the amount of the Debt so guaranteed if (i) the
Company is not actually making directly or indirectly interest payments on
such Debt and (ii) GAAP does not require the Company on an unconsolidated
basis to record such Debt as a liability of the Company.
"CONSOLIDATED SUBSIDIARY" means at any date with respect to any
Person, any Subsidiary of such Person or other entity the accounts of which
would be consolidated with those of such Person in its consolidated
financial statements if such statements were prepared as of such date,
other than an Unrestricted Subsidiary.
"CONSOLIDATED TOTAL ASSETS" means, with respect to any Person at any
time, the total assets of such Person and its Consolidated Subsidiaries at
such time determined in conformity with GAAP.
"CURRENCY AGREEMENT" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Restricted
Subsidiaries against fluctuations in currency values to or under which such
Person or any of its Restricted Subsidiaries is a party or a beneficiary on
the Closing Date or becomes a party or a beneficiary thereafter.
"DEBT" means, with respect to any Person at any date of determination
(without duplication), (i) all indebtedness of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such Person in
respect of letters of credit or bankers' acceptance or other similar
instruments (or reimbursement obligations with respect thereto), (iv) all
obligations of such Person to pay the deferred purchase price of property
or services, except Trade Payables, (v) all obligations of such Person as
lessee under Capitalized Leases, (vi) all Debt of others secured by a Lien
on any asset of such Person, whether or not such Debt is assumed by such
Person; provided that, for purposes of determining the amount of any Debt
of the type described in this clause, if recourse with respect to such Debt
is limited to such asset, the amount of such Debt shall be limited to the
lesser of the fair market value of such asset or the amount of such Debt,
(vii) all Debt of others Guaranteed by such Person to the extent such Debt
is Guaranteed by such Person, (viii) all Redeemable Stock valued at the
greater of its voluntary or involuntary liquidation preference plus accrued
and unpaid dividends and (ix) to the extent not otherwise included in this
definition, all obligations of such Person under Currency Agreements and
Interest Rate Agreements.
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"DEFAULT" means any Event of Default as defined in Section 6.1 and any
event that is, or after notice or passage of time or both would be, an
Event of Default.
"DESIGNATED SENIOR DEBT" means (i) Debt under the Bank Credit
Agreement 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 in the instrument evidencing
such Senior Debt as "Designated Senior Debt" by the Company.
"EVENT OF DEFAULT" has the meaning provided in Section 6.1.
"EXCESS CASH FLOW" of any Person for any period means Consolidated
EBITDA less Consolidated Fixed Charges less any income taxes actually paid
by such Person during such period.
"FINANCE SUBSIDIARY" means a Wholly-Owned Subsidiary of the Company
that does not engage in any activity other than (i) the holding of Debt of
the Company that both (x) is subordinated to the Notes and (y) provides for
no payments of principal by way of sinking fund, mandatory redemption or
otherwise prior to the maturity of the Notes, (ii) the issuance of Capital
Stock and (iii) any activity necessary, incidental or related to the
foregoing.
"FIXED CHARGE RATIO" means the ratio, on a pro forma basis, of (i) the
aggregate amount of Consolidated EBITDA of any Person for the Reference
Period immediately prior to the date of the transaction giving rise to the
need to calculate the Fixed Charge Ratio (the "Transaction Date") to (ii)
the aggregate Consolidated Fixed Charges of such Person during such
Reference Period; provided that for purposes of such computation, in
calculating Consolidated EBITDA and Consolidated Fixed Charges, (1) the
Incurrence of the Debt giving rise to the need to calculate the Fixed
Charge Ratio and the application of the proceeds therefrom shall be assumed
to have occurred on the first day of the Reference Period, (2) Asset Sales
and Asset Acquisitions which occur during the Reference Period or
subsequent to the Reference Period and prior to the Transaction Date (but
including any Asset Acquisition to be made with the Debt Incurred pursuant
to clause (1) above) shall be assumed to have occurred on the first day of
the Reference Period, (3) the Incurrence of any Debt during the Reference
Period or subsequent to the Reference Period and prior to the Transaction
Date and the application of the proceeds therefrom shall be assumed to have
occurred on the first day of such Reference Period, (4) Consolidated
Interest Expense attributable to
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any Debt (whether existing or being Incurred) computed on a pro forma basis
and bearing a floating interest rate shall be computed as if the rate in
effect on the date of computation had been the applicable rate for the
entire period unless such Person or any of its Restricted Subsidiaries is a
party to an Interest Rate Agreement (which shall remain in effect for the
twelve month period after the Transaction Date) which has the effect of
fixing the interest rate on the date of computation, in which case such
rate (whether higher or lower) shall be used and (5) there shall be
excluded from Consolidated Fixed Charges any Consolidated Fixed Charges
related to any amount of Debt which was outstanding during and subsequent
to the Reference Period but is not outstanding on the Transaction Date,
except for Consolidated Fixed Charges actually incurred with respect to
Debt borrowed (as adjusted pursuant to clause (4)) (x) under a revolving
credit or similar arrangement to the extent the commitment thereunder
remains in effect on the Transaction Date or (y) pursuant to clause (iv) of
Section 3.3(b). For the purpose of making this computation, Asset Sales and
Asset Acquisitions which have been made by any Person which has become a
Restricted Subsidiary of the Company or been merged with or into the
Company or any Restricted Subsidiary of the Company during the Reference
Period or subsequent to the Reference Period and prior to the Transaction
Date shall be calculated on a pro forma basis (including all of the
calculations referred to in clauses (1) through (5) above assuming such
Asset Sales or Asset Acquisitions occurred on the first day of the
Reference Period).
"FOREIGN ASSET DISPOSITION" means any Asset Disposition in respect of
the Capital Stock and/or Property of any Restricted Subsidiary of any
Person where such Restricted Subsidiary is organized under the laws of any
jurisdiction other than the U.S. or any state thereof or any Restricted
Subsidiary of the type described in Section 936 of the Internal Revenue
Code of 1986, as amended, to the extent that the proceeds of such Asset
Disposition are received by a Person subject in respect of such proceeds to
the tax laws of a jurisdiction other than the U.S. or any state thereof.
"GAAP" means generally accepted accounting principles in the U.S. as
in effect as of the Closing Date applied on a basis consistent with the
principles, methods, procedures and practices employed in the preparation
of the Company's audited financial statements, including, without
limitation, those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
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entity as is approved by a significant segment of the accounting
profession.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HOLDER", "HOLDER OF SECURITIES", "SECURITYHOLDER" and other similar
terms mean the registered holder of any Security.
"INCUR" means, with respect to any Debt, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Debt; provided that neither the accrual of interest (whether such interest
is payable in cash or kind) nor the accretion of original issue discount
shall be considered an Incurrence of Debt.
"INDENTURE" means this Indenture as originally executed and delivered
or as it may be amended or supplemented from time to time pursuant to the
terms hereof.
"INDEPENDENT FINANCIAL ADVISOR" means a nationally recognized
investment banking firm (i) which does not (and whose directors, officers,
employees and Affiliates do not) have a direct or indirect material
financial interest in the Company and (ii) which, in the sole judgment of
the Board of Directors, is otherwise independent and qualified to perform
the task for which such firm is being engaged.
"INTEREST PAYMENT DATE," when used with respect to any Security, means
the stated maturity of an installment of interest specified in such
Security.
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"INTEREST RATE AGREEMENT" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement, interest rate hedge
agreement or other similar agreement or arrangement designed to protect
such Person or any of its Restricted Subsidiaries against fluctuations in
interest rates to or under which such Person or any of its Restricted
Subsidiaries is a party or a beneficiary on the date of the Indenture or
becomes a party or a beneficiary thereafter.
"INTERMEDIATE HOLDING COMPANY" means any Restricted Subsidiary of the
Company that serves as a holding company for the Company's direct or
indirect interests in Power Supply Businesses and Unrelated Businesses.
"INVESTMENT" in a Person means any investment in, loan or advance to,
Guarantee on behalf of, directly or indirectly, or other transfer of assets
to such Person. For purposes of the definition of "Unrestricted Subsidiary"
and Section 3.8, "Investment" shall include (i) the fair market value of
the assets (net of liabilities) of any Restricted Subsidiary at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary
and shall exclude the fair market value of the assets (net of liabilities)
of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) any property
transferred to or from any Person shall be valued at its fair market value
at the time of such transfer, in each case as determined by the Board of
Directors in good faith.
"INVESTMENT GRADE" means, with respect to any security, a rating of
Baa3 or higher of such security by Moody's Investors Service Inc. together
with a rating of BBB- or higher of such security by Standard & Poor's
Corporation.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form;
provided that, as to any such arrangement in corporate form, such
corporation shall not, as to any Person of which such corporation is a
Subsidiary, be considered to be a Joint Venture to which such Person is a
party.
"LEGAL HOLIDAY" means any day other than a Business Day.
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"LIEN" means, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Indenture, the Company shall be deemed
to own subject to a Lien any Property which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to
such Property.
"MATERIAL AES ENTITY" means (i) any Subsidiary Guarantor, (ii) any of
AES Connecticut Management Co., Inc., AES Thames, Inc., AES Barbers Point,
Inc. and AES Shady Point, Inc. and (iii) any other Person in which the
Company has a direct or indirect equity Investment if such Person's
contribution to Consolidated EBITDA of the Company for the four most
recently completed fiscal quarters of the Company constitutes 15% or more
of the Consolidated EBITDA of the Company for such period, in each case,
other than an Unrestricted Subsidiary.
"MATERIAL SUBSIDIARY" of a Person means, as of any date, any
Restricted Subsidiary that would constitute a "SIGNIFICANT SUBSIDIARY"
within the meaning of Article 1 of Regulation S-X.
"MATURITY DATE," when used with respect to any Note, means the date
specified in such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any
acceleration thereof pursuant to Section 6.2 of the Original Indenture or
any Change of Control Offer pursuant to Section 3.6).
"NET CASH PROCEEDS" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment
of principal pursuant to a note or installment receivable or otherwise, but
only as and when received (including any cash received upon sale or
disposition of such note or receivable), excluding any other consideration
received in the form of assumption by the acquiring Person of Debt or other
obligations relating to the Property disposed of in such Asset Disposition
or received in any other noncash form) therefrom, in each case, net of all
legal, title and recording tax expenses, commissions and other fees and
expenses incurred (including, without limitation, consent and waiver fees
and any applicable premiums, earn-out or working interest payments or
payments in lieu or in termination thereof), and all federal, state,
provincial, foreign and local taxes required to be accrued as a liability
under GAAP (i) as a consequence of such Asset Disposition, (ii) as a result
of the repayment of any Debt in any jurisdiction other than the
jurisdiction where the Property disposed of was
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located or (iii) as a result of any repatriation to the U.S. of any
proceeds of such Asset Disposition, and in each case net of a reasonable
reserve for the after tax-cost of any indemnification payments (fixed and
contingent) attributable to seller's indemnities to the purchaser
undertaken by the Company or any of its Restricted Subsidiaries in
connection with such Asset Disposition (but excluding any payments, which
by the terms of the indemnities will not, under any circumstances, be made
during the term of the Notes), and net of all payments made on any Debt
which is secured by such Property, in accordance with the terms of any Lien
upon or with respect to such Property or which must by its terms or by
applicable law be repaid out of the proceeds from such Asset Disposition,
and net of all distributions and other payments made to minority interest
holders in Restricted Subsidiaries or Joint Ventures as a result of such
Asset Disposition.
"NET INCOME" of any Person for any period means the net income (loss)
of such Person for such period, determined in accordance with GAAP, except
that extraordinary and non-recurring gains and losses as determined in
accordance with GAAP shall be excluded.
"NET WORTH" of any Person means, as of any date, the aggregate of
capital, surplus and retained earnings (including any cumulative
translation adjustment) of such Person and its Consolidated Subsidiaries as
would be shown on a consolidated balance sheet of such Person and its
Consolidated Subsidiaries prepared as of such date in accordance with GAAP.
"NON-RECOURSE" to a Person as applied to any Debt (or portion thereof)
means that such Person is not directly or indirectly liable to make any
payments with respect to such Debt (or portion thereof), that no Guarantee
of such Debt (or portion thereof) has been made by such Person and that
such Debt (or portion thereof) is not secured by a Lien on any asset of
such Person.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of (and, premium, if any) or interest on the Notes on behalf of
the Company.
"PERMITTED INVESTMENT" means any Investment of the type specified in
clauses (iv) or (vi) of the definition of Restricted Payment which is made
directly or indirectly by the Company and its Restricted Subsidiaries;
provided that (i) at the time such Investment is made, the Company could
Incur at least $1 of Debt under Section 3.3(a); (ii) at the
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time such Investment is made, 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; (iii) after giving effect to the
Investment, the aggregate Investments made by the Company and its
Restricted Subsidiaries in the applicable Person and in any other Persons
that have a direct or indirect interest in the same Power Supply Business
or Unrelated Business does not exceed 40% of the Net Worth of the Company
as of the end of its most recently ended fiscal quarter; (iv) the Person in
which the Investment is made is engaged only in the businesses described in
Section 3.1; and (v) the Company directly or through its Restricted
Subsidiaries either (x) controls, under an operating and management
agreement or otherwise, the day to day management and operation of any
Power Supply Business or Unrelated Business of the Person in which the
Investment is made or (y) has significant influence over the management and
operation of any such Power Supply Business or Unrelated Business in
connection with such management or operation. To the extent that an
Investment is not a Permitted Investment only because the aggregate
investment limitation in clause (iii) above is not satisfied, such
Investment shall be treated as a Permitted Investment to the extent of the
limitation and any excess Investment shall be subject to the other
restrictions of Section 3.8.
"PERMITTED PAYMENTS" means with respect to the Company or any of its
Restricted Subsidiaries (i) any dividend on shares of Capital Stock payable
(or to the extent paid) solely in shares of Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Redeemable Stock) and any distribution of Capital
Stock (other than Redeemable Capital Stock) in respect of the exercise of
any right to convert or exchange any instrument (whether Debt or equity and
including Redeemable Stock); (ii) any dividend or other distribution
payable to the Company by any of its Restricted Subsidiaries or by a
Restricted Subsidiary to another Restricted Subsidiary; (iii) the
repurchase or other acquisition or retirement for value of any shares of
the Company's Capital Stock, or any option, warrant or other right to
purchase shares of the Company's Capital Stock with additional shares of,
or out of the proceeds of a substantially contemporaneous issuance of,
Capital Stock other than Redeemable Stock (unless the redemption provisions
of such Redeemable Stock prohibit the redemption thereof prior to the date
on which the Capital Stock to be acquired or retired was by its terms
required to be redeemed); (iv) any defeasance, redemption, repurchase or
other acquisition for value of any Debt which by its terms ranks pari passu
with, or subordinate in right of payment to the Notes with the proceeds
from the issuance of (x) Debt which is also pari passu with the Notes or
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subordinate to the Notes at least to the extent and in the manner as the
Debt to be defeased, redeemed, repurchased or otherwise acquired is
subordinate in right of payment to, the Notes; provided that such new pari
passu or subordinated Debt provides for no payments of principal by way of
sinking fund, mandatory redemption or otherwise (including defeasance) by
the Company (including, without limitation, at the option of the holder
thereof other than an option given to a holder pursuant to a "change of
control" or "limitation on asset sale" covenant which is no more favorable
to the holders of such Debt than the provisions contained in the Debt being
replaced or, if none, Sections 3.6 and 3.10) prior to the maturity of Debt
being replaced and the proceeds of such new pari passu or subordinated Debt
are utilized for such purpose within 45 days of issuance or (y) Capital
Stock (other than Redeemable Stock); (v) in respect of any actual payment
on account of an Investment which is not fixed in amount at the time when
made, the amount determined by the Board of Directors to be a Restricted
Payment on the date such Investment was originally deemed to have been made
(the "ORIGINAL RESTRICTED PAYMENT CHARGE") plus an amount equal to the
interest on a hypothetical investment in a principal amount equal to the
Original Restricted Payment Charge assuming interest at the rate of 7% per
annum compounded annually for a period beginning on the date the Investment
was originally deemed to have been made and ending with respect to any
portion of the Original Restricted Payment Charge actually paid on the date
of actual payment, less any actual payments previously made on account of
such Investment; provided that the Permitted Payment under this clause (v)
shall in no event exceed the payment actually made; (vi) the declaration
and payment of dividends to holders, or any payment on account of the
purchase, redemption, retirement or acquisition for value, of any class or
series of Redeemable Stock; or (vii) a Permitted Investment.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"POWER SUPPLY BUSINESS" means an electric power or thermal energy
generation or cogeneration facility or related facilities, or electric
power transmission, distribution, fuel supply or fuel transportation
facilities, or any combination thereof, all subject to related security
interests under related project financing arrangements, together with its
or their related power supply, thermal energy and fuel contracts as well as
other contractual arrangements with customers, suppliers and contractors.
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"PREFERRED STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of preferred or preference stock of such
Person which is outstanding or issued on or after the Closing Date.
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included
in the most recent consolidated balance sheet of such Person under GAAP.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of a Person that is
not Redeemable Stock.
"REDEEMABLE STOCK" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior
to the Stated Maturity of the Notes, (ii) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the Notes or (iii) convertible into or exchangeable for
(unless solely at the option of the Company) Capital Stock referred to in
clause (i) or (ii) above or Debt having a scheduled maturity prior to the
Stated Maturity of the Notes; provided that any Capital Stock that would
not constitute Redeemable Stock but for provisions thereof giving holders
thereof the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of an "ASSET SALE" or a "CHANGE OF
CONTROL" occurring prior to the Stated Maturity of the Notes shall not
constitute Redeemable Stock if the "ASSET SALE" or "CHANGE OF CONTROL"
provision applicable to such Capital Stock is no more favorable to the
holders of such Capital Stock than the provisions contained in Sections 3.6
and 3.10, and such Capital Stock specifically provides that the Company
will not repurchase or redeem any such Capital Stock pursuant to such
provisions prior to the Company's repurchase of Notes required to be
repurchased by the Company under Sections 3.6 and 3.10.
"REFERENCE PERIOD" means the four fiscal quarters for which financial
information is available preceding the date of a transaction giving rise to
the need to make a financial calculation.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee to administer its corporate
trust matters.
"RESTRICTED PAYMENT" means, with respect to any Person, (i) any
dividend or other distribution on any shares of such Person's Capital
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Stock; (ii) any payment on account of the purchase, redemption, retirement
or acquisition for value of such Person's Capital Stock; (iii) any
defeasance, redemption, repurchase or other acquisition or retirement for
value prior to scheduled maturity of any Debt subordinated in right of
payment to the Notes and having a maturity date after the maturity of the
Notes; (iv) any Investment in a Restricted Subsidiary after the occurrence
of an event of default, as defined in any indenture or instrument
evidencing or under which such Restricted Subsidiary has at the Closing
Date or shall thereafter have outstanding any Debt, shall happen and be
continuing; (v) any Investment in an Unrestricted Subsidiary; (vi) any
Investment made in an Affiliate (other than a Person that constitutes an
Affiliate solely because of the Company's, or a Restricted Subsidiary of
the Company's, control of such Person) and (vii) the conversion of such
Person's Capital Stock into Debt of such Person or its Restricted
Subsidiaries. Notwithstanding the foregoing, "RESTRICTED PAYMENT" shall not
include any Permitted Payment.
"RESTRICTED SUBSIDIARY" means any Subsidiary other than an
Unrestricted Subsidiary.
"SENIOR DEBT" means the principal of (and premium, if any) and
interest on all Debt of the Company whether created, incurred or assumed
before, on or after the date of the issuance of the Securities; provided
that Senior Debt shall not include (i) the Company's 9 3/4% Senior
Subordinated Notes due 2000 which rank pari passu to the Securities, (ii)
Debt of the Company to any Affiliate, (iii) Debt that, when incurred and
without respect to any election under Section 1111(b) of Title 11, United
States Code, was without recourse to the Company, (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 Securities and (v) Redeemable Stock of the Company.
"SIGNIFICANT SUBSIDIARY" of a Person means, as of any date, any
Restricted Subsidiary which has two or more of the following attributes:
(i) it contributes 20% or more of such Person's Excess Cash Flow for its
most recently completed fiscal quarter or (ii) it contributes 15% or more
of Net Income before tax of such Person and its Consolidated Subsidiaries
for such Person's most recently completed fiscal quarter or (iii) it
constitutes 20% or more of Consolidated Total Assets of such Person at the
end of such Person's most recently completed fiscal quarter.
"STATED MATURITY" means, with respect to any debt security or any
installment of interest thereon, the date specified in such debt security
as
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the fixed date on which any principal of such debt security or any such
installment of interest is due and payable.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which a majority of the Capital Stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.
"SUBSIDIARY GUARANTORS" means (i) prior to the first day, if any, on
which the Company's long-term debt is rated BBB- or higher by Standard &
Poor's Corporation and Baa3 or higher by Moody's Investors Services, Inc.,
AES Oklahoma and AES Hawaii, and (ii) on and after such first day, if any,
AES Hawaii.
"TRADE PAYABLES" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Restricted
Subsidiaries arising in the ordinary course of business in connection with
the acquisition of goods or services.
"UNRELATED BUSINESS" means any business not of the same general type
now conducted by the Company and its Restricted Subsidiaries.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may
designate any Restricted Subsidiary (including any newly acquired or newly
formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any Restricted Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated, provided that (A) any
Guarantee by the Company or any Restricted Subsidiary of any Debt of the
Subsidiary being so designated shall be deemed an "INCURRENCE" of such Debt
and an "INVESTMENT" by the Company or such Restricted Subsidiary (or both,
if applicable) at the time of such designation; (B) either (I) the
Subsidiary to be so designated has total assets of $1,000 or less or (II)
if such Subsidiary has assets greater than $1,000, such designation would
be permitted under Section 3.8 and (C) if applicable, the Incurrence of
Debt and the Investment referred to in clause (A) of this proviso would be
permitted under Sections 3.4 and 3.8. The Board of Directors may designate
any
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Unrestricted Subsidiary to be a Restricted Subsidiary; provided that
immediately after giving effect to such designation (x) all Liens and Debt
of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be
incurred for all purposes of this Indenture and (y) no Default or Event of
Default shall have occurred and be continuing. Any such designation by the
Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the U.S. for the payment of which its full faith and credit
is pledged or (ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the U.S. the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
U.S., which, in either case, are not callable or redeemable at the option
of the issuer thereof, and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such U.S.
Government Obligations or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account
of the holder of a depository receipt, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S. Government
Obligation evidenced by such depository receipt.
"VOTING STOCK" means, with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of
directors of such Person.
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person, any
Restricted Subsidiary of such Person if all the Capital Stock or other
ownership interests in such Restricted Subsidiary having ordinary voting
power to elect the entire board of directors or entire group of other
persons performing similar functions (other than any director's qualifying
shares or Investments by foreign nationals mandated by applicable law) is
owned directly or indirectly by such Person."
SECTION 3. Amendment of Section 3 of First Supplemental Indenture. Section
3.1 through Section 3.11 of the First Supplemental Indenture is hereby amended
to read in its entirety as follows:
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"Section 3. In addition to all covenants described in the Original
Indenture, the Company covenants and agrees with the Trustee as follows:
Section 3.1 Limitation on Business.
The Company (a) shall continue, and shall cause each Material AES
Entity to continue, to engage in business of the same general type as now
conducted by the Company and its Restricted Subsidiaries and (b) shall
continue, and shall cause each Material AES Entity to continue, to operate
its and their respective businesses on a basis substantially consistent
with the policies and standards of the Company or such Material AES Entity
as in effect on the Closing Date.
Section 3.2 Limitation on Restricted Subsidiary Investments and
Mergers.
The Company shall not permit any Restricted Subsidiary with any direct
or indirect interest in a Power Supply Business to make any Investment in,
or to consolidate or merge with, any other Person with a direct or indirect
interest in any other Power Supply Business or any Unrelated Business. In
addition, the Company will not permit any Restricted Subsidiary with any
direct or indirect interest in any Unrelated Business to make any
Investment in, or to consolidate or merge with, any other Person with a
direct or indirect interest in any Power Supply Business or any other
Unrelated Business. The Company's obligation to comply with this covenant
shall terminate if and when the Notes become Investment Grade.
The foregoing restrictions shall not apply to any Intermediate Holding
Company; provided that (i) each such Intermediate Holding Company's direct
and indirect interest in any Power Supply Business or Unrelated Business
shall be limited to the ownership of Capital Stock or Debt obligations of a
Person with a direct or indirect interest in such Power Supply Business or
Unrelated Business; (ii) no Intermediate Holding Company shall incur,
assume, create or suffer to exist any Debt (including any Guarantee of
Debt) other than Debt to the Company or Debt permitted under clauses (iii),
(viii) and (xi) of Section 3.4(b); and (iii) no Lien shall exist upon any
assets of such Intermediate Holding Company whether now or hereafter
acquired, except for Liens upon the Capital Stock of a Restricted
Subsidiary of an Intermediate Holding Company securing Debt of such
Restricted Subsidiary and Liens securing Debt permitted under clauses (iii)
and (xi) of Section 3.4(b).
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Section 3.3 Limitation on Debt.
(a) The Company shall not Incur any Debt, including Acquisition
Debt, unless after giving effect to the Incurrence of such Debt and
the receipt and application of the proceeds therefrom, the Fixed
Charge Ratio of the Company would be greater than 2 to 1. The
Company's obligation to comply with this covenant will terminate if
and when the Notes become Investment Grade.
(b) Notwithstanding the foregoing, the Company may Incur each and
all of the following:
(i) Debt under or in respect of the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to exceed
$600 million;
(ii) Debt issued in exchange for, or the proceeds of which are
used to refinance, outstanding Notes or other Debt of the Company in
an amount (or, if such new Debt provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, with an original issue price) not to exceed the
amount so exchanged or refinanced (plus accrued interest, premium, if
any, and fees and expenses related to such exchange or refinancing);
provided that (A) the date of any scheduled payment of principal by
way of sinking fund, mandatory redemption or otherwise (including
defeasance) on any Debt so refinanced or exchanged otherwise due after
the final scheduled Maturity Date of the Notes shall not occur prior
to such Maturity Date as a result of such exchange or refinancing and
(B) new Debt the proceeds of which are used to exchange or refinance
the Notes or other Debt of the Company that is subordinated in right
of payment to the Notes shall only be permitted under this clause (ii)
if (x) in case the Notes are exchanged or refinanced in part, such new
Debt, by its terms or by the terms of any agreement or instrument
pursuant to which such Debt is issued, is expressly made pari passu
with, or subordinate in right of payment to, the remaining Notes, (y)
in case the Debt to be exchanged or refinanced is subordinated in
right of payment to the Notes, such new Debt, by its terms or by the
terms of any agreement or instrument pursuant to which such Debt is
issued, is expressly made subordinate in right of payment to the
Notes, at least to the extent that the Debt to be exchanged or
refinanced is subordinated in right of payment to the Notes and (z) in
case the Notes are exchanged or refinanced in part or the Debt to be
exchanged or refinanced is subordinated in right of payment to the
Notes, as of the date the new Debt is Incurred, the Average Life of
the new Debt shall be equal to or
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greater than the Average Life of the Notes or Debt to be exchanged or
refinanced;
(iii) Debt of the Company to any of its Consolidated
Subsidiaries, except that any transfer of such Debt by a Consolidated
Subsidiary (other than to another Consolidated Subsidiary) will be
deemed to be an Incurrence of Debt; provided that such Debt is
expressly subordinated in right of payment to the Notes; and
(iv) Debt in an aggregate principal amount not to exceed $50
million at any one time outstanding.
(c) For purposes of determining any particular amount of Debt
under this Section 3.3, Guarantees of, or obligations with respect to
letters of credit supporting, Debt otherwise included in the
determination of such particular amount shall not be included. For
purposes of determining compliance with this Section 3.3, (A) in the
event that an item of Debt meets the criteria of more than one of the
types of Debt described in the above clauses, the Company, in its sole
discretion, shall classify such item of Debt and only be required to
include the amount and type of such Debt in one of such clauses and
(B) the amount of Debt issued at a price that is less than the
principal amount thereof shall be equal to the amount of the liability
in respect thereof determined in conformity with GAAP.
Section 3.4 Limitation on Restricted Subsidiary Debt.
(a) The Company shall not permit any Restricted Subsidiary to
Incur, directly or indirectly, any Debt, including Acquisition Debt.
The Company's obligation to comply with this covenant will terminate
if and when the Notes become Investment Grade.
(b) Notwithstanding the foregoing, each and all of the following
Debt may be Incurred by a Restricted Subsidiary:
(i) Debt outstanding as of the Closing Date;
(ii) Debt Incurred for any purpose (including without limitation
the purposes set forth in clause (iii) below) to the extent of the
amount thereof that is also Debt of the Company and is permitted under
Section 3.3;
(iii) Debt Incurred to finance the development, acquisition,
construction, maintenance, working capital requirements in the
ordinary
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course of business consistent with past practice or operation of a
Power Supply Business or Unrelated Business in which the Company or
any Restricted Subsidiary has a direct or indirect interest; provided
that (a) such Debt shall be permitted under this clause (iii) only to
the extent of the amount thereof which (x) is Non-Recourse to the
Company and (y) is Non-Recourse to any other Restricted Subsidiary of
the Company other than Restricted Subsidiaries which represented less
than 33% of the Consolidated EBITDA of the Company for the Reference
Period, and (b) upon the commencement of commercial operations of such
Power Supply Business or, in the case of an acquisition of such Power
Supply Business or Unrelated Business, upon the date of such
acquisition, the Company directly or through its Restricted
Subsidiaries either (x) controls, under an operating and management
agreement or otherwise, the day to day management and operation of the
Power Supply Business or Unrelated Business so financed or (y) has
significant influence over the management and operation of such Power
Supply Business or Unrelated Business;
(iv) Debt issued in exchange for, or the proceeds of which are
used to refinance, outstanding Debt of such Restricted Subsidiary
otherwise permitted under the Indenture in an amount (or, if such new
Debt provides for an amount less than the principal amount thereof to
be due and payable upon a declaration of acceleration thereof, with an
original issue price) not to exceed the amount so exchanged or
refinanced (plus accrued interest, premium, if any, and fees and
expenses related to such exchange or refinancing plus any principal
amounts previously repaid); provided that (a) the new Debt shall be
Non-Recourse to the Company to the same extent as the Debt to be
exchanged or refinanced, (b) if such Restricted Subsidiary has a
direct or indirect interest in any Power Supply Business or Unrelated
Business, the new Debt shall be Non- Recourse to any other Restricted
Subsidiary of the Company other than Restricted Subsidiaries which
represented less than 33% of the Consolidated EBITDA of the Company
for the Reference Period, (c) the date of any scheduled payment of
principal by way of sinking fund, mandatory redemption or otherwise
(including defeasance) on any Debt so refinanced or exchanged
otherwise due after the final scheduled Maturity Date of the Notes
shall not occur prior to such Maturity Date as a result of such
exchange or refinancing and (d) if the new Debt refinances principal
amounts previously repaid, (x) such new Debt shall be permitted only
if on the date such new Debt is Incurred, the Company could incur at
least $1 of Debt under Section 3.3(a) and (y) the proceeds from such
new Debt are not to be used to make any Restricted Payments;
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(v) Guarantees of Debt of the Company under the Bank Credit
Agreement;
(vi) Debt Incurred to support the performance obligations of a
Restricted Subsidiary engaged in providing construction management or
operating services to a Power Supply Business; provided that (a) such
Debt shall be permitted under this clause (vi) only to the extent of
the amount thereof which is Non-Recourse to the Company and is Non-
Recourse to any other Restricted Subsidiary of the Company other than
Restricted Subsidiaries which represented less than 33% of the
Consolidated EBITDA of the Company for the Reference Period, and (b)
upon the commencement of commercial operation of such Power Supply
Business or in the case of an acquisition of such Power Supply
Business, upon the date of such acquisition, the Company directly or
through its Restricted Subsidiaries either (x) controls, under an
operating and management agreement or otherwise, the day to day
management and operation of such Power Supply Business or (y) has
significant influence over the management and operation of such Power
Supply Business;
(vii) Debt in an aggregate amount for all Restricted Subsidiaries
at any one time outstanding of not more than $50 million Incurred to
finance the on-going operation, but not any expansion or improvement,
of a Power Supply Business or Unrelated Business in which such
Restricted Subsidiary has a direct or indirect interest; provided that
such Debt shall be permitted under this clause (vii) only to the
extent it is Non-Recourse to the Company and to any other Restricted
Subsidiary of the Company other than Restricted Subsidiaries which
represented less than 33% of the Consolidated EBITDA of the Company
for the Reference Period;
(viii) Debt of any Restricted Subsidiary of the Company owed to
(A) the Company or (B) any Restricted Subsidiary of the Company;
(ix) Debt in respect of Currency Agreements or Interest Rate
Agreements;
(x) Debt that is Non-Recourse to the Company and Non- Recourse to
any other Restricted Subsidiary of the Company other than Restricted
Subsidiaries which represented less than 33% of the Consolidated
EBITDA of the Company for the Reference Period, only to the extent
that the proceeds of such Debt are received by the Company or an
Intermediate Holding Company as a result of such proceeds being used
to pay dividends or make distributions on the Capital Stock of such
Restricted Subsidiary and any other Restricted Subsidiary in the chain
of
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ownership between the Company or such Intermediate Holding Company and
such Restricted Subsidiary;
(xi) Acquisition Debt and Debt incurred to finance the
acquisition of a Power Supply Business; provided that such Acquisition
Debt and other Debt is Non-Recourse to the Company or any Person that
was a Restricted Subsidiary of the Company immediately prior to such
Incurrence; and provided further that where any Debt is incurred to
finance the acquisition of more than one Power Supply Business, all
such acquisitions shall have occurred within 180 days of each other;
and
(xii) Debt of the type described in clause (iii) of the
definition thereof the Incurrence of which causes a corresponding
reduction in any debt service or other similar cash reserve required
to be maintained in connection with any Debt of such Restricted
Subsidiary permitted by clause (iii) above and (to the extent that the
same constitutes a refinancing of Debt permitted under such clause
(iii)), clause (iv) above, in each case, only to the extent that the
proceeds from such reserve reduction are received by the Company or an
Intermediate Holding Company as a result of such proceeds being used
to pay dividends or make distributions on the Capital Stock of such
Restricted Subsidiary and any other Restricted Subsidiary in the chain
of ownership between the Company or such Intermediate Holding Company
and such Restricted Subsidiary.
(c) For purposes of determining compliance with this Section 4.9,
(A) in the event that an item of Debt meets the criteria of more than
one of the types of Debt described in the above clauses, the Company,
in its sole discretion, shall classify such item of Debt and only be
required to include the amount and type of such Debt in one of such
clauses and (B) the amount of Debt issued at a price that is less than
the principal amount thereof shall be equal to the amount of the
liability in respect thereof determined in conformity with GAAP.
Section 3.5 Limitation on Additional Tiers of Senior Subordinated
Debt.
The Company shall not Incur or suffer to exist any Debt, other
than Debt evidenced by the Notes, that is subordinate in right of
payment to any Senior Debt unless such Debt, by its terms or the terms
of the instrument creating or evidencing it, is pari passu with, or
subordinate in right of payment to, the Notes; provided that any Debt
of the Company or any of its Restricted Subsidiaries which is
outstanding on the Closing Date shall be excluded from the operation
of this covenant.
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Section 3.6 Change of Control.
(a) Upon a Change of Control, each Holder of the Notes shall have,
subject to Article 11 of the Original Indenture, the right to require that
the Company repurchase such Holder's Notes at a repurchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase in accordance with Section
3.6(b) hereof.
(b) Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder of the Notes at their last registered
addresses with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Notes at a
repurchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (the "Change
of Control Offer");
(2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of
Control);
(3) the repurchase date (which shall be not earlier than 30 days or
later than 60 days from the date such notice is mailed) (the "Repurchase
Date");
(4) that any Note not tendered will continue to accrue interest;
(5) that any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Repurchase Date;
(6) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Repurchase Date;
(7) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day (or such shorter periods as may be required by applicable law)
preceding the Repurchase Date, a facsimile transmission or letter
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setting forth the name of the Holder, the principal amount of Notes the
Holder delivered for purchase, and a statement that such Holder is
withdrawing his election to have such Notes purchased; and
(8) that Holders which elect to have their Notes purchased only in
part will be issued new Notes in a principal amount equal to the
unpurchased portion of the Notes surrendered.
(c) On the Repurchase Date, the Company shall:
(i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer;
(ii) deposit by 10:00 a.m., New York City time, with the Trustee money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered; and
(iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate identifying the Notes or
portions thereof tendered to the Company.
The Trustee shall promptly mail to the Holders of the Notes so
accepted payment in an amount equal to the purchase price, and promptly
authenticate and make available for delivery to such Holders a new Note in
a principal amount equal to any unpurchased portion of the Note
surrendered. The Company will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Repurchase Date.
The Company shall comply with all applicable tender offer rules,
including without limitation, Rule 14e-1 under the Exchange Act, in
connection with a Change of Control Offer.
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Section 3.7 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly enter into any transaction
(including, without limitation, the sale, purchase or lease of any assets
or properties or the rendering of any services) involving aggregate
consideration in excess of $5 million with any Affiliate (other than a
Person that constitutes an Affiliate solely because of the Company's or a
Subsidiary of the Company's control of such Person except for any
Unrestricted Subsidiary) or holder of 5% or more of any class of Capital
Stock of the Company except for transactions (including, subject to Section
3.8, any loans or advances by or to, or Guarantee on behalf of, any
Affiliate or any such holder) made in good faith the terms of which are
fair and reasonable to the Company or such Restricted Subsidiary, as the
case may be, and are at least as favorable as the terms which could be
obtained by the Company or such Restricted Subsidiary, as the case may be,
in a comparable transaction made on an arm's-length basis with Persons who
are not such a holder or Affiliate; provided that any such transaction
shall be conclusively deemed to be on terms which are fair and reasonable
to the Company or any of its Restricted Subsidiaries and on terms which are
at least as favorable as the terms which could be obtained on an
arm's-length basis with Persons who are not such a holder or Affiliate if
such transaction is approved by a majority of the Company's directors
(including a majority of the Company's independent directors); and provided
further, that with respect to the purchase or disposition of assets of the
Company or any of its Restricted Subsidiaries having a net book value in
excess of $15 million, in addition to approval of its Board of Directors,
the Company shall obtain a written opinion of an Independent Financial
Advisor stating that the terms of such transaction are fair to the Company
or its Restricted Subsidiary, as the case may be, from a financial point of
view; and provided further that the fairness, reasonableness and
arm's-length nature of the terms of any transaction which is part of a
series of related transactions may be determined on the basis of the terms
of the series of related transactions taken as a whole. This Section 3.7
shall not apply to (a) transactions between the Company or any of its
Restricted Subsidiaries and any employee of the Company or any of its
Restricted Subsidiaries that are approved by the Board of Directors or any
committee of the Board of Directors consisting of the Company's independent
directors, (b) the payment of reasonable and customary regular fees to
directors of the Company or a Restricted Subsidiary, (c) any transaction
between the Company and any of its Consolidated Subsidiaries or between any
of its Consolidated Subsidiaries, (d) any Permitted Payment and any
Restricted Payment not otherwise prohibited by Section 3.8 or (e) the
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provision of general corporate administrative, operating and management
services, including, without limitation, procurement, construction
engineering, construction administration, legal, accounting, financial,
money management, risk management, personnel, administration and business
planning services, in each case, in the ordinary course.
Section 3.8 Limitation on Restricted Payments.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, make any Restricted Payment if after giving
effect to such Restricted Payment:
(a) an 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;
(b) the Company could not Incur at least $1 of Debt under Section
3.3(a); or
(c) the aggregate amount expended by the Company and its Restricted
Subsidiaries for all Restricted Payments (the amount of any single or
related series of Restricted Payments so expended or distributed, if in
excess of $15 million and other than in cash, to be determined in good
faith by the Board of Directors, as evidenced by a Board resolution) after
April 1, 1997 shall exceed the sum of:
(1) 50% of the Net Income of the Company and its Consolidated
Subsidiaries for the period (taken as one accounting period) beginning on
April 1, 1997 and ending on the last day of the fiscal quarter for which
financial information is available immediately prior to the date of such
calculation; provided that if Net Income for such period is less than zero,
then minus 100% of such net loss; plus
(2) the aggregate net proceeds (including the fair market value of
proceeds other than cash, as determined in good faith by the Board of
Directors, as evidenced by a Board Resolution if the fair market value of
such non-cash proceeds is in excess of $15 million) received by (A) the
Company from and after April 1, 1997 from the issuance and sale (other than
to a Restricted Subsidiary) of its Capital Stock (excluding Redeemable
Stock, but including Capital Stock other than Redeemable Stock issued upon
conversion of, or in exchange for, Redeemable Stock or securities other
than its Capital Stock), and warrants, options and rights to purchase its
Capital Stock (other than Redeemable Stock), but excluding
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the net proceeds from the issuance, sale, exchange, conversion or other
disposition of its Capital Stock convertible (unless solely at the option
of the Company) into (x) any security other than its Capital Stock or (y)
its Redeemable Stock or (B) a Finance Subsidiary of the Company from and
after April 1, 1997 from the issuance and sale (other than to the Company
or a Restricted Subsidiary) of its Qualified Capital Stock; plus
(3) to the extent not included in clause (1) above, the net reduction
in Investments of the type specified in clauses (iv) through (vi) of the
definition of Restricted Payment resulting from payments of interest on
Debt, dividends, repayments of loans or advances, or other transfers of
assets to the Company or other Person that made the original Investment
from the Person in which such Investment was made or resulting from the
sale or disposition of the Investment or other return of the amount of the
Investment or from the redesignation of any Unrestricted Subsidiary as a
Restricted Subsidiary; provided that such payment, for purposes of the
calculation to be made pursuant to this clause (3), shall not exceed the
amount of the original Investment; plus
(4) any amount previously included as a Restricted Payment on account
of an obligation by the Company or any Restricted Subsidiary to make a
Restricted Payment which has not actually been made by the Company or any
Restricted Subsidiary and which is no longer required to be paid by the
Company or any Restricted Subsidiary; plus
(5) $502 million;
provided that the foregoing clause (c) shall not prevent the payment of any
dividend within 60 days after the date of its declaration if such dividend
could have been made on the date of its declaration without violation of
the provisions of this Section 3.8.
For purposes of clause (c)(2) above, the aggregate net proceeds
received by the Company (x) from the issuance of its Capital Stock upon the
conversion of, or exchange for, securities evidencing Debt of the Company,
shall be calculated on the assumption that the gross proceeds from such
issuance are equal to the aggregate principal amount (or, if discount Debt,
the accreted principal amount) of the Debt evidenced by such securities
converted or exchanged and (y) upon the conversion or exchange of other
securities of the Company shall be equal to the aggregate net proceeds of
the original sale of the securities so converted or exchanged if such
proceeds of such original sale were not previously
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included in any calculation for the purposes of clause (c)(2) above plus
any additional sums payable upon conversion or exchange.
The Company's obligation to comply with this covenant shall terminate
if and when the Notes become Investment Grade.
If an Investment which the Company or any Restricted Subsidiary is
obligated to make either in part from time to time or in whole in the
future is fixed in amount by the agreement setting forth such obligation,
for purposes of determining whether such Investment is a Restricted Payment
permitted under this Section 3.8 or is a Permitted Payment, the Investment
shall be deemed to have been made only once, in the amount so fixed, at the
time the obligation first arises (and not when payments in respect thereof
are later made). If an Investment which the Company or any Restricted
Subsidiary is obligated to make either in part from time to time or in
whole in the future is not fixed in amount by the agreement setting forth
such obligation, for purposes of determining whether such Investment is a
Restricted Payment permitted under this Section 3.8 or is a Permitted
Payment, the Investment shall be deemed to have been made at the time the
obligation first arises in an amount to be determined in good faith by the
Board of Directors, as evidenced by a Board Resolution, and any actual
payments in respect of such Investment shall be deemed to be Investments
made on the date of payment thereof. Subject to the terms of clause (v) of
the definition of Permitted Payments, such later Investments may be
Permitted Payments.
Section 3.9 Limitation on Dividend and other Payment Restrictions
Affecting Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted
Subsidiary owned by the Company or any other Restricted Subsidiary, (ii)
make payments in respect of any Debt owed to the Company or any other
Restricted Subsidiary, (iii) make loans or advances to the Company or any
other Restricted Subsidiary or (iv) transfer any of its Property to the
Company or any other Restricted Subsidiary. The Company's obligation to
comply with this covenant will terminate if and when the Notes become
Investment Grade.
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This Section 3.9 shall not restrict or prohibit any encumbrances or
restrictions existing: (i) in connection with the Incurrence of any Debt
permitted under clauses (iii), (vi), (vii), (x) or (xi) of Section 3.4(b)
or with respect to any portion thereof that is also Debt of the Company and
permitted under Section 3.3; provided that such encumbrances or
restrictions are required in order to effect such financing and are not
materially more restrictive, taken as a whole, on the ability of the
applicable Restricted Subsidiary to make the payments, distributions,
loans, advances or transfers referred to in clauses (i) through (iv) of the
preceding paragraph than encumbrances and restrictions, taken as a whole,
customarily accepted (or, in the absence of any industry custom, reasonably
acceptable) in substantially non-recourse project financing, (ii) in
connection with the execution and delivery of an electric power or thermal
energy purchase contract to which such Restricted Subsidiary is the
supplying party or other contracts with customers, suppliers and
contractors to which such Restricted Subsidiary is a party and where such
Restricted Subsidiary is engaged in the development, construction,
acquisition or operation of a Power Supply Business; provided that such
encumbrances or restrictions are required in order to effect such contracts
and are not materially more restrictive, taken as a whole, on the ability
of the applicable Restricted Subsidiary to make the payments,
distributions, loans, advances or transfers referred to in clauses (i)
through (iv) in the preceding paragraph than encumbrances and restrictions,
taken as a whole, customarily accepted (or, in the absence of any industry
custom, reasonably acceptable) in substantially non-recourse project
financing, (iii) in connection with the Incurrence of any Debt permitted
under clause (iv) of Section 3.4(b), provided that such encumbrances or
restrictions taken as a whole are not materially more restrictive on the
ability of the applicable Restricted Subsidiary to make the payments,
distributions, loans, advances or transfers referred to in clauses (i)
through (iv) in the preceding paragraph than those that are then in effect,
taken as a whole, in connection with the Debt so exchanged or refinanced,
(iv) in connection with the Bank Credit Agreement and the project
financing, electric power and thermal energy purchase arrangements and
other contracts with customers, suppliers and contractors in effect on the
Closing Date, including extensions, refinancings, renewals or replacements
thereof, (v) pursuant to customary non-assignment provisions in leases,
(vi) pursuant to restrictions imposed pursuant to any stock purchase or
asset purchase agreement pending the consummation of the transactions
contemplated thereby, (vii) in connection with any Acquisition Debt,
provided that such encumbrance or restriction was not incurred in
contemplation of the obligor becoming a Restricted Subsidiary of the
Company, which encumbrance or restriction is not applicable to any Person,
or the Property
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or assets of any Person, other than the Person, or the Property or assets,
acquired, (viii) customary restrictions on transfers of Property subject to
a Lien which could not materially adversely affect the Company's ability to
satisfy its obligations under the Indenture and the Notes or (ix)
provisions contained in agreements or instruments relating to Debt which
prohibit the transfer of all or substantially all of the assets of the
obligor thereunder unless the transferee shall assume the obligations of
the obligor under such agreement or instrument, in each case; provided
that, in the case of clause (iv) above, such encumbrances and restrictions,
taken as a whole, in any such extensions, refinancings, renewals or
replacements are not materially more restrictive on the ability of the
applicable Restricted Subsidiary to make the payments, distributions,
loans, advances or transfers referred to in clauses (i) through (iv) in the
preceding paragraph than those encumbrances or restrictions taken as a
whole in effect immediately before such extension, refinancing, renewal or
replacement. This Section 3.9 shall not prevent the Company from granting
any Liens not expressly prohibited hereby.
Section 3.10 Limitation on Asset Dispositions.
(a) The Company shall not make, and shall not permit any of its
Restricted Subsidiaries to make, any Asset Disposition unless the Company
(or the Restricted Subsidiary, as the case may be) receives consideration
at the time of each such Asset Disposition at least equal to the fair
market value of the shares or assets sold or otherwise disposed of (such
amounts in excess of $50 million determined in good faith by the Board of
Directors, as evidenced by a Board Resolution) and either (i) not less than
75% of the consideration received by the Company (or such Restricted
Subsidiary, as the case may be) is in the form of cash or property or
assets used or useful in a Power Supply Business or Capital Stock of a
Person primarily engaged in a Power Supply Business, provided that any note
or other obligation received by the Company (or such Restricted Subsidiary,
as the case may be) that is converted into cash within 180 days of such
Asset Disposition and any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary that are assumed by the transferee of any such assets
shall be deemed to be cash for purposes of this clause (i), and (ii) first,
the Net Cash Proceeds of such Asset Disposition are applied within 90 days
from the later of the date of such Asset Disposition or the receipt of Net
Cash Proceeds related thereto, to the payment of the principal of, premium
and interest on any Senior Debt of the Company (including to cash
collateralize letters of credit) and, in connection with any such payment,
any related loan commitment, standby
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facility or the like shall be permanently reduced in an amount equal to the
principal amount so repaid and second, to the extent such Net Cash Proceeds
are not required by the lenders, or the terms, of the Senior Debt to be
applied in accordance with the foregoing or, if after being so applied
there remain Net Cash Proceeds, then at the Company's election, such Net
Cash Proceeds are either (x) invested in the business or businesses of the
Company or any of its Restricted Subsidiaries consistent with Section 3.1;
provided that such investment is made within 365 days from the later of the
date of such Asset Disposition or the receipt of the Net Cash Proceeds
related thereto or (y) applied to the payment of any Senior Debt of the
Company or Debt of any Restricted Subsidiary or any Consolidated Subsidiary
(other than Debt owed to the Company or another Restricted Subsidiary),
and, in connection with any such payment, any related loan commitment,
standby facility or the like shall be permanently reduced in an amount
equal to the principal amount so repaid; provided that such Net Cash
Proceeds are so applied within three months after the expiration of the
365-day period referred to in clause (x) above or (z) applied to make a
tender offer (the "Offer") to purchase Notes and other Debt of the Company
from time to time outstanding with similar provisions requiring the Company
to make an offer to purchase or to redeem such Debt with the proceeds from
assets sales, pro rata in proportion to the respective principal amounts
(or accreted values in the case of Debt issued with an original issue
discount) of the Notes and such other Debt then outstanding at a purchase
price of 100% of their principal amount (or accreted value in the case of
Debt issued with an original issue discount), plus accrued interest
(subject to proration in the event of oversubscription in the manner set
forth below). Notwithstanding the foregoing, to the extent that any or all
of the Net Cash Proceeds of any Foreign Asset Disposition are prohibited or
delayed by applicable local law from being repatriated to the U.S., the
Company (or such Restricted Subsidiary, as the case may be) shall not be
required to apply the portion of such Net Cash Proceeds so affected in
accordance with clause (ii) above (other than to repay Debt of the
Restricted Subsidiary making such Asset Disposition or Debt of a
Consolidated Subsidiary of the Company, in each case as contemplated by
clause (ii) above and to the extent the prohibition or delay on
repatriation is not applicable to such repayment and such repayment is not
in violation of the terms of any Senior Debt) (the Company hereby agreeing
to cause the applicable Restricted Subsidiary to promptly take all actions
required by the applicable local law to permit such repatriation); provided
that once such repatriation of any such affected Net Cash Proceeds is
permitted under the applicable local law, such repatriation will be
immediately effected and such repatriated Net Cash Proceeds will be applied
in the manner set forth in this Section 3.10. To the extent that dividends
or
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distributions of any or all of the Net Cash Proceeds of any Foreign Asset
Disposition would result in a tax liability greater than that which would
be incurred if such Net Cash Proceeds were not so dividended or
distributed, the Net Cash Proceeds so affected may be retained by the
applicable Restricted Subsidiary for so long as such adverse tax liability
would continue to be incurred.
Notwithstanding anything in this covenant to the contrary, the Company
and any Restricted Subsidiary may make the following Asset Dispositions:
(i) a disposition resulting from the bona fide exercise by
governmental authority of its claimed or actual power of eminent domain;
(ii) a realization upon a security interest;
(iii) any Permitted Payment or Restricted Payment that is permitted
hereunder; or
(iv) any sale, transfer, conveyance, lease or other disposition of the
Capital Stock or Property of a Restricted Subsidiary pursuant to the terms
of any power sales agreement or steam sales agreement or other agreement or
contract related to the output or product of, or services rendered by, a
Power Supply Business as to which such Restricted Subsidiary is the
supplying party; provided that to the extent the Company or any Restricted
Subsidiary receives any cash consideration in connection with such Asset
Disposition, the Net Cash Proceeds from such Asset Disposition shall be
applied in accordance with clause (ii) of this Section 3.10.
(b) If the aggregate purchase price of Notes and other Debt tendered
pursuant to an Offer made pursuant to clause (ii)(z) clause (a) above is
less than the Net Cash Proceeds allotted to the purchase of the Notes and
other Debt, the Company may use the remaining Net Cash Proceeds for general
corporate purposes. The Company will not be required to comply with the
provisions of clause (ii) in the first paragraph of this Section 3.10 if
the Net Cash Proceeds from one or more Asset Dispositions occurring on or
after the date of the Indenture are less than $40 million in any one fiscal
year. Any lesser amounts so carried forward and cumulated need not be
segregated or reserved and may be used for general corporate purposes.
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(c) (i) Promptly, and in any event within 30 days from the Asset
Disposition and the receipt of the Net Cash Proceeds as to which the
Company must make an Offer, the Company shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder of Notes, a
written notice stating that:
(A) an Asset Disposition has occurred and that such Holders may tender
all or any portion of their Notes pursuant to the Offer in integral
multiples of $1,000 principal amount, at the applicable purchase price;
(B) any Note not tendered or accepted for payment will continue to
accrue interest;
(C) any Note accepted for payment pursuant to the Offer shall cease to
accrue interest after the Purchase Date (as defined below); and
(D) holders of Notes will be entitled to withdraw their election in
the manner described in clause (iii) of this Section 3.10(c).
The notice shall specify a purchase date not less than 30 days nor
more than 60 days after the date of such notice (the "Purchase Date"),
shall include all instructions and materials necessary to enable each
holders of Notes to tender Notes pursuant to the Offer and shall contain
information concerning the business of the Company which the Company in
good faith believes will enable such holder to make an informed decision
(which at a minimum will include (1) the most recently filed Annual Report
on Form 10-K (including audited consolidated financial statements) of the
Company, the most recent subsequently filed Quarterly Report on Form 10-Q
and any Current Report on Form 8-K of the Company filed subsequent to such
Quarterly Report, other than Current Reports describing other asset
dispositions otherwise described in the offering materials (or
corresponding successor reports or reports otherwise required to be
delivered to holder of Notes if the Company is no longer filing reports
pursuant to the Securities Exchange Act of 1934), (2) a description of
material developments in the Company's business subsequent to the date of
the latest of such Reports, and (3) if material, appropriate pro forma
financial information).
(ii) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to
the Trustee an Officers' Certificate as to (A) the amount of the Offer (the
"Offer Amount"), (B) the allocation of the Net Cash Proceeds
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pursuant to which such Offer is being made and (C) the compliance of such
allocation with the provisions of this Section 3.10. Not later than one
Business Day prior to the Purchase Date, the Company shall also irrevocably
deposit with the Trustee or with the Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust) in immediately
available funds an amount equal to the Offer Amount to be held for payment
in accordance with the provisions of this Section 3.10. Upon the expiration
of the period for which the Offer remains open (the "Offer Period"), the
Company shall deliver to the Trustee the Notes or portions thereof which
have been properly tendered to and are to be accepted by the Company. The
Trustee or the Paying Agent (if any), or the Company if acting as its own
Paying Agent, shall, on the Purchase Date, mail or deliver payment to each
tendering Holder in the amount of the purchase price. In the event that the
aggregate purchase price of the Notes delivered by the Company to the
Trustee or the Paying Agent (if the Company is not acting as its own Paying
Agent) is less than the Offer Amount, the Trustee or the Paying Agent, as
the case may be, shall deliver the excess to the Company immediately after
the expiration of the Offer Period.
(iii) Any holder of Notes electing to have his Notes purchased will be
required to surrender such Notes, with an appropriate form duly completed,
to the Trustee at the address specified in the notice by the close of
business at least one Business Day prior to the Purchase Date. Holders of
Notes will be entitled to withdraw their election if the Trustee or Paying
Agent (if any) receives not later than the close of business on the
Business Day prior to the Purchase Date a facsimile transmission or letter
setting forth the name of the Holder and a statement that such Holder is
withdrawing his election to have all or a portion of his Notes purchased.
If at the expiration of the Offer Period the aggregate principal amount of
Notes surrendered by holders of Notes exceeds the Offer Amount, the Company
shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000 or integral multiples thereof, shall be
purchased). Holders whose Notes are purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered.
(iv) At the time the Company delivers Notes to the Trustee which are
to be accepted for purchase, the Company will also deliver an Officers'
Certificate stating that such Notes are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 3.10. A Note
shall be deemed to have been accepted for purchase at the
38
<PAGE>
time the Trustee, directly or through an agent, or the Company if acting as
its own Paying Agent, mails or makes available for delivery payment
therefor to the surrendering Holder.
(d) In the event the Company is unable to purchase Notes from Holders
thereof in an Offer because such purchase is prohibited by any provision of
applicable law, the Company need not make an Offer. The Company shall then
be obligated to use such Net Cash Proceeds in accordance with clause
(i)(B)(x) or (y) of this Section 3.10(c).
(e) Whenever Net Cash Proceeds are received by the Company, and prior
to the allocation of such Net Cash Proceeds pursuant to this Section 3.10,
such Net Cash Proceeds shall be set aside by the Company in a separate
account pending allocation.
The Company will comply with all applicable tender offer rules,
including without limitation Rule 14e-1 under the Exchange Act, in
connection with an Offer under the provisions of this covenant."
SECTION 4. Amendment of Section 6.1 of the Original Indenture. (a)
Clause (c) of Section 6.1 of the Original Indenture is hereby amended by
(i) deleting the word "30" in such clause (c) and inserting in its place
the word "60" and (ii) deleting the words "all series affected thereby" and
inserting in its place the words "of such series".
(b) Clause (d) of Section 6.1 of the Original Indenture is hereby
amended by (i) inserting the word "(i)" before the word "relief", (ii)
deleting the words "or appointing" and inserting in its place the words
"(ii) appointment of" and (iii) deleting the words "any substantial part of
its property or ordering" and inserting in its place the words "all or
substantially all of the property and assets of the Company or (iii)".
SECTION 5. Amendment of Section 6.2 of the Original Indenture. The
second paragraph of clause (b) of Section 6.2 of the Original Indenture is
hereby amended by deleting the following words:
"all the then outstanding Securities of such series that have
been accelerated (voting as a single class), by written notice
to the Company and to the Trustee, may waive all defaults with
respect to all such series (or with respect to all the
Securities, as the case may be) and rescind"
and inserting in its place the following words:
39
<PAGE>
"all the then outstanding Securities of any series that has
been accelerated (voting as a separate class), by written
notice to the Company and to the Trustee, may waive all
defaults with respect to such series and rescind"
SECTION 6. Amendment of Section 4 of the First Supplemental Indenture.
Section 4 of the First Supplemental Indenture is hereby amended to read in
its entirety as follows:
"In addition to the Events of Default described in Section 6.1 of the
Original Indenture, an Event of Default shall occur with respect to the
Notes if:
(a) an event of default, as defined in any indenture or instrument
evidencing or under which the Company or any Significant Subsidiary has at
the date of this Indenture or shall hereafter have outstanding any Debt,
shall happen and be continuing and either
(i) such default results from the failure to pay the principal of such
Debt in excess of $50 million at final maturity of such Debt or
(ii) as a result of such default, the maturity of such Debt shall have
been accelerated so that the same shall be or become due and payable prior
to the date on which the same would otherwise have become due and payable,
and such acceleration shall not be rescinded or annulled within 60 days and
the principal amount of such Debt, together with the principal amount of
any other Debt of the Company or any Significant Subsidiary in default, or
the maturity of which has been accelerated, aggregates $50 million or more;
provided that such default shall not be an Event of Default if such Debt is
Debt of a Significant Subsidiary, is Non-Recourse to the Company in respect
of the amounts not paid or due upon acceleration and the Company could, at
the time of default, incur at least $1 of Debt under Section 3.3(a); and
provided, further, however that, subject to the provisions of Sections 7.1
and 7.2 of the Original Indenture, the Trustee shall not be charged with
knowledge of any such default unless written notice thereof shall have been
given to the Trustee by the Company, by the holder or an agent of the
holder of any such Debt, by the trustee then acting under any indenture or
other instrument under which such default shall have occurred, or by the
Holders of not less than 25% in the aggregate principal amount of the Notes
at the time outstanding;
(b) one or more judgments or orders shall be entered by a court
against the Company or any Significant Subsidiary for the payment of money
in an
40
<PAGE>
amount which, individually or in the aggregate exceeds $50 million
(excluding the amount thereof covered by insurance or by a bond written by
third parties but treating any deductibles, self insurance or retentions as
not so covered by insurance) and which judgments or orders shall not be
discharged or waived, and shall remain outstanding and there shall be any
period of 60 consecutive days following entry of such judgment or order in
excess of $50 million or the judgment or order which causes the aggregate
amount to exceed $50 million during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; provided, that such a judgment or order shall not be an Event of
Default if such judgment or order is against a Significant Subsidiary and
does not require any payment by the Company and the Company could, at the
expiration of the applicable 60 day period, incur at least $1 of Debt under
Section 3.3;
(c) a court having jurisdiction in the premises enters a decree or
order for (i) relief in respect of any of the Material Subsidiaries of the
Company in an involuntary case under any applicable bankruptcy, insolvency,
or other similar law now or hereafter in effect, (ii) appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or
similar official of the Company or any of the Material Subsidiaries of the
Company or for all or substantially all of the property and assets of any
of the Material Subsidiaries of the Company or (iii) the winding up or
liquidation of the affairs of any of the Material Subsidiaries of the
Company and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(d) any of the Material Subsidiaries of the Company (i) 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, (ii) consents
to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or similar official of any of
the Material Subsidiaries of the Company or for all or substantially all of
the property and assets of any of the Material Subsidiaries of the Company
or (iii) effects any general assignment for the benefit of creditors."
SECTION 7. Amendment of Section 5.1 of Original Indenture. Section 5.1
of the Original Indenture is hereby amended to read in its entirety as
follows:
"SECTION 5.1. Merger, Consolidation, Etc.
The Company shall 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 unless: (i) the Company shall be the
continuing Person, or the Person (if other than the
41
<PAGE>
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 obligations of the Company under the Securities and
this Indenture; (ii) immediately after giving effect to such transaction no
Event of Default or event or condition which through the giving of notice
of lapse of time or both would become an Event of Default shall have
occurred and be continuing; and (iii) the Company or such Person shall have
delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture, comply with this provision of this Indenture
and that all conditions precedent in this Indenture relating to such
transaction have been satisfied."
SECTION 8. Amendment of Section 5 of First Supplemental Indenture.
Section 5 of First Supplemental Indenture is hereby amended to read in its
entirety as follows:
"SECTION 5.
The Company covenants and agrees with the Trustee that in addition to
the provisions of Section 5.1 of the Original Indenture, it shall 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 unless
immediately after giving effect to such transaction on a pro forma basis,
the Company or the surviving entity would be able to incur at least $1 of
Debt under Section 3.3(a). Notwithstanding the foregoing, the preceding
sentence shall not prohibit a transaction, the principal purpose of which
is (as determined in good faith by the Board of Directors as evidenced by a
Board Resolution) to change the state of incorporation of the Company, and
such transaction does not have as one of its purposes the evasion of the
limitations imposed by the covenant contained in Section 5.1 of the
Original Indenture or the immediately preceding sentence."
SECTION 9. Amendment of Section 8 of Original Indenture. Section 8.5
through Section 8.6 of the Original Indenture is hereby amended to read in
its entirety as follows:
"SECTION 8.5. Defeasance and Discharge of Indenture.
The Company shall be deemed to have paid and shall be discharged from
any and all obligations in respect of the Securities of any series,
42
<PAGE>
on the 123rd day after the deposit referred to in clause (A) hereof has
been made, and the provisions of this Indenture shall no longer be in
effect with respect to the Securities of such series (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
the same), except as to: (a) rights of registration of transfer and
exchange, and the Company's right of optional redemption, (b) substitution
of apparently mutilated, defaced, destroyed, lost or stolen Securities, (c)
rights of holders to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), (d) the rights, obligations and immunities of the Trustee
hereunder and (e) the rights of the Securityholders of such series as
beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them; provided that the following
conditions shall have been satisfied:
(A) with reference to this provision the Company has deposited or
caused to be irrevocably deposited with the Trustee (or another
trustee satisfying the requirements of Sections 7.8 and 7.10) as trust
funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of such
series, (i) money in an amount, or (ii) U.S. Government Obligations
which through the payment of interest and principal in respect thereof
in accordance with their terms will provide not later than one day
before the due date of any payment referred to in this clause (A)
money in an amount, or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge without consideration of the
reinvestment of such interest and after payment of all federal, state
and local taxes or other charges and assessments in respect thereof
payable by the Trustee (x) the principal of, premium, if any, and each
installment of interest on the outstanding Securities of such series
on the due dates thereof or earlier redemption (irrevocably provided
for under arrangements satisfactory to the Trustee), as the case may
be and (y) any mandatory sinking fund payments or analogous payments
applicable to the Securities of such series on the day on which such
payments are due and payable in accordance with the terms of
Securities of such series and the Indenture with respect to the
Securities of such series;
(B) the Company has delivered to the Trustee (i) either (x) an
Opinion of Counsel to the effect that Holders of Securities of such
series 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 Section 8.5 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
43
<PAGE>
must be based upon a ruling of the Internal Revenue Service to the
same effect or a change in applicable federal income tax law or
related treasury regulations after the date of this Indenture 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 (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit) 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 Securities by Article 11 hereof; and
(E) if at such time the Securities of such series are listed on a
national securities exchange, the Company has delivered to the Trustee
an Opinion of Counsel to the effect that the Securities of such series
will not be delisted as a result of such deposit, defeasance and
discharge.
SECTION 8.6 Defeasance of Certain Obligations.
The Company may omit to comply with any term, provision or condition
set forth in, and this Indenture will no longer be in effect with respect
to, any covenant in Article 5 or any covenants established pursuant to
Section 2.3 in any indenture supplemental hereto and clauses (c) and (e) of
Section 6.1 shall not be deemed to be an Event of Default, if
(A) with reference to this Section 8.6, the Company has deposited
or caused to be irrevocably deposited with the Trustee (or another
trustee satisfying the requirements of Section 7.8) as trust funds in
trust, specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of the Securities of such series and the
Indenture
44
<PAGE>
with respect to the Securities of such series, (i) money in an amount
or (ii) U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their
terms will provide not later than one day before the due dates thereof
or earlier redemption (irrevocably provided for under agreements
satisfactory to the Trustee), as the case may be, of any payment
referred to in this clause (A) money in an amount, or (iii) a
combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee the
principal of, premium, if any, and each installment of interest on the
outstanding Securities on the due date thereof or earlier redemption
(irrevocably provided for under arrangements satisfactory to the
Trustee), as the case may be and (y) any mandatory sinking fund
payments or analogous payments applicable to the Securities of such
series on the day on which such payments are due and payable in
accordance with the terms of Securities of such series and the
Indenture with respect to the Securities of such series;
(B) the Company has delivered to the Trustee (i) an Opinion of
Counsel to the effect that Holders of Securities of such series 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 Section
8.6 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 and defeasance had not occurred 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 (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit) 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
45
<PAGE>
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 Securities by Article 11 hereof; and
(E) if at such time the Securities of such series are listed on a
national securities exchange, the Company has delivered to the Trustee
an Opinion of Counsel to the effect that the Securities of such series
will not be delisted as a result of such deposit, defeasance and
discharge."
SECTION 10. Amendment of Original Indenture. This Second Supplemental
Indenture shall form a part of the Original Indenture as supplemented
hereby shall be bound hereby. The Original Indenture as supplemented by
this Second Supplemental Indenture is hereby in all respects ratified and
confirmed.
SECTION 11. Acceptance by Trustee. The Trustee, for itself and its
successor or successors, accepts the trust of the Original Indenture as
amended by this Second Supplemental Indenture, and agrees to perform the
same, but only upon the terms and conditions set forth in the Original
Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, which terms and provisions
shall in like manner define and limit its liabilities and responsibilities
in the performance of the trust created by the Original Indenture, and,
without limiting the generality of the foregoing, the recitals contained
herein shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Second
Supplemental Indenture other than as to the validity of its execution and
delivery by the Trustee.
SECTION 12. Counterparts. This Second Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original;
but such counterparts shall together constitute but one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the day and year
first written above.
THE AES CORPORATION
as the Company
By /s/ Barry J. Sharp
----------------------
Name: Barry J. Sharp
Title: Vice President and Chief
Financial Office
THE FIRST NATIONAL BANK
OF CHICAGO
as Trustee
By /s/ Mary R. Fonti
---------------------
Name: Mary R. Fonti
Title: Assistant Vice President
47
EXHIBIT 5.1
[LETTERHEAD OF DAVIS POLK & WARDWELL]
NOVEMBER 19, 1997
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Ladies and Gentlemen:
We have acted as counsel in connection with the Registration Statement
on Form S-3 (the "REGISTRATION STATEMENT") filed by the AES Corporation (the
"Company") with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, for the registration of the sale by the
Company from time to time of up to $1,500,000,000 aggregate principal amount of
senior debt securities, senior subordinated debt securities, junior subordinated
debt securities and junior subordinated debt securities (the "JUNIOR
SUBORDINATED DEBT TRUST SECURITIES") issued directly or to a Trust referred to
below (collectively, the "DEBT SECURITIES") 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 III AES Trust IV and AES
Trust V, 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 Junior
Subordinated Debt Trust Securities are to be issued pursuant to an indenture
(the "JUNIOR SUBORDINATED DEBT TRUST INDENTURE") between the Company the 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
<PAGE>
2
Indenture, the Junior Subordinated Indenture is referred to herein as the
"TRUSTEE" and the Senior Indenture, Subordinated Indenture, Junior Subordinated
Indenture and the Junior Subordinated Debt Trust 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 are 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 effecting the
enforcement of creditors' rights generally and (b) the availability of
equitable
<PAGE>
3
remedies may be limited by equitable principles of general applicability
(regardless of whether considered in a proceeding at law or in equity).
3. When 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
<PAGE>
4
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
Unites 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
EXHIBIT 5.2
[RICHARDS, LAYTON & FINGER LETTERHEAD]
November 19, 1997
AES Trust III
AES Trust IV
AES Trust V
c/o The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Re: AES Trust III, AES Trust IV and AES Trust V
Ladies and Gentlemen:
We have acted as special Delaware counsel for The AES
Corporation, a Delaware corporation ("AES"), AES Trust III, a Delaware business
trust ("Trust III"), AES Trust IV, a Delaware business trust ("Trust IV"), and
AES Trust V, a Delaware business trust ("Trust V")(Trust III, Trust IV and Trust
V 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 III, dated as of
November 13, 1996, as filed with the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on November 14, 1996;
<PAGE>
AES Trust III
AES Trust IV
AES Trust V
November 19, 1997
Page 2
(b) The Certificate of Trust of Trust IV, dated as of November
5, 1997, as filed with the Secretary of State on November 5, 1997;
(c) The Certificate of Trust of Trust V, dated as of November
5, 1997, as filed with the Secretary of State on November 5, 1997;
(d) The Declaration of Trust of Trust III, dated as of
November 13, 1996, between AES and the trustees of Trust III named therein;
(e) The Declaration of Trust of Trust IV, dated as of November
5, 1997, between AES and the trustees of Trust IV named therein;
(f) The Declaration of Trust of Trust V, dated as of November
5, 1997, between AES and the trustees of Trust V 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 19, 1997;
(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 19, 1997, 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
<PAGE>
AES Trust III
AES Trust IV
AES Trust V
November 19, 1997
Page 3
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:
<PAGE>
AES Trust III
AES Trust IV
AES Trust V
November 19, 1997
Page 4
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
CDK
EXHIBIT 12.1
THE AES CORPORATION AND SUBSIDIARIES
STATEMENT RE: CALCULATIONS OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions, unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
1992 1993 1994 1995 1996 1997
----- ----- ----- ----- ----- --------------
<S> <C> <C> <C> <C> <C> <C>
Actual:
COMPUTATION OF EARNINGS:
Income from continuing operations $ 65 $ 89 $ 142 $ 164 $ 185 $ 182
before income taxes
Adjustment for undistributed equity
earnings, net of distributions (3) (11) (6) 3 (20) (39)
Interest expense 97 125 122 122 138 148
Depreciation of previously capitalized
interest 4 4 4 4 4 4
Net amortization of issuance costs 3 3 4 5 6 6
----- ----- ----- ----- ----- -----
Earnings $ 166 $ 210 $ 266 $ 298 $ 313 $ 301
===== ===== ===== ===== ===== =====
COMPUTATION OF FIXED CHARGES:
Interest expensed and capitalized
amounts (including construction
related fixed charges) $ 118 $ 127 $ 124 $ 132 $ 165 $ 202
Net amortization of issuance costs
(including capitalized amounts) 3 3 4 5 6 6
----- ----- ----- ----- ----- -----
Fixed charges $ 121 $ 130 $ 128 $ 137 $ 171 $ 208
===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges 1.37x 1.62x 2.08x 2.18x 1.83x 1.45x
</TABLE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-39857 of The AES Corporation of our report dated
January 30, 1997, except for the penultimate paragraph of Note 6, as to which
the date is March 13, 1997, the pre-penultimate paragraph of Note 6, as to which
the date is August 8, 1997, the subsequent event paragraph of Note 7, as to
which the date is July 15, 1997, and Note 13, as to which the date is October
27, 1997, appearing in the Current Report on Form 8-K of The AES Corporation,
dated November 6, 1997, and of our report on the consolidated financial
statement schedules dated January 30, 1997, appearing in the Annual Report on
Form 10-K of The AES Corporation, for the year ended December 31, 1996 and to
the reference to us under the headings "Experts" in each Prospectus, which is
part of such Registration Statement.
/s/ Deloitte & Touche LLP
- ------------------------------
Washington, D.C.
November 19, 1997
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned (other than Dennis W. Bakke and Barry J. Sharp), acting in the
capacity or capacities stated opposite their respective names below, hereby
constitute and appoint DENNIS W. BAKKE, BARRY J. SHARP and WILLIAM R. LURASCHI
and each of them severally, the attorneys-in-fact of the undersigned with full
power to them and each of them to sign for and in the name of the undersigned in
the capacities indicated below the Registration Statement on Form S-3 relating
to the securities of this Company, including Senior Debt Securities, Senior
Subordinated Debt Securities, Junior Subordinated Debt Securities, Preferred
Securities, Guarantees of Preferred Securities, Stock Purchase Contracts, Stock
Purchase Units, Preferred Stock, and Common Stock of the Company, and any and
all exhibits, amendments and supplements thereto, and any other documents
necessary, appropriate or desirable in connection therewith, and to file the
same and to do and perform each and every act and thing necessary, appropriate
or desirable in connection therewith. Each of DENNIS W. BAKKE and BARRY J.
SHARP, each acting in the capacity stated opposite his name below, hereby
constitutes and appoints WILLIAM R. LURASCHI as his attorney-in-fact with full
power to him to sign for and in his name in the capacity indicated below the
Registration Statement on Form S-3 and any and all exhibits, amendments and
supplements thereto, and any other documents necessary, appropriate or desirable
in connection therewith, and to file the same and to do and perform each and
every act and thing necessary, appropriate or desirable in connection therewith.
<TABLE>
<CAPTION>
SIGNATURE POSITION WITH AES DATE
- --------------------------- ---------------------------------------- -----------------
<S> <C> <C>
/s/ Roger W. Sant Chairman of the Board and Director November 7, 1997
- -------------------------
Roger W. Sant
/s/ Dennis W. Bakke President, Chief Executive Officer and November 7, 1997
- ------------------------- Director (Principal Executive Officer)
Dennis W. Bakke
/s/ Vicki-Ann Assevero Director November 7, 1997
- -------------------------
Vicki-Ann Assevero
/s/ Dr. Alice F. Emerson Director November 7, 1997
- -------------------------
Dr. Alice F. Emerson
/s/ Robert F. Hemphill, Jr. Director November 7, 1997
- -------------------------
Robert F. Hemphill, Jr.
/s/ Frank Jungers Director November 7, 1997
- -------------------------
Frank Jungers
/s/ Dr. Henry R. Linden Director November 7, 1997
- -------------------------
Dr. Henry R. Linden
/s/ John H. McArthur Director November 7, 1997
- -------------------------
John H. McArthur
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Hazel O'Leary Director November 7, 1997
- -------------------------
Hazel O'Leary
/s/ Thomas I. Unterberg Director November 7, 1997
- -------------------------
Thomas I. Unterberg
/s/ Robert H. Waterman, Jr. Director November 7, 1997
- -------------------------
Robert H. Waterman, Jr.
/s/ Barry J. Sharp Vice President and Chief Financial Officer November 7, 1997
- ------------------------- (Principal Financial and Accounting
Barry J. Sharp Officer)
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1163725
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
SENIOR DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between The AES Corporation
and The First National Bank of Chicago, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1163725
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
SENIOR SUBORDINATED DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between The AES Corporation
and The First National Bank of Chicago, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1163725
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
JUNIOR SUBORDINATED DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between The AES Corporation
and The First National Bank of Chicago, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1163725
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
JUNIOR SUBORDINATED DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between The AES Corporation
and The First National Bank of Chicago, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES TRUST III
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE TO BE APPLIED FOR
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
PREFERRED SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of The Amended and Restated Declaration of
Trust of AES Trust III, and The First National Bank of Chicago, the undersigned,
in accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, hereby consents that the reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES TRUST IV
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE TO BE APPLIED FOR
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
PREFERRED SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of The Amended and Restated Declaration of
Trust of AES Trust IV, the undersigned, in accordance with Section 321(b) of the
Trust Indenture Act of 1939, as amended, hereby consents that the reports of
examinations of the undersigned, made by Federal or State authorities authorized
to make such examinations, may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD ----
BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES TRUST V
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE TO BE APPLIED FOR
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
PREFERRED SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of The Amended and Restated Declaration of
Trust of AES Trust V, the undersigned, in accordance with Section 321(b) of the
Trust Indenture Act of 1939, as amended, hereby consents that the reports of
examinations of the undersigned, made by Federal or State authorities authorized
to make such examinations, may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD ----
BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1163725
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
GUARANTEE OF PREFERRED SECURITIES OF
THE AES TRUST III
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of a Guarantee Agreement between The AES
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD ------------
BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1163725
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
GUARANTEE OF PREFERRED PREFERRED SECURITIES
THE AES TRUST IV
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of a Guarantee Agreement between The AES
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD ------------
BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
--
-------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
(IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-------------------
THE AES CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1163725
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1001 NORTH 19TH STREET
ARLINGTON, VIRGINIA 22209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
GUARANTEE OF PREFERRED SECURITIES OF
THE AES TRUST V
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS
SUBJECT.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise
corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE
OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS
FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A copy of the articles of association of
the trustee now in effect.*
2. A copy of the certificates of authority
of the trustee to commence business.*
3. A copy of the authorization of the
trustee to exercise corporate trust
powers.*
4. A copy of the existing by-laws of the
trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition
of the trustee published pursuant to law
or the requirements of its supervising
or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 7th day of November, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
----------------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25,
1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
November 7, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of a Guarantee Agreement between The AES
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
VERY TRULY YOURS,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
---------------------------------
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD ------------
BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,415,563 1.a.
b. Interest-bearing balances(2)............................................. 0071 7,049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)................ 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............. 1773 4,455,173 2.b.
3 . Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)....................................................................... RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses................................ RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve.................................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)..................................... 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,930,216 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 64,504 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 562,251 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 283,716 10.
11. Other assets (from Schedule RC-F)........................................... 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11).................................... 2170 54,837,423 12.
</TABLE>
- --------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................... RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1).................................... RCON 6631 9,474,510 13.a.1
(2) Interest-bearing.......................................... RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)............................ RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing....................................... RCFN 6631 330,030 13.b.1
(2) Interest-bearing.......................................... RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................... RCFD 2800 3,827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less.................... RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years.. A547 265,393 16.b
c. With a remaining maturity of more than three years .......... A548 322,175 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding.......... RCFD 2920 562,251 18
19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23
24. Common stock..................................................... RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves........................ RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................... RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,219,224 28
29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 54,837,423 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of
auditing work performed for the bank by independent external Number
Number auditors as of any date during 1996....................... RCFD 6724 [ N/A ] M.1.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
