AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 23, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
THE AES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 4911 54-1163725
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(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code 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
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: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box:[ ]
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CALCULATION OF REGISTRATION FEE
===========================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE REGIS- AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TERED REGISTERED PER NOTE(1) OFFERING PRICE(1) REGISTRATION FEE(2)
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8.50% Senior Subordinated Exchange Notes
due 2007 ...................................... $375,000,000 99.805% $374,267,917 $110,409
- ---------------------------------------------------------------------------------------------------------------------------
8.875% Senior Subordinated Exchange De-
bentures due 2027 ............................. $125,000,000 97.064% $121,329,463 $ 35,792
===========================================================================================================================
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457(f).
----------------
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, AS AMENDED, 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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SUBJECT TO COMPLETION, DATED JANUARY 23, 1998
PROSPECTUS
JANUARY 23, 1998
[GRAPHIC OMITTED]
THE AES CORPORATION
OFFER TO EXCHANGE 8.50% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007 FOR ANY
AND ALL OUTSTANDING 8.50% SENIOR SUBORDINATED NOTES DUE 2007 AND TO EXCHANGE
8.875% SENIOR SUBORDINATED EXCHANGE DEBENTURES DUE 2027 FOR ANY AND ALL
OUTSTANDING 8.875% SENIOR SUBORDINATED DEBENTURES DUE 2027.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
February __, 1998, unless extended.
The AES Corporation ("AES" or the "Company"), hereby offers, upon the terms
and subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange $1,000 principal amount of 8.50% Senior Subordinated Exchange Notes due
2007 (the "New 8.50% Notes") of the Company for each $1,000 principal amount of
the issued and outstanding 8.50% Senior Subordinated Notes due 2007 (the "Old
8.50% Notes") of the Company and to exchange $1,000 principal amount of 8.875%
Senior Subordinated Exchange Debentures due 2027 (the "New 8.875% Debentures",
and together with the New 8.50% Debentures, the "New Notes") of the Company for
each $1,000 principal amount of the issued and outstanding 8.875% Senior
Subordinated Debentures due 2027 (the "Old 8.875% Debentures", and, together
with the Old 8.50% Notes, the "Old Notes") of the Company. As of the date of
this Prospectus, there were outstanding $375,000,000 principal amount of Old
8.50% Notes and $125,000,000 principal amount of Old 8.875% Debentures. The
terms of the New 8.50% Notes are identical in all material respects to the Old
8.50% Notes and the terms of the New 8.875% Debentures are identical in all
material respects to the Old 8.875% Debentures, in each case except that the
offer of the New Notes will have been registered under the Securities Act and
therefore, the New Notes will not be subject to certain transfer restrictions,
registration rights and related liquidated damage provisions applicable to the
Old Notes.
The Old 8.50% Notes were issued at 99.800% of their principal amount and
the Old 8.875% Debentures were issued at 97.040% of their principal amount. The
New Notes will bear interest from October 29, 1997. Holders of Old Notes whose
Old Notes are accepted for exchange will be deemed to have waived the right to
receive any payment in respect of interest on the Old Notes accrued from October
29, 1997 to the date of issuance of the New Notes. Interest on the New Notes is
payable semi-annually on May 1 and November 1, commencing May 1, 1998, accruing
from October 29, 1997 at a rate of 8.50% per annum in the case of the New 8.50%
Notes and at a rate of 8.875% per annum in the case of the New 8.875%
Debentures.
The New 8.50% Notes and Old 8.50% Notes (collectively, the "8.50% Notes")
are redeemable at any time on or after November 1, 2002 and the New 8.875%
Debentures and the Old 8.875% Debentures (collectively, the "8.875% Debentures"
and, together with the 8.50% Notes, the "Notes") are redeemable at any time on
or after November 1, 2004, in each case, for cash at the option of The AES
Corporation ("AES" or the "Company"), in whole or in part, at the redemption
prices set forth herein, plus accrued interest. In addition, prior to November
1, 2000, in the event that the Company consummates one or more offerings of its
Qualified Capital Stock (as defined herein), the Company may at its option use
all or a portion of the net cash proceeds from such offerings to redeem up to
33% of the original aggregate principal amount of the 8.50% Notes at a cash
redemption price equal to 108.500% of the principal amount thereof and up to 33%
of the original aggregate principal amount of the 8.875% Debentures at a cash
redemption price equal to 108.875% of the principal amount thereof, in each
case, plus accrued and unpaid interest thereon, if any, to the redemption date;
provided that at least $100 million of the original aggregate principal amount
of the 8.50% Notes and $83.75 million of the original aggregate principal amount
of the 8.875% Debentures remains outstanding, as the case may be, thereafter.
The Notes are redeemable at the option of the holder upon a Change of Control
(as defined herein) at 101% of the principal amount thereof, plus accrued and
unpaid interest thereon. The Notes are unsecured obligations of the Company and
subordinated to all existing and future Senior Debt as defined herein) of the
Company. As of September 30, 1997, on a pro forma basis after giving effect to
the Adjustments (as defined herein), the Company had approximately $207 million
in aggregate principal amount of Senior Debt and the subsidiaries of the Company
had approximately $4.0 billion in aggregate amount of liabilities to which the
Notes are effectively subordinated.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company under the Registration Rights Agreement, dated
October 29, 1997, among the Company and the other signatories thereto (the
"Registration Rights Agreement"). Based upon interpretations contained in
letters issued to third parties by the staff of the Securities and Exchange
Commission (the "Commission" or "SEC"), the Company believes that the New Notes
issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for resale, resold and otherwise transferred by each Holder thereof
(other than a broker-dealer, as set forth below, and any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act of 1933, as amended, (the "Securities Act")) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes. Eligible Holders wishing to
accept the Exchange Offer must represent to the Company in the Letter of
Transmittal that such conditions have been met and must represent, if such
Holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes in for its own account in exchange for Old Notes, that neither such Holder
nor the person receiving such New Notes, if other than a Holder, is engaged in
or intends to participate in the distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must represent that the Old Notes tendered in exchange therefor
were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 90 days after the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Company terminates the Exchange Offer and does
not accept for exchange any Old Notes, the Company will promptly return tendered
Old Notes to the Holders thereof.
Prior to this Exchange Offer, there has been no public market for the
Notes. The Company does not currently intend to list the New Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active public market for the
New Notes will develop.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE
CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES IN AN EXCHANGE OFFER.
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 COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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.
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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 (this "Prospectus") in connection with the offer made hereby and if
given or made such information or representation must not be relied upon as
having been authorized by the Company or any other person. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained or incorporated
by reference herein is correct as of any time subsequent to its date. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy the securities offered hereby 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 anyone to whom it is unlawful to
make such offer or solicitation.
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TABLE OF CONTENTS
PAGE PAGE
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Available Information ..................... 2 Use of Proceeds ........................... 24
Incorporation of Certain Documents by The Exchange Offer ........................ 24
Reference .............................. 3
Description of Notes ...................... 31
Special Note Regarding Forward Looking
Statements .............................. 3 United States Federal Income Tax
Consequences of the Exchange Offer ...... 59
Prospectus Summary ........................ 5
Plan of Distribution ...................... 60
Risk Factors .............................. 15
Legal Matters ............................. 60
Selected Consolidated Financial Data ...... 15
Experts ................................... 60
Ratio of Earnings to Fixed Charges ........ 24
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AVAILABLE INFORMATION
This Prospectus constitutes a part of the Registration Statement on Form
S-4 under the Securities Act filed by the company with the Commission under the
Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information contained in the
Registration Statement and the exhibits and schedules thereto and reference is
herby made to the Registration Statement and the exhibits and schedules thereto
for further information with respect to the Company and the Notes offered
hereby. Statements contained herein concerning the provisions of any documents
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission are not necessarily complete, and in each instance reference is made
to the copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
AES is subject to the informational requirements of the Securities Exchange
Act of 1934 (the "Exchange Act"), and in accordance therewith files reports,
proxy and information statements and other information with 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 agreed that, whether or not it is required to do so by the
rules and regulations of the Commission, for so long as any of the Notes remain
outstanding, it will furnish to the holders of the Notes and file with the
Commission (i) all quarterly and annual financial information that would be
2
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required to file such forms, including contained in a filing with the Commission
on Forms 10-Q and 10-K if the Company were required to file such forms,
including a "Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent auditors and (ii) all reports that would
be required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, for so long as any of the Notes
remain outstanding, the Company has agreed to make available to any prospective
purchaser of the Notes or any beneficial owner of the Notes in connection with
any sale thereof the information required by Rule 144A(d)(4) under the
Securities Act.
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 January 9, 1998, 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
18, 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 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.
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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREWITH. THE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM WILLIAM R. LURASCHI,
GENERAL COUNSEL AND SECRETARY, THE AES CORPORATION, 1001 NORTH 19TH STREET,
ARLINGTON, VIRGINIA 22209, TELEPHONE (703) 522-1315. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY FEBRUARY , 1998.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements under the caption "Prospectus Summary" and under the
caption "Risk Factors" in this Prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 ("Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance and achievements of AES, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, the following factors, as well as those factors discussed in
the section entitled "Risk Factors" and those discussed elsewhere in AES's
filings with the Commission, including its Current Report on Form 8-K dated
February
3
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26, 1996: changes in company-wide operation and availability compared to AES's
historical performance; changes in AES's historical operating cost structure,
including changes in various costs and expenses; political and economic
considerations in certain non-U.S. countries where AES is conducting or is
seeking to conduct business; restrictions on foreign currency convertibility and
remittance abroad, exchange rate fluctuations and developing legal systems;
regulation and restrictions; legislation intended to promote competition in U.S.
and non-U.S. electricity markets; tariffs; governmental approval processes;
environmental matters; construction, operating and fuel risks; load growth,
dispatch and transmission constraints; conflict of interest of contracting
parties; and adherence to the AES principles; and other factors referenced in
this Prospectus. See "Risk Factors."
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in connection with, the more detailed information and consolidated financial
statements and the notes thereto included and incorporated by reference in this
Prospectus. References herein to "AES" or the "Company" include The AES
Corporation and its subsidiaries and affiliates unless the context requires
otherwise and references herein to "MW" are to megawatts.
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 global 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 and Consolidated EBITDA (as defined herein) has increased from $45
million to $189 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 up to approximately 20%). AES is also constructing 9
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 11,699 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%.
The Company, a corporation organized under the laws of Delaware, was formed
in 1981. The principal office of the Company is located at 1001 North 19th
Street, Suite 2000, Arlington, Virginia 22209, and its telephone number is (703)
522-1315.
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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 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.
6
<PAGE>
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/or 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 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.
RECENT DEVELOPMENTS
Recent Acquisitions
On January 21, 1998, the Company announced that it won a bid to acquire for
$109 million the outstanding shares (79.78%) of Compania de Luz Electrica de
Santa Ana (CLESA), an electrical distribution company in El Salvador. These
shares will be purchased from Comision Ejecutiva Hidroelectrica del Rio Lempa
(CEL), a government-owned utility company. Energia Global International, Ltd., a
Bermuda company, with activities in Central America, may purchase up to 20% of
CLESA from AES.
CLESA serves 188,000 customers and borders Guatemala and Honduras to the
north, with access to the Pacific Ocean. Three other distribution companies in
El Salvador were sold in yesterday's auction to two other private companies.
Closing is expected to occur in mid-February 1998.
In November 1997, the Company announced that it won a bid to acquire three
natural gas-fired, electric generating stations from Southern California Edison
for approximately $781 million. The facilities were auctioned as part of
Edison's divestiture of all of its gas-fired generating facilities prior to the
restructuring of California's electricity industry.
The three plants, all located on the southern California coast, are
Alamitos (2083 MW), Redondo Beach (1310 MW) and Huntington Beach (563 MW). Each
of the plants has been designated a "must-run facility" because station output
is critical to maintaining the reliability of electric supply in the region.
Consequently, they initially will operate in part under agreements with the
Independent System Operator being established through electricity restructuring.
Pursuant to California's electricity restructuring law, Edison will remain under
contract to operate and maintain the facilities for two years.
Completion of the acquisition is subject to a number of conditions,
including the receipt of California Public Utilities Commission approval and
successful implementation of the new California electric spot market, called the
Power Exchange.
On October 21, 1997, a subsidiary of AES was the winning bidder to acquire
approximately 90% of the common shares of Companhia Centro-Oeste de Distribuicao
de Energia Eletrica ("CCODEE"), the distribution company serving the central and
western sections of the State of Rio Grande do Sul in Brazil, for a total
purchase price of approximately $1.37 billion. The acqui-
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sition closed on October 27, 1997, at which time the Company financed the
payment of the purchase price with the proceeds of (i) $220 million of revolving
credit borrowings under its $425 million revolving credit facility (the
"Revolver") (the commitments under which had been temporarily increased from
$425 million to $600 million), (ii) $550 million of short term loans under a
bridge loan facility (the "CEEE Bridge Loan") provided by affiliates of J.P.
Morgan Securities, Inc., Donaldson, Lufkin & Jenrette Securities Corporation,
Salomon Brothers Inc and Unterberg Harris (each of which was an Initial
Purchaser in one or both of the Initial Offerings (as defined below)) and (iii)
$600 million of non-recourse financing under a $680 million facility provided by
BankBoston and ANZ Investment Bank as co-arrangers (the "CEEE Non-recourse
Financing"). AES purchased the shares of CCODEE from the State of Rio Grande do
Sul in a partial privatization of Companhia Estadual de Energia Eletrica
("CEEE"), the integrated utility of Rio Grande do Sul. All of the remaining
shares of CCODEE may be purchased by its employees. CCODEE currently serves
approximately 800,000 customers or approximately 31.3% of the population of the
State of Rio Grande do Sul on sales of 5,772 gigawatt hours. The foregoing
transaction and the financing described therein and below are referred to herein
as the "CEEE Acquisition". The Borrowings under the Revolver and the CEEE Bridge
Loan were refinanced with the proceeds of the Initial Offerings.
See "Use of Proceeds".
Also in October 1997, a joint venture named Tau Power that is 85% owned by
AES and 15% owned by Israel-based Suntree Power completed the acquisition and
takeover of two hydro-electric stations ("GES") and four combined heat and power
stations ("TETS") in the province of East Kazakhstan. The total electric
capacity of the stations included in the agreement is 1,384 MW, with additional
thermal capacity of over 1,000 MW electric equivalent. The transaction expands
AES's current global portfolio of electric generating facilities, which already
includes the 4,000 MW coal-fired Ekibastuz power station in Kazakhstan. The
power stations included in the agreement signed are: the 332 MW Ust-Kamenogorsk
GES, the 702 MW Shulbinsk GES, the 240 MW Ust-Kamenogorsk TETS, the 50 MW
Leninogorsk TETS, the 50 MW Sogrinsk TETS and the 10 MW Semipalatinsk TETS.
Included in the transaction, AES obtained ownership and control of the retail
sales department of the former utility and will assume the existing power supply
contracts with the 50 largest customers in East Kazakhstan, including the
distribution companies. Tau Power paid $20.7 million for the concession on the
GES, with an additional payment of $2.5 million for the shares of the TETS. The
Company will also repay back wages of approximately $4 million to the workers
during the first year of operation and provide for working capital to finance
the delivery of much needed coal prior to winter and complete winter preparation
plans.
In June 1997, AES together with The Southern Company and The Opportunity
Fund, a Brazilian investment fund, (collectively, the "AES Consortium"),
acquired 14.41% of Companhia Energ-tica de Minas Gerais ("CEMIG"), an integrated
electric utility serving the State of Minas Gerais in Brazil, for a total
purchase price of approximately $1.056 billion, $654 million of the financing
for which was in the form of non-recourse financing provided by Banco Nacional
de Desenvolvimento Economico e Social ("BNDES"). AES's portion of the purchase
price was approximately $364 million after consideration of the BNDES facility.
The shares of CEMIG, which represent approximately 33% of the voting interest,
have been purchased from the State of Minas Gerais in a partial privatization of
CEMIG. Initially, AES and The Opportunity Fund had a 90.6% and a 9.4% economic
interest in the AES Consortium, respectively. Subsequently, The Southern Company
exercised its option to purchase 25% interest in the AES Consortium from AES.
Pursuant to a shareholders agreement between the AES Consortium and the State of
Minas Gerais, AES will have significant operating influence, including the right
to appoint the chief operating officer of CEMIG, and will otherwise share
control of CEMIG with the State of Minas Gerais. CEMIG owns approximately 5,000
MW of generating plants and serves approximately 4 million customers. The
foregoing transaction and the financing therefor described below are referred to
herein as the "CEMIG Acquisition".
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In June 1997, AES completed its acquisition of the international assets of
Destec Energy, Inc. ("Destec"), a large independent energy producer with
headquarters in Houston, Texas, at a total price to AES of approximately $439
million. Destec's international assets acquired by AES include ownership
interests in the following five electric generating plants (with ownership
percentages in parentheses): (i) a 110 MW gas-fired combined cycle plant in
Kingston, Canada (50%); (ii) a 405 MW gas-fired combined cycle plant in
Terneuzen, Netherlands (50%); (iii) a 140 MW gas-fired simple cycle plant in
Cornwall, England (100%); (iv) a 235 MW oil-fired simple cycle plant in Santo
Domingo, Dominican Republic (99%); and (v) a 1,600 MW coal-fired plant
("Hazelwood") in Victoria, Australia (20%). Each of such plants is currently in
operation, except for the plant in Terneuzen which is under construction. The
acquisition by AES of Destec's international assets also includes Destec's
non-U.S. developmental stage power projects, including projects in Taiwan, the
Philippines, Australia and Argentina. The foregoing transaction and the
financing therefor described below are referred to herein as the "Destec
Acquisition".
In May 1997, a subsidiary of AES, and its partner, Community Energy
Alternatives ("CEA"), acquired an aggregate of 90% (AES acquired 60% and CEA
acquired 30%) of two distribution companies of Empresa Social de Energia de
Buenos Aires S.A. ("ESEBA") serving certain portions of the Province of Buenos
Aires, Argentina for an aggregate purchase price of $565 million. AES's portion
of the purchase price after consideration of non-recourse debt was $244 million.
The remaining 10% is owned by the employees of each of the two acquired
companies. The foregoing transaction is referred to herein as the "ESEBA
Acquisition".
AES funded its acquisition of Destec through cash on hand and borrowings
under the Revolver. The net proceeds of approximately $387 million from the
Company's issuance and sale of its common stock, par value $.01 per share (the
"AES Common Stock"), and $2.6875 Term Convertible Securities, Series A ("Series
A TECONS") in March 1997 was temporarily applied to repay amounts outstanding
under the Revolver. AES financed its acquisitions of CEMIG and ESEBA through:
(i) $450 million in non-recourse bridge financing, comprised of a $250 million
bridge loan (the "CEMIG Bridge") to AES CEMIG Funding Corporation, a
wholly-owned subsidiary of AES, and a $200 million bridge loan (the "ESEBA
Bridge") to AESEBA Funding Corporation, a wholly-owned subsidiary of AES; (ii) a
$200 million subordinated bridge loan to AES (the "AES Bridge Loan"); (iii)
non-recourse project debt; (iv) borrowings under AES's Revolver and (v) cash on
hand.
AES intends to repay the ESEBA Bridge and the CEMIG Bridge through a
combination of proceeds from: (i) the sale of AES's interest in Hazelwood; (ii)
additional borrowings at one or more AES projects; (iii) the replacement of cash
reserves with letters of credit at certain AES projects; (iv) the proceeds from
the exercise of the Southern Company's option to purchase 25% interest in the
AES Consortium from AES or (v) borrowings under the Revolver. None of the
foregoing sources of funds is committed except for the exercise of Southern
Company's option. Accordingly, there can be no assurances that such sources or
any other sources will be available to repay the ESEBA Bridge and CEMIG Bridge.
The CEMIG Bridge and ESEBA Bridge mature in August 1998 or, in the case of
the ESEBA Bridge, earlier if AES sells its interest in Hazelwood. The interest
rates on both the CEMIG Bridge and the ESEBA Bridge will initially be LIBOR plus
2.5% and will increase by 1.0% each month beginning February 1, 1998. These
loans are secured by a pledge of 34.6 million shares of AES Common Stock issued
to a subsidiary of AES.
These projects are subject to a number of risks including those related to
financing, construction and contract compliance, and there can be no assurance
that they will be completed successfully.
Other Events
In September 1997, AES began construction on the AES Parana project, an 830
MW gas-fired, combined cycle power plant. AES Parana will be located in San
Nicolas, Argentina, adjacent to Central Termica San Nicolas, in which AES owns a
controlling interest. AES Parana is in the
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final stages of arranging for project financing for the facility. AES Parana has
entered into a lump sum, turnkey construction contract with Nichimen Corporation
and Mitsubishi Heavy Industries for the plant. A portion of the fuel will be
supplied by Total Corporation under a long term, risk management contract.
Project output will be sold into the Argentine electric market. Total capital
cost is estimated at $440 million, and the project is expected to commence
commercial operation in 2000.
Also in September, AES's 100% owned subsidiary, AES Mt. Stuart, raised
A$103.50 million (approximately US$75.5 million) of non-recourse project
financing for its 288 MW kerosene-fired simple cycle power plant in Townsville,
Queensland, Australia. The project debt facility was solely under-written by
Societe Generale Australia Ltd. and is comprised of a 10-year term loan, a
letter of credit facility and a short-term revolving cash advance facility.
Low-cost peaking power from the plant will be sold to the Queensland
Transitional Power Trading Corporation under a 10-year power purchase agreement.
A turnkey construction agreement has been signed with Nichimen Corporation, and
the major equipment will be supplied by Mitsubishi Heavy Industries.
Construction of the plant will start during the fourth quarter of 1997 and is
scheduled to be completed on January 1, 1999.
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.
In the same month, the Company issued approximately $325 million of senior
subordinated notes due 2007 with an 83/8% interest rate per annum in a private
placement. The Company used the net proceeds of approximately $315 million to
repay amounts outstanding under the AES Bridge Loan, to redeem the Company's $75
million 93/4% senior subordinated notes due 2000 and to repay pro rata a portion
of the amounts outstanding under the ESEBA Bridge and the CEMIG Bridge. The
ESEBA Bridge and the CEMIG Bridge have been refinanced and are currently $180
million and $106 million, respectively.
Also in July, the Company sold 4.5 million shares of its common stock (on a
pre-split basis) for gross proceeds of approximately $359 million or $79.75 per
share. The Company used the net proceeds of approximately $350 million to repay
pro rata a portion of the amounts outstanding under the ESEBA Bridge and the
CEMIG Bridge.
On January 9, 1998, the Southern Company exercised their option for
approximately $114 million which was used entirely to partially pay down the
CEMIG Bridge to $106 million.
Unless otherwise indicated, all share numbers and per share amounts in this
Prospectus have been restated to reflect the stock split.
The pro forma information contained or incorporated by reference in this
Prospectus has been adjusted for the Company's issuance of $325 million
aggregate principal amount of 83/8% Senior Subordinated Notes due 2007 and 9
million shares of AES Common Stock, the redemption of $75 million 93/4% Senior
Subordinated Notes and the repayment and reborrowing of the CEMIG Bridge and
ESEBA Bridge, in each case, during the third quarter of 1997 (collectively, the
"Third Quarter Financings"), the CEMIG Acquisition, the Destec Acquisition, the
ESEBA Acquisition, the CEEE Acquisition and the offering of the Old Notes and an
offering of Trust Convertible Securities ("TECONS") issued by AES Trust II, a
Delaware business trust formed by the Company for the purpose of conducting such
offering (such offerings collectively, the "Initial Offerings") and the
application of the net proceeds therefrom (collectively, the "Adjustments").
Complete unaudited pro forma financial information giving effect to the
Adjustments is incorporated by reference to the Company's Current Report on Form
8-K filed on January 9, 1998.
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THE EXCHANGE OFFER
SECURITIES OFFERED....... Up to $375,000,000 principal amount of 8.50% Senior
Subordinated Exchange Notes due 2007 and up to
$125,000,000 principal amount of 8.875% Senior
Subordinated Exchange Debentures due 2027. The terms
of the New 8.50% Notes and the Old 8.50% Notes are
identical in all material respects and the terms of
the New 8.875% Debentures and the Old 8.875%
Debentures are identical in all material respects,
in each case except that the offer of the New Notes
will have been registered under the Securities Act
and therefore, the New Notes will not be subject to
certain transfer restrictions, registration rights
and related liquidated damage provisions applicable
to the Old Notes.
THE EXCHANGE OFFER....... The Company is offering, upon the terms and subject
to the conditions of the Exchange Offer, to exchange
$1,000 principal amount of New 8.50% Notes for each
$1,000 principal amount of Old 8.50% Notes and
$1,000 principal amount of New 8.875% Debentures for
each $1,000 principal amount of Old 8.875%
Debentures. See "The Exchange Offer" for a
description of the procedure for tendering Old
Notes. The Exchange Offer is intended to satisfy
obligations of the Company under the Registration
Rights Agreement, dated October 29, 1997, between
J.P. Morgan & Co. and Salomon Brothers Inc.
(collectively, the "Initial Purchasers") and the
Company.
TENDERS, EXPIRATION DATE;
WITHDRAWAL............. The Exchange Offer will expire at 5:00 p.m., New
York City time on February , 1998, or such later
date and time to which it is extended. The tender of
Old Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
Any Old Notes not accepted for exchange for any
reasons will be returned without expense to the
tendering Holder thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer.
FEDERAL INCOME TAX
CONSEQUENCES........... The exchange pursuant to the Exchange Offer will not
result in any income, gain or loss to the Holders or
the Company for federal income tax purposes. See
"United States Federal Income Tax Consequences of
the Exchange Offer."
USE OF PROCEEDS.......... There will be no proceeds to the Company from the
issuance of the New Notes pursuant to the Exchange
Offer.
EXCHANGE AGENT........... The First National Bank of Chicago is serving as
Exchange Agent in connection with the Exchange
Offer.
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CONSEQUENCE OF EXCHANGING OLD NOTES
PURSUANT TO THE EXCHANGE OFFER
Based upon interpretations contained in letters issued to third parties by
the staff of the SEC, the Company believes that, generally, any Holder of Old
Notes (other than a broker-dealer, as set forth below, and any Holder who is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who exchanges its Old Notes for New Notes pursuant to the Exchange Offer
may offer such New Notes for resale, resell such New Notes, or otherwise
transfer such New Notes without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided such New Notes are acquired
in the ordinary course of the Holder's business and such Holder has no
arrangement or understanding with any person to participate in a distribution of
such New Notes. Eligible Holders wishing to accept the Exchange Offer must
represent to the Company in the Letter of Transmittal that such conditions have
been met and must represent, if such Holder is not a broker-dealer, or is a
broker-dealer but will not receive New Notes for its own account in exchange for
Old Notes, that neither such Holder nor the person receiving such New Notes, if
other than the Holder, is engaged in or intends to participate in the
distribution of such New Notes. Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes must represent that the Old Notes
tendered in exchange therefor were acquired as a result of market-making
activities or other trading activities and must acknowledge that it will deliver
a prospectus in connection with any resale of such New Notes. See "Plan of
Distribution". To comply with the securities laws of certain jurisdictions, it
may be necessary to qualify for sale or register the New Notes prior to offering
or selling such New Notes. The Company does not currently intend to take any
action to register or qualify the New Notes for resale in any such
jurisdictions. If a Holder of Old Notes does not exchange such Old Notes for New
Notes pursuant to the Exchange Offer, such Old Notes will continue to be subject
to the restrictions on transfer contained in the legend thereon. In general, the
Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. Any holder who tenders
in the Exchange Offer with the intention to participate, or for the purpose of
participating, in a distribution of New Notes could not rely on the position of
the staff of the SEC enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988) or similar-no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements in such instance may result in such holder incurring liability
under the Securities Act for which the holder is not indemnified by the Company.
See "The Exchange Offer-Consequences of Failure to Exchange" and "Description of
Notes-Registration Rights."
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New 8.50% Notes and the Old 8.50% Notes are identical in
all material respects, and the terms of the New 8.875% Debentures and the Old
8.875% Debentures are identical in all material respects, in each case except
that the offer of the New Notes will have been registered under the Securities
Act and, therefore, the New Notes will not be subject to certain transfer
restrictions, registration rights and related provisions applicable to the Old
Notes.
NOTES OFFERED............ Up to $375 million aggregate principal amount of
8.50% Senior Subordinated Exchange Notes due 2007
and up to $125 million aggregate principal amount of
8.875% Senior Subordinated Exchange Debentures due
2027.
MATURITY DATE............ The 8.50% Notes will mature on November 1, 2007 and
the 8.875% Debentures will mature on November 1,
2027.
INTEREST RATE............ The 8.50% Notes will bear interest at 8.50% per
annum and the 8.875% Debentures will bear interest
at 8.875% per annum.
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The New Notes will bear interest from October 29,
1997. Holders of Old Notes whose Old Notes are
accepted for exchange will be deemed to have waived
the right to receive any payment in respect of
interest on such Old Notes accrued from October 29,
1997 to date of the issuance of the New Notes.
Consequently, holders who exchange their Old Notes
for New Notes will receive the same interest payment
on May 1, 1998 (the first interest payment date with
respect to the Old Notes and the New Notes) that
they would have received had they not accepted the
Exchange Offer.
INTEREST PAYMENT DATES... May 1 and November 1, commencing May 1, 1998.
OPTIONAL REDEMPTION BY THE
COMPANY................ The 8.50% Notes may not be redeemed prior to
November 1, 2002. On and after that date, the 8.50%
Notes may be redeemed at any time, in whole or in
part, on not less than 30 nor more than 60 days'
notice at the prices set forth herein.
The 8.875% Debentures may not be redeemed prior to
November 1, 2004. On and after that date, the 8.875%
Debentures may be redeemed at any time, in whole or
in part, on not less than 30 nor more than 60 days'
notice at the prices set forth herein.
In addition, prior to November 1, 2000, in the event
that the Company consummates one or more offerings
of its Qualified Capital Stock, the Company may at
its option use all or a portion of the net cash
proceeds from such offerings to redeem up to 33% of
the original aggregate principal amount of the 8.50%
Notes at a cash redemption price equal to 108.500%
of the principal amount thereof and up to 33% of the
original aggregate principal amount of the 8.875%
Debentures at a cash redemption price equal to
108.875% of the principal amount thereof, in each
case, plus accrued and unpaid interest thereon, if
any, to the redemption date; provided that at least
$100 million of the original aggregate principal
amount of the 8.50% Notes and $83.75 million of the
original aggregate principal amount of the 8.875%
Debentures, as the case may be, remains outstanding
thereafter.
MANDATORY SINKING FUND PAY-
MENTS.................. The 8.50% Notes are not subject to a sinking fund.
The 8.875% Debentures are subject to mandatory
redemption on a pro rata basis through operation of
a mandatory sinking fund on November 1 of each year,
commencing on November 1, 2008, to and including
November 1, 2026, according to the sinking fund
payments set forth herein. The sinking fund
redemption price is 100% of the principal amount of
the 8.875% Debentures being redeemed, together with
interest accrued to the date fixed for redemption.
RANKING.................. The Notes will be general unsecured obligations of
the Company and will be subordinated in right of
payment to all Senior Debt of the Company. As of
September 30, 1997, on a pro forma basis after
giving effect to the Adjustments, the Company had
approximately $207 million in aggregate principal
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<PAGE>
amount of Senior Debt. In addition, the Company's
subsidiaries had approximately $4.0 billion in
aggregate amount of liabilities to which the Notes
are effectively subordinated.
CHANGE OF CONTROL OFFER.. Upon a Change of Control, each Holder of the Notes
shall have, subject to certain conditions, the right
to require that the Company repurchase such Holder's
Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest to the date of purchase
in accordance with the procedures set forth in the
Indenture (as defined herein) for the Notes. If a
Change of Control occurs, the subordination
provisions of the Notes require Senior Debt to be
repaid prior to the purchase of any tendered Notes.
Due to the highly leveraged nature of the Company,
there can be no assurance that, upon a Change of
Control, the Company will be able to fund the
purchase of the Notes. See "Description of Notes --
Covenants -- Repurchase of Notes Upon a Change of
Control."
PRINCIPAL COVENANTS...... The Indenture for the Notes will restrict, among
other things, the ability of the Company and its
Restricted Subsidiaries (as defined herein) to (i)
incur additional indebtedness, (ii) pay dividends
and make other distributions, (iii) make certain
investments, (iv) engage in unrelated businesses,
(v) create encumbrances to secure Debt that is pari
passu with or subordinated to the Notes, (vi) engage
in certain transactions with affiliates, (vii)
dispose of certain assets or (viii) merge or
consolidate with or into, or sell or otherwise
transfer their properties and assets as an entirety
to, another entity. See "Description of Notes --
Covenants."
RISK FACTORS
Prospective purchasers of the Notes should carefully consider the specific
matters set forth under "Risk Factors" as well as the other information and data
included, or incorporated by reference, in this Prospectus prior to making an
investment in the Notes.
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<PAGE>
RISK FACTORS
In addition to the other matters described in this Prospectus, Holders of
Old Notes should carefully consider the following risk factors before accepting
the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to
the Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in letters issued to third parties by
the staff of the SEC, New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold or otherwise
transferred by each Holder thereof (other than a broker-dealer, as set forth
below, and any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes. Eligible Holders wishing to
accept the Exchange Offer must represent to the Company in the Letter of
Transmittal that such conditions have been met and must represent, if such
Holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, that neither such Holder
nor the person receiving such New Notes, if other than the Holder, is engaged in
or intends to participate in the distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must represent that the Old Notes tendered in exchange therefor
were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with the resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 90 days after the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." However, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered or sold unless they have been registered or qualified for
sale in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any such
jurisdictions. In addition, the tender of Old Notes pursuant to the Exchange
Offer will reduce the principal amount of the Old Notes outstanding, which may
have an adverse effect upon, and increase the volatility of, the market price of
the Old Notes due to a reduction in liquidity.
EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and avoid the restrictions on Old
Notes, each Holder of Old Notes must transmit a properly completed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to the Exchange Agent at one of the addresses set forth below under
"Exchange Agent") on or prior to the Expiration Date (or comply with the
guaranteed delivery procedures described below on or before the Expiration
Date). In addition, (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if
such procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date or (iii) the Holder must comply with the guaranteed
delivery procedures described below. See "The Exchange Offer."
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<PAGE>
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 Notes will be subordinated to all existing and future Senior Debt,
including, but not limited to, the amounts outstanding under the Company's $425
million Revolver. As of September 30, 1997, on a pro forma basis after giving
effect to the Adjustments, the Company had approximately $207 million in
aggregate principal amount of 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
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 Notes will be
entitled to receive any payment in respect of the principal of, premium, if any,
or interest on such Notes. No payments on account of principal, premium, if any,
or interest in respect of the Notes may be made if there shall have occurred and
be continuing a default in any payment under any Senior Debt or during certain
periods when an event of default under certain Senior Debt permits the lenders
thereunder to accelerate the maturity thereof. See "Description of Notes --
Subordination."
The Notes will be effectively subordinated to the indebtedness and other
obligations (including trade payables) of the Company's subsidiaries. At
September 30, 1997, on a pro forma basis after giving effect to the Adjustments,
the indebtedness and obligations of the Company's subsidiaries would have
aggregated approximately $4.0 billion. The ability of the Company to pay
principal of, premium, if any, and interest on the Notes 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 Indenture for the Notes
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 Notes 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 Notes. 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 Notes 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 and preferred stock issued by such subsidiary). The Company currently
conducts substantially all of its operations through its subsidiaries.
DOING BUSINESS OUTSIDE THE UNITED STATES
The Company's involvement in the development of new projects and the
acquisition of existing plants in locations outside the United States is
increasing and most of the Company's current development and acquisition
activities are for projects and plants outside the United States. The Company,
through subsidiaries, affiliates and joint ventures, has ownership interests in
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
16
<PAGE>
restrictions, currency inconvertibility, political instability, civil unrest,
and expropriation) and other credit quality, liquidity or structural issues that
have the potential to cause substantial delays in respect of or material
impairment of the value of the project being developed or operated, which AES
may not be capable of fully insuring or hedging against. The ability to obtain
financing on a commercially acceptable non-recourse basis in developing nations
may also require higher investments by the Company than historically have been
the case. In addition, financing in countries with less than investment grade
sovereign credit ratings may also require substantial participation by
multilateral financing agencies. There can be no assurance that such financing
can be obtained when needed.
The uncertainty of the legal environment in certain countries in which the
Company, its subsidiaries and its affiliates are or in the future may be
developing, constructing or operating could make it more difficult for the
Company to enforce its respective rights under agreements relating to such
projects. In addition, the laws and regulations of certain countries may limit
the Company's ability to hold a majority interest in some of the projects that
it may develop or acquire. International projects owned by the Company may, in
certain cases, be expropriated by applicable governments. Although AES may have
legal recourse in enforcing its rights under agreements and recovering damages
for breaches thereof, there can be no assurance that any such legal proceedings
will be successful.
COMPETITION
The global power production market is characterized by numerous strong and
capable competitors, many of whom may have extensive and diversified
developmental or operating experience (including both domestic and international
experience) and financial resources similar to or greater than the Company.
Further, in recent years, the power production industry has been characterized
by strong and increasing competition with respect to both obtaining power sales
agreements and acquiring existing power generation assets. In certain markets,
these factors have caused reductions in prices contained in new power sales
agreements and, in many cases, have caused higher acquisition prices for
existing assets through competitive bidding practices. The evolution of
competitive electricity markets and the development of highly efficient
gas-fired power plants have also caused, or are anticipated to cause, price
pressure in certain power markets where the Company sells or intends to sell
power. There can be no assurance that the foregoing competitive factors will not
have a material adverse effect on the Company.
DEVELOPMENT UNCERTAINTIES
The majority of the projects that AES develops are large and complex and
the completion of any such project is subject to substantial risks. Development
can require the Company to expend significant sums for preliminary engineering,
permitting, legal and other expenses in preparation for competitive bids which
the Company may not win or before it can be determined whether a project is
feasible, economically attractive or capable of being financed. Successful
development and construction is contingent upon, among other things, negotiation
on terms satisfactory to the Company of engineering, construction, fuel supply
and power sales contracts with other project participants, receipt of required
governmental permits and consents and timely implementation and satisfactory
completion of construction. There can be no assurance that AES will be able to
obtain new power sales contracts, overcome local opposition, if any, obtain the
necessary site agreements, fuel supply and ash disposal agreements, construction
contracts, steam sales contracts, licenses and certifications, environmental and
other permits and financing commitments necessary for the successful development
of its projects. There can be no assurance that development efforts on any
particular project, or the Company's efforts generally, will be successful. If
these development efforts are not successful, the Company may abandon a project
under development. At the time of abandonment, the Company would expense all
capitalized development costs incurred in connection therewith and could incur
additional losses associated with any related contingent liabilities. The future
growth of the Company is dependent, in part, upon the demand for significant
amounts of additional electrical generating capacity and its ability to obtain
contracts to supply portions of this capacity. Any material unremedied delay in,
or unsatisfactory completion of, construction of the Company's projects could,
under certain circumstances, have an adverse effect on the Company's ability to
meet its obligations, including the payment of principal of, premium, if any and
interest on the Notes. 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."
17
<PAGE>
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 the ESEBA Acquisition,
the Destec Acquisition, the CEMIG Acquisition and the CEEE Acquisition in which
the Company invested an aggregate of approximately $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 supply
businesses it may seek to acquire may require substantial capital investment.
Continued access to capital with acceptable terms is necessary to assure the
success of future projects and acquisitions. AES has substantially utilized
project financing loans to fund the capital expenditures associated with
constructing and acquiring its electric power plants and related assets. Project
financing borrowings have been substantially non-recourse to other subsidiaries
and affiliates and to AES as the parent company and are generally secured by the
capital stock, physical assets, contracts and cash flow of the related project
subsidiary or affiliate. The Company intends to continue to seek, where
possible, such non-recourse project financing in connection with the assets
which the Company or its affiliates may develop, construct or acquire. However,
depending on market conditions and the unique characteristics of individual
projects, such financing may not be available or the Company's traditional
providers of project financing, particularly multinational commercial banks, may
seek higher borrowing spreads and increased equity contributions.
Furthermore, because of the reluctance of commercial lending institutions
to provide non-recourse project financing (including financial guarantees) in
certain less developed economies, the Company, in such locations, has and will
continue to seek direct or indirect (through credit support or guarantees)
project financing from a limited number of multilateral or bilateral
international financial institutions or agencies. As a precondition to making
such project financing available, these institutions may also require
governmental guarantees of certain project and sovereign related risks.
Depending on the policies of specific governments, such guarantees may not be
offered and as a result, AES may determine that sufficient financing will
ultimately not be available to fund the related project.
In addition to the project financing loans, if available, AES provides a
portion, or in certain instances all, of the remaining long-term financing
required to fund development, construction, or acquisition. These investments
have generally taken the form of equity investments or loans, which are
subordinated to the project financing loans. The funds for these investments
have been provided by cash flows from operations and by the proceeds from
borrowings under the short-term credit facilities and issuances of senior
subordinated notes, convertible debentures and common stock of the Company.
The Company's ability to arrange for financing on either a fully recourse
or a substantially non-recourse basis and the costs of such capital are
dependent on numerous factors, including general economic and capital market
conditions, the availability of bank credit, investor confidence in the Company,
the continued success of current projects and provisions of tax and securities
laws which are conducive to raising capital in this manner. Should future access
to capital not be available, AES may decide not to build new plants or acquire
existing facilities. While a decision not to build new plants or acquire
existing facilities would not affect the results of operations of AES on its
currently operating facilities or facilities under construction, such a decision
would affect the future growth of AES.
DEPENDENCE ON UTILITY CUSTOMERS AND CERTAIN PROJECTS
The nature of most of AES's power projects is such that each facility
generally relies on one power sales contract with a single customer for the
majority, if not all, of its revenues over the life of the power sales contract.
During 1996, five customers, including CL&P, a subsidiary of Northeast
Utilities, ac-
18
<PAGE>
counted 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 Ba2/BB and S&P has placed CL&P on watch
for possible downgrade. As a result of regulatory action by the Public Service
Commission of New Hampshire, Moody's and S&P recently downgraded the senior
unsecured debt of Northeast Utilities, the parent of CL&P, from Ba2/BB to B1/B+
and S&P has 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 of 1935, 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.
19
<PAGE>
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.
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 the outstanding AES 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 the
outstanding AES 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.
20
<PAGE>
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.
LACK OF PUBLIC MARKET
The New Notes are being offered to the Holders of the Old Notes. The Old
Notes were issued on October 29, 1997 to a limited number of institutional
investors. The New Notes are new securities for which there currently is no
market. The Company does not intend to apply for listing of the Notes on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System. There can be no assurance that an
active trading market for the New Notes will develop. If a trading market
develops for the New Notes, future trading prices of such securities will depend
on many factors, including prevailing interest rates, the Company's results of
operations and financial condition and the market for similar securities.
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 Notes
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
Notes, (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 Notes and AES (a) was insolvent, (b) was rendered insolvent by
reason of the issuance of the Notes, (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 Notes. Among other things, a legal challenge of the Notes
on fraudulent conveyance grounds may focus on the benefits, if any, realized by
AES as a result of the issuance by AES of the Notes.
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 Notes.
Management believes that, for purposes of all such insolvency, bankruptcy
and fraudulent transfer or conveyance laws, the Notes 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 Notes 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.
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes certain selected consolidated financial
data, which should be read in conjunction with the Company's consolidated
financial statements and related notes incorporated by reference herein. The
selected consolidated financial data as of and for each of the five years in the
period ended December 31, 1996 have been derived from the audited consolidated
financial statements of the Company. The consolidated financial statements as of
December 31, 1995 and 1996, and for each of the three years inthe period ended
December 31, 1996, and the independent auditors' report thereon, are
incorporated by reference herein. The selected financial data presented below as
of September 30, 1996 and 1997 and for the nine months ended September 30, 1996
and 1997 are derived from the unaudited consolidated financial statements of the
Company. The results of operations for the nine months ended September 30, 1997
are not necessarily indicative of the results to be expected for the full year.
The Company believes that the unaudited information for the nine months ended
September 30, 1996 and 1997 contain all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the operating
results for such periods.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1996 1997
----------- ----------------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
In millions, except ratio and per share data
STATEMENT OF OPERATIONS DATA:
Revenues:
Sales ...................................... $ 394 $ 508 $ 514 $ 672 $ 824 $ 545 $ 871
Services ................................... 7 11 19 7 11 6 9
--------- --------- --------- --------- --------- --------- ---------
Total revenues ........................... 401 519 533 679 835 551 880
--------- --------- --------- --------- --------- --------- ---------
Operating cost and expenses:
Cost of sales .............................. 222 257 252 388 495 315 567
Cost of services ........................... 6 9 13 6 7 6 9
Selling, general and administrative ex-
penses 18 35 32 32 35 23 25
Provision to reduce carrying value of as-
sets ..................................... -- 22 -- -- 20 -- 19
--------- --------- --------- --------- --------- --------- ---------
Total operating costs and expenses ....... 246 323 297 426 557 344 620
--------- --------- --------- --------- --------- --------- ---------
Operating income ............................ 155 196 236 253 278 207 260
Other income and (expense):
Interest expense ........................... (99) (128) (125) (127) (144) (97) (154)
Interest income ............................ 8 11 22 27 24 16 28
Equity in earnings of affiliates (net of
income taxes) ............................ 2 10 12 14 35 16 58
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes, minority
interest and extraordinary item .......... 66 89 145 167 193 142 192
Income taxes ............................... 9 18 44 57 60 47 50
Minority interest .......................... 1 -- 3 3 8 6 10
--------- --------- --------- --------- --------- --------- ---------
Net income before extraordinary item ....... 56 71 98 107 125 89 132
Extraordinary item ......................... -- -- 2 -- -- -- (3)
--------- --------- --------- --------- --------- --------- ---------
Net income ................................. $ 56 $ 71 $ 100 $ 107 $ 125 $ 89 $ 129
========= ========= ========= ========= ========= ========= =========
Net income per share before extraordinary
item...................................... $ 0.40 $ 0.49 $ 0.65 $ 0.71 $ 0.81 $ 0.58 $ 0.78
========= ========= ========= ========= ========= ========= =========
Net income per share ....................... $ 0.40 $ 0.49 $ 0.66 $ 0.71 $ 0.81 $ 0.58 $ 0.76
========= ========= ========= ========= ========= ========= =========
Weighted average number of common
and common equivalent shares ............. 138.8 146.0 151.6 151.8 154.6 153.1 169.0
Ratio of earnings to fixed charges(1) ...... 1.37 x 1.62 x 2.08 x 2.18 1.83 x 2.04 x 1.45 x
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
In millions, except ratios
BALANCE SHEET DATA:
Total assets ............................... $ 1,552 $ 1,687 $ 1,915 $ 2,341 $ 3,622 $ 3,419 $ 6,568
Revolving bank loan (current) .............. -- -- -- 50 88 89 --
Project financing debt (current) ........... 71 79 61 84 110 243 533
Revolving bank loan (long term) ............ -- -- -- -- 125 125 --
Project financing debt (long term) ......... 1,146 1,075 1,019 1,098 1,558 1,301 2,814
Other notes payable (long term) ............ 50 125 125 125 325 325 573
Company-obligated mandatorily redeem-
able preferred securities of AES Trust I... -- -- -- -- -- -- 250
Stockholders' equity ....................... 177 309 401 549 721 689 1,444
Debt to total capitalization plus short term
debt ratio:
Project financing debt .................... 83.2 % 72.4 % 67.0 % 61.6 % 57.0% 55.7% 59.6%
Parent debt(2) ............................ 3.4 7.9 7.8 9.1 18.4 19.4 10.2
-------- -------- -------- -------- -------- -------- --------
Total ................................. 86.6 % 80.3 % 74.8 % 70.7 % 75.4% 75.1% 69.8%
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FOUR QUARTERS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
----------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
In millions, except ratios
OTHER DATA:
Net cash provided by operating activ-
ities .............................. $ 76 $ 123 $ 164 $ 197 $ 182 $ 178 $ 152
Consolidated EBITDA(3)(4) ........... 45 30 68 110 193 121 234
Consolidated Fixed Charges(3) ....... 3 7 11 12 40 26 69
Fixed Charge Ratio(3) ............... 15.0 x 4.3 x 6.2 x 9.2 x 4.8 x 4.7 x 3.4 x
</TABLE>
- ----------
(1) For purposes of this ratio, earnings include income before taxes and fixed
charges excluding capitalized interest. Fixed charges include interest,
whether capitalized or expensed, and amortization of deferred financing
costs, whether capitalized or expensed.
(2) Parent debt represents obligations of the Company, as parent. It does not
include non-recourse obligations of the Company's subsidiaries.
(3) The other data presented for "Consolidated EBITDA," "Consolidated Fixed
Charges" and "Fixed Charge Ratio" is calculated in accordance with the
respective definitions of such terms in the Indenture and set forth herein
under "Description of Notes -- Certain Definitions." As of September 30,
1997, on a pro forma basis after giving effect to the Adjustments,
Consolidated EBITDA, Consolidated Fixed Charges, and Fixed Charge Ratio were
$246 million, $99 million, and 2.5x, respectively.
(4) Consolidated EBITDA is a concept defined in the Indenture and is not a
substitute for cash flows from operating activities as defined by generally
accepted accounting principles.
23
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ --------------
1992 1993 1994 1995 1996 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 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 September 30, 1997, no shares
of Preferred Stock were issued or outstanding, and during that period the
Company did not pay any Preferred Stock dividends.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. The net proceeds from the offering of the Old Notes of
approximately $486 million were used, together with approximately $291 million
from the TECONS offering to repay approximately $770 million of the indebtedness
incurred in connection with the CEEE Acquisition (consisting of approximately
$220 million under the Revolver and $550 million under the CEEE Bridge Loan) and
for general corporate purposes, including other potential acquisitions.
24
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on February __, 1997; provided, however, that if the Company, in
its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $375,000,000 aggregate principal amount
of the Old 8.50% Notes and $125,000,000 aggregate principal amount of the Old
8.875% Debentures was outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about the date set forth on the cover
page to all Holders of Old Notes at the addresses set forth in the security
register with respect to Old Notes maintained by the Trustee. The Company's
obligations to accept Old Notes for exchange pursuant to the Exchange Offer is
subject to certain conditions as set forth under "Certain Conditions to the
Exchange Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance of any Old Notes, by giving oral or written notice of
such extension to the Exchange Agent and notice of such extension to the Holders
as described below. During any such extension, all Old Notes previously tendered
will remain subject to the Exchange Offer and may be accepted for exchange by
the Company. Any Old Notes not accepted for exchange for any reason will be
returned without expense to the tendering Holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the Holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the SEC thereunder.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to The First National Bank of Chicago
(the "Exchange Agent") at one of the addresses set forth below under "Exchange
Agent" on or prior to the Expiration Date (or comply with guaranteed delivery
procedures described below on or prior to the Expiration Date). In addition, (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(The "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the Holder must comply with the guaranteed delivery
procedures described below.
25
<PAGE>
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS AND, EXCEPT AS
OTHERWISE PROVIDED BELOW, WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED. IF
SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD
NOTES SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered Holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than
the person signing the Letter of Transmittal, the Old Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered Holder with the
signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of its authority to so act
must be submitted.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right in its
sole discretion to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any Holder
who seeks to tender Old Notes in the Exchange Offer). The interpretation of the
terms and conditions of the Exchange Offer as to any particular Old Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with the tenders of
Old Notes for exchange must be cured within such reasonable period of time as
the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall any
of them incur any liability for failure to give such notification.
By tendering, each Holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, (ii) neither the Holder nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not a
broker-dealer, or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the Holder not any such other person
is engaged in or intends to participate in the distribution of such New Notes
and (iv) neither the Holder nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company. If the tendering
Holder is a broker-dealer that will receive New Notes for its owns account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, it will be required to acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
26
<PAGE>
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of the Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Notes for exchange.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "Certain Conditions to the Exchange Offer" below. For purposes of
the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral or
written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, a properly completed and duly executed Letter of Transmittal
and all other required documents. If any tendered Old Notes are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if
certificates representing Old Notes are submitted for a greater principal amount
than the Holder desires to exchange, such unaccepted or non-exchanged Old Notes
will be returned without expense to the tendering Holder thereof (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described below, such non-exchanged Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from October 29, 1997, payable
semiannually on May 1 and December 1 of each year, commencing on May 1, 1998, at
the rate of 8.50% per annum in the case of the New 8.50% Notes and at the rate
of 8.875% per annum in the case of the 8.875% Debentures. Holders of Old Notes
whose Old Notes are accepted for exchange will be deemed to have waived the
right to receive any payment in respect of interest on the Old Notes accrued
from October 29, 1997 until the date of the issuance of the New Notes.
Consequently, holders who exchange their Old Notes for New Notes will receive
the same interest payment on May 1, 1998 (the first interest payment date with
respect to the Old Notes and the New Notes) that they would have received had
they not accepted the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer promptly after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Notes by causing the Book-Entry Transfer
Facility to transfer such Notes into the Exchange Agent's account in accordance
with the Book-Entry Transfer Facility's Automated Tender Offer Program ("ATOP")
procedures for transfer. However, the exchange for the Notes so tendered will
only be made after timely confirmation of such book-entry transfer of Notes into
the Exchange Agent's account, and timely receipt by the Exchange Agent of an
Agent's Message (as such term is defined in the next sentence) and any other
documents required by the Letter of Transmittal. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility and received by
the Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from a participant tendering Notes that are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such participant.
27
<PAGE>
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) on or prior to the Expiration Date, the
Exchange Agent receives from such Eligible Institution a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form provided
by the Company (by telegram, facsimile transmission, mail or hand delivery),
setting forth the name and address of the Holder of Old Notes and the amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates of all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, a properly completed and duly executed Letter
of Transmittal (or a facsimile thereof), and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written, telegraphic or facsimile
notice of withdrawal must be received by the Exchange Agent at one of the
addresses set forth below under "Exchange Agent." Any such notice of withdrawal
must specify the name of the person having tendered the Old Notes to be
withdrawn, identify the Old Notes to be withdrawn (including the principal
amount of such Old Notes), and (where certificates for Old Notes have been
transmitted) specify the name in which such Old Notes are registered, if
different from that of the withdrawing Holder, must include a statement that
such Holder is withdrawing its election to have such Old Notes exchanged and
must be signed by the Holder in the same manner as the original signature on the
Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Company than the person withdrawing
the tender has succeeded to the beneficial ownership of the Old Notes being
withdrawn. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing Holder must also submit the serial numbers of the
particular certificates to be withdrawn. If Old Notes have been tendered
pursuant to the procedure for book-entry transfer described above, any note of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Old Notes and otherwise
comply with the procedures of such facility. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the Holder thereof without cost to such Holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend
28
<PAGE>
the Exchange Offer, if at any time before the acceptance of such Old Notes for
exchange or the exchange of the New Notes for such Old Notes, such acceptance or
issuance would violate applicable law or any interpretation of the staff of the
SEC.
The foregoing condition is for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise the foregoing rights shall not be deemed a waiver of any such right
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA").
EXCHANGE AGENT
The First National Bank of Chicago has been appointed as the Exchange Agent
for the Exchange Offer. All executed Letters of Transmittal should be directed
to the Exchange Agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or of
the Letter of Transmittal and requests for Notices of Guaranteed Delivery should
be directed to the Exchange Agent, addressed as follows:
<TABLE>
<S> <C> <C>
THE FIRST NATIONAL BANK OF CHICAGO
Exchange Agent
By Mail: Facsimile Transmissions: By Hand or Overnight Delivery:
(Registered or Certified Mail (Eligible Institutions Only) The First National Bank of Chicago
Recommended) (212) 240-8938 c/o First Chicago Trust Company
The First National Bank of Chicago of New York
c/o First Chicago Trust 14 Wall Street
Company of New York 8th Floor, Window 2
14 Wall Street New York, New York 10005
8th Floor, Window 2
New York, New York 10005
To Confirm by Telephone or for Information Call:
(212) 240-8801
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers and
regular employees of the Company and its affiliates. No additional compensation
will be paid to any such officers and employees who engage in soliciting
tenders. The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be $ .
29
<PAGE>
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that (i) Holders who
instruct the Company to register New Notes in the name of, or request that Old
Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering Holder will be responsible for the
payment of any applicable transfer tax thereon and (ii) if a transfer tax is
imposed for any reason other than the transfer of Old Notes to the Company or
its order pursuant to the Exchange Offer, the Holder will be responsible for the
payment of any such taxes (whether imposed on the registered Holder or any other
person).
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
intend to register the Old Notes under the Securities Act. The Company believes
that, based upon interpretations contained in letters issued to third parties by
the staff of the SEC, New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold or otherwise
transferred by each Holder thereof (other than a broker-dealer, as set forth
below, and any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person to
participate in the distribution of such New Notes. If any Holder has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on
the applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes must acknowledge that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution." In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the New Notes may not be offered or sold
unless they have been registered or qualified for sale in such jurisdiction or
an exemption from registration or qualification is available and is complied
with. The Company does not currently intend to take any action to register or
qualify the New Notes for resale in any such jurisdictions.
30
<PAGE>
DESCRIPTION OF NOTES
The New 8.50% Notes and the New 8.875% Debentures will each be a separate
series of debt securities to be issued under an Indenture (hereinafter referred
to as the "Indenture") dated as of October 29, 1997, between the Company and The
First National Bank of Chicago (hereinafter referred to as the "Trustee") as
amended by the First Supplemental Indenture dated as of November 21, 1997,
copies of each of which have been filed as an exhibit to the Registration
Statement of which this Prospectus constitutes a part. The following summary of
certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Indenture, including the definitions of certain terms therein and those
terms made a part thereof by the Trust Indenture Act of 1939, as amended.
Wherever particular defined terms of the Indenture are referred to, such defined
terms shall be incorporated herein by reference. A summary of certain defined
terms used in the Indenture and referred to in the following summary description
of the Notes is set forth below under "Certain Definitions". The following
summary of certain provisions of the Registration Rights Agreement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Registration Rights Agreement which
has been filed as an exhibit to the Registration Statement of which this
Prospectus constitutes a part.
The terms of the New 8.50% Notes are identical in all material respects to
the terms of the Old 8.50% Notes and the terms of the 8.875% Debentures are
identical in all material respects to the terms of the Old 8.875% Debentures, in
each case except for certain transfer restrictions and registration rights
relating to the Old Notes and except that, if the Exchange Offer is not
consummated by April 27, 1998, Holders that have complied with their obligations
under the Registration Rights Agreements will be entitled, subject to certain
exceptions, to liquidated damaged in an amount equal to 0.5% per annum held by
such Holder until July 26, 1998 and increasing to an amount equal to 1.0% per
annum thereafter until the consummation of the Exchange Offer.
GENERAL
The Notes will be general unsecured obligations of the Company subordinated
in right of payment to all Senior Debt of the Company. Initially the 8.50% Notes
will be limited to $375 million aggregate principal amount and the 8.875%
Debentures will be limited to $125 million aggregate principal amount. However,
the Company has the right to issue additional 8.50% Notes and additional 8.875%
Debentures under the Indenture with the same terms including, without
limitation, interest and interest payment rates, as the Notes offered hereby.
Any such additional 8.50% Notes or 8.875% Debentures issued from time to
time by the Company shall constitute part of the same series as the 8.50% Notes
or 8.875% Debentures, as the case may be, offered hereby.
Principal of, and premium, if any, on, the Notes will be payable, and the
Notes may be exchanged or transferred, at the office or agency of the Trustee.
Interest at the annual rate set forth on the cover page hereof will accrue from
October 29, 1997, will be payable semi-annually on May 1 and November 1
commencing May 1, 1998, to the Holders thereof at the close of business on the
preceding April 15 and October 15, respectively, and, unless other arrangements
are made, will be paid by checks mailed to such Holders.
The Notes will be issued only in fully registered form in denominations of
$1,000 and any multiple of $1,000. No service charge shall be payable for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
31
<PAGE>
OPTIONAL REDEMPTION
The 8.50% Notes will be redeemable, at the Company's option, in whole or in
part, at any time on or after November 1, 2002, and prior to maturity, upon not
less than 30 nor more than 60 days' prior notice, at the following redemption
prices (expressed in percentages of principal amount) ("Redemption Prices"),
plus accrued interest to the date of redemption, if redeemed during the 12-month
period commencing on or after November 1 of the years set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C> <C>
2002......................... 104.250%
2003......................... 102.833%
2004......................... 101.417%
</TABLE>
and, after November 1, 2005, at 100% of the principal amount.
The 8.875% Debentures will be redeemable, at the Company's option, in whole
or in part, at any time on or after November 1, 2004, and prior to maturity,
upon not less than 30 nor more than 60 days' prior notice, at a price equal to
the sum of (i) par plus accrued interest to the date of redemption plus (ii) the
"Make-Whole Amount" if any.
The term "Make-Whole Amount" shall mean, in connection with any optional
redemption of any 8.875% Debenture, the excess, if any, of (i) the aggregate
present value as of the date of such redemption of each dollar of principal
being redeemed and the amount of interest (exclusive of interest accrued to the
date of redemption) that would have been payable in respect of such dollar if
such prepayment had not been made, determined by discounting, on a semiannual
basis, such principal and interest at the Reinvestment Rate (determined on the
Business Day immediately preceding the date of such redemption) from the
respective dates on which such principal and interest would have been payable if
such prepayment had not been made, over (ii) the aggregate principal amount of
the 8.875% Debentures being redeemed.
The term "Reinvestment Rate" shall mean 0.50% (one-half of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the maturity of the principal being prepaid. If no maturity
exactly corresponds to such maturity, yields for the two published maturities
most closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purpose of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
The term "Statistical Release" shall mean the statistical release
designated "H.15(519)" or any successor publication which is published weekly by
the Federal Reserve System and which establishes yields on actively traded U.S.
government securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonably comparable index which shall be designated by the
Company.
In addition, prior to November 1, 2000 in the event that the Company
consummates one or more offerings of its Qualified Capital Stock, the Company
may at its option, use all or a portion of the proceeds therefrom to redeem up
to 33% of the original aggregate principal amount at maturity of the 8.50% Notes
at a cash redemption price equal to 108.500% of the principal amount thereof and
up to 33% of the original aggregate principal amount of the 8.875% Debentures at
a cash redemption price equal to 108.875% of the principal amount thereof, in
each case, plus accrued and unpaid interest thereon through the date of
repurchase; provided that at least $100 million of the original aggregate
principal amount of the 8.50% Notes and $83.75 of the original aggregate
principal amount of the 8.875% Debentures, as the case may be, remains
outstanding thereafter.
32
<PAGE>
MANDATORY SINKING FUND
The 8.875% Debentures are subject to mandatory redemption on a pro rata
basis on each November 1, commencing November 1, 2008, to and including November
1, 2026 (each, a "Mandatory Sinking Fund Redemption Date"). On each Mandatory
Sinking Fund Redemption Date, the Company shall redeem 8.875% Debentures with an
aggregate principal amount equal to $6.25 million (subject to adjustment as
described below, the "Mandatory Sinking Fund Payment Amount"); provided that the
Company's obligation to redeem 8.875% Debentures on any Mandatory Sinking Fund
Redemption Date shall be deemed satisfied to the extent that the Company
delivers or causes to be delivered to the Trustee for cancellation, on or prior
to such Mandatory Sinking Fund Redemption Date, 8.875% Debentures, if any,
acquired during the 12-month period preceding such Mandatory Sinking Fund
Redemption Date. The sinking fund redemption price is 100% of the principal
amount of the 8.875% Debentures being redeemed, together with interest accrued
to the Mandatory Sinking Fund Payment Date.
The Mandatory Sinking Fund Payment Amount shall be subject to adjustment in
the event that on or prior to any Mandatory Sinking Fund Redemption Date the
Company delivers or causes to be delivered to the Trustee for cancellation
8.875% Debentures with an aggregate principal amount in excess of the Mandatory
Sinking Fund Payment Amount for such next succeeding Mandatory Sinking Fund
Redemption Date, in which case the Mandatory Sinking Fund Payment Amount
applicable to each Mandatory Sinking Fund Redemption Date after the next
succeeding Mandatory Sinking Fund Redemption Date shall be adjusted to be the
quotient obtained by dividing (i) the aggregate principal amount of 8.875%
Debentures outstanding after giving effect to such cancellation by (ii) the
number of remaining Mandatory Sinking Fund Redemption Dates including the next
succeeding Mandatory Sinking Fund Redemption Date.
GLOBAL NOTES
The Notes will be issued in the form of one or more fully registered global
notes (each a "Global Note") deposited with the Depositary or a nominee thereof.
Unless and until it is exchanged in whole or in part for Notes in definitive
registered form, a Global Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor of the Depositary or a nominee of such successor.
Ownership of beneficial interests in a Global Note will be limited to
persons that have accounts with the Depositary ("Participants") or persons that
may hold interests through Participants. Upon the issuance of a Global Note, the
Depositary for such Global Note will credit, on its book-entry registration and
transfer system, the Participants' accounts with the respective principal
amounts of the Notes represented by such Global Note beneficially owned by such
Participants. Ownership of beneficial interests in such Global Note will be
shown on, and the transfer of such ownership interests will only be effected
through, records maintained by the Depositary (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
persons holding through Participants). The laws of some states may require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer, or pledge beneficial interests in Global Notes.
So long as the Depositary or its nominee is the owner of record of a Global
Note, the Depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Global Note will not be entitled to have the Notes represented by
such Global Note registered in their names, and will not receive or be entitled
to receive physical delivery of such Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note 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 Indenture. 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 Note desires to give or
take any action which
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a holder is entitled to give or take under the 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 Notes
represented by a Global Note 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 Note. None of the Company, the Trustee, or
any agent of the Company or agent of the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Global Note or for maintaining,
supervising, or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary, upon receipt of any payment of
principal, premium, if any, or interest in respect of such Global Note, will
immediately credit Participants' accounts with payments in amounts proportionate
to their respective beneficial interests in such Global Note as shown on the
records of the Depositary. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Note held through
such Participants will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participants.
If the Depositary notifies the Company that it is at any time unwilling or
unable to continue as Depositary or ceases to be eligible under applicable law,
and a successor Depositary eligible under applicable law is not appointed by the
Company within 90 days, the Company will issue such Notes in definitive form in
exchange for such Global Note. In addition, the Company may at any time and in
its sole discretion determine not to have any of the Notes represented by one or
more Global Notes and, in such event, will issue Notes in definitive form in
exchange for all of the Global Notes representing such Notes. Any Notes issued
in definitive form in exchange for a Global Note will be registered in such name
or names as the Depositary shall instruct the Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
Participants with respect to ownership of beneficial interests in such Global
Note.
SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL NOTES
So long as any Notes are represented by Global Notes registered in the name
of the Depositary or its nominee, such Notes will trade in the Depositary's
Same-Day Funds Settlement System, and secondary market trading activity in such
Notes will therefore be required by the Depositary to settle in immediately
available funds. No assurances can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
SUBORDINATION
The payment of principal of, Change of Control purchase price, premium, if
any, and interest on the Notes 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 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 Notes will be entitled to
receive any payment in respect of the principal of, Change of Control purchase
price, premium, if any, or interest on the Notes.
No payments on account of principal, Change of Control purchase price,
premium, if any, or interest in respect of the Notes may be made by the Company
if there shall have occurred and be continuing a default in any payment with
respect to Senior Debt. In addition, during the continuance of any other event
of default (other than a payment default) with respect to Designated Senior Debt
pursuant to which the maturity thereof may be accelerated, from and after the
date of receipt by the Trustee of
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written notice from the holders of such Designated Senior Debt or from an agent
of such holders, no payments on account of principal, Change of Control purchase
price, premium, if any, or interest in respect of the Notes may be made by the
Company for a period ("Payment Blockage Period") commencing on the date of
delivery of such notice and ending 179 days thereafter (unless 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 Notes 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 Notes.
As of September 30, 1997, on a pro forma basis after giving effect to the
Adjustments, the Company had approximately $207 million in aggregate principal
amount of Debt which would have constituted Senior Debt. The Company expects
from time to time to incur additional Debt constituting Senior Debt. Although
the Indenture contains limitations on the amount of Debt which the Company may
incur, the amount of such Debt could be substantial and, in any case, such Debt
may be Senior Debt. See "-- Covenants -- Limitation on Debt" below.
In addition, the Company currently conducts substantially all of its
operations through its Subsidiaries. The rights of the Company and its
creditors, including the Holders of the Notes, to participate in the
distribution of the assets of any Subsidiary upon any liquidation or
reorganization of such Subsidiary or otherwise will be effectively subordinated
to, and subject to, the prior claims of creditors of such Subsidiary, except to
the extent that the Company may itself be a creditor with recognized claims
against the Subsidiary. The ability of the Company to pay principal of, Change
of Control purchase price, premium, if any, and interest on the Notes 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 a Power Supply Business currently have in place, and the Indenture
will 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 and otherwise. As of September 30, 1997, on a pro forma basis
after giving effect to the Adjustments, the Company's Subsidiaries had
approximately $4.0 billion of indebtedness to which the Notes would have been
effectively subordinated. The Company expects its Subsidiaries from time to time
to incur additional Debt and the amount of such Debt could be substantial.
REGISTRATION RIGHTS
Holders of New Notes are not entitled in any registration rights with
respect to the New Notes. Holders of Old Notes are entitled to certain
registration rights pursuant to the Registration Rights Agreement. AES has
agreed with the Initial Purchasers pursuant to the terms of the Registration
Rights Agreement, for the benefit of the Holders of the Old Notes, that AES will
use its reasonable best efforts, to file and cause to become effective a
registration statement (the "Exchange Offer Registration Statement,") with
respect to a registered offer to exchange the Old Notes for an issue of notes of
AES with terms identical to the Old Notes (except that the New Notes will not
contain terms with respect to transfer restrictions or the additional interest
provisions described below). Upon such registration statement being declared
effective, AES shall offer the New Notes in return for surrender of the Old
Notes. The Exchange Offer shall remain open for not less than 20 business days
after the date notice of the Exchange Offer is mailed out to Holders of the Old
Notes. For each Old Note surrendered to AES under the Exchange Offer, the Holder
will receive a New Note of the same series and of equal principal amount. The
Registration Statement of which this Prospectus is a part constitutes the
Exchange Offer Registration Statement.
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In the event that applicable interpretations of the staff of the Commission
do not permit AES to effect the Exchange Offer, AES shall use its best efforts
to cause to become effective a shelf registration statement with respect to
resales of the Notes (a "Shelf Registration Statement") and to keep such Shelf
Registration Statement effective until the earliest of (i) two years after the
Closing Date, (ii) the time when the Notes registered thereunder can be sold by
non-affiliates of AES pursuant to Rule 144(k), or (iii) such time as all the
Notes have been sold thereunder, AES shall, in the event of such a shelf
registration, provide to each Holder copies of the prospectus, notify each
Holder when a registration statement for the Notes has become effective and take
certain other actions as are required to permit resales of the Notes.
In the event that (i) the Exchange Offer Registration Statement (or in the
event the Exchange Offer is not permitted under applicable law or Commission
policy, a Shelf Registration Statement) is not filed with the Commission on or
prior to the 90th day following the Closing Date, (ii) such Exchange Offer
Registration Statement is not declared effective by the Commission or a Shelf
Registration Statement is not filed with the Commission on or prior to the 150th
day following the Closing Date of the Notes or (iii) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective on or
prior to the 180th day following the Closing Date (each such event referred to
in clauses (i) through (iii), a "Registration Default"), then AES will pay
additional interest (in addition to the interest otherwise due on the Notes) to
each holder of the Notes during the first 90-day period immediately following
the occurrence of each such Registration Default in an amount equal to 0.5% per
annum increasing to an amount equal to 1.0% per annum thereafter. Such
additional interest will cease accruing on such Notes when the Registration
Default has been cured.
COVENANTS
Limitation on Debt
The Company will 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.
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 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 Sub-
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sidiary) 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.
For purposes of determining any particular amount of Debt under this
"Limitation on Debt" covenant, 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 "Limitation on Debt" covenant, (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.
Limitation on Restricted Subsidiary Debt
The Company will 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.
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 the "Limitation on Debt"
covenant described above; (iii) Debt Incurred to finance the development,
acquisition, construction, maintenance, working capital requirements in the
ordinary 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 the first paragraph of the
"Limitation on Debt" covenant described above and (y) the proceeds from such new
Debt are not to be used to make any Restricted Payments; (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 operat-
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ing 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 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.
For purposes of determining compliance with this "Limitation on Restricted
Subsidiary Debt" covenant, (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.
Limitation on Restricted Payments
The Company will not, and will 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 the first paragraph of the "Limitation on Debt" covenant described above
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
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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 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 covenant. 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 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. The
amount available to make Restricted Payments calculated in accordance with
clause (c) of the first sentence of this covenant is the same amount available
under the equivalent provision applicable to the Company's outstanding 10 1/4%
Senior Subordinated Notes due 2006 and 8 3/8% Senior Subordinated Notes due
2007.
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 the
foregoing covenant 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 the
foregoing covenant 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
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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.
Restricted Payments are defined in the Indenture to exclude Permitted
Payments which include Permitted Investments. See "Certain Definitions" below.
Limitation on Restricted Subsidiary Investments and Mergers
The Company will 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 the "Limitation on
Restricted Subsidiary Debt" covenant described above; 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 the
"Limitation on Restricted Subsidiary Debt" covenant described above.
Limitation on Business
The Company (a) will continue, and will 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) will continue, and will 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.
Limitations on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Company will not, and will 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.
This covenant shall not restrict or prohibit any encumbrances or
restrictions existing: (i) in connection with the Incurrence of any Debt
permitted under clause (iii), (vi), (vii), (x) or (xi) of the "Limitation on
Restricted Subsidiary Debt" covenant described above or with respect to any
portion thereof that is also Debt of the Company and permitted under the
"Limitation on Debt" covenant described above; 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,
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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 the "Limitation on
Restricted Subsidiary Debt" covenant described above, 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 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. The covenant shall not prevent the Company from granting
any Liens not expressly prohibited by this covenant.
Limitation on Additional Tiers of Senior Subordinated Debt
The Company will 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.
Limitation on Asset Dispositions
The Company will not make, and will 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 re-
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ceived 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 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
the "Limitation on Business" covenant described above; 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 covenant. To the extent that dividends
or 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 covenant.
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If the aggregate purchase price of Notes and other Debt tendered pursuant
to an Offer made pursuant to clause (ii)(z) in the first paragraph of this
covenant description 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 covenant 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.
The Company will make such Offer by mailing to each Holder of the Notes,
within 30 days from the receipt of Net Cash Proceeds, a written notice
specifying the purchase date, which shall be not less than 30 days nor more than
60 days after the date of such notice (the "Purchase Date") and shall contain
certain information concerning the business of the Company which the Company
believes in good faith will enable the Holders of the Notes to make an informed
decision. Holders electing to have their Notes purchased will be required to
surrender such Notes at least one Business Day prior to the Purchase Date. If at
the expiration of the offer period the aggregate principal amount of Notes
surrendered by Holders exceeds the amount available to purchase Notes, the
Company will select the Notes to be purchased on a pro rata basis.
In the event the Company is unable to purchase Notes from Holders in an
Offer because of provisions of applicable law, the Company need not make an
Offer. The Company shall then be obligated to use the Net Cash Proceeds in
accordance with clauses (ii)(x) or (y) in the first paragraph of this covenant
description.
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.
Repurchase of Notes Upon a Change of Control
Upon a Change of Control, each Holder of the Notes shall have, subject to
the provisions of "Subordination" above, 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. Certain of the events constituting a Change of Control under
the Notes will also constitute an event of default under the Company's Bank
Credit Agreement and, in any event, the right of Holders to receive the Change
of Control purchase price is subordinated in right of payment to the payment of
all Senior Debt, including Debt outstanding under the Bank Credit Agreement. As
of September 30, 1997, on a pro forma basis after giving effect to the
Adjustments, the Company had approximately $207 million in aggregate principal
amount of Debt which would have constituted Senior Debt. Furthermore, other
Senior Debt is permitted to be Incurred, provided certain Fixed Charge Ratios
are met. Due to the highly leveraged nature of the Company, there can be no
assurance that the Company will have sufficient funds to purchase tendered Notes
upon a Change of Control.
The Change of Control provisions may not be waived by the Trustee or by the
Board of Directors, and any modification thereof must be approved by each
Holder. Nevertheless, the Change of Control provisions will not necessarily
afford protection to Holders, including protection against an adverse effect on
the value of the Notes, in the event that the Company or its Restricted
Subsidiaries Incur additional Debt, whether through recapitalizations or
otherwise. Furthermore, the Change of Control provisions will not be applicable
in the event of certain transactions with Affiliates of the Company that are
approved by the Board of Directors. The Change of Control provisions will not
prevent a change in the Board of Directors which is approved by the then-present
members of the Board of Directors. See "Certain Definitions -- Change of
Control" below. With respect to a sale of assets, the phrase "all or
substantially all", which appears in the definition of Change of Control, has
not gained an established meaning. In interpreting this phrase, courts have made
subjective determinations, considering such factors as the value of the assets
conveyed and the proportion of an entity's income derived from such assets.
Accordingly, there may be uncertainty as to whether a Holder can determine
whether a Change of Control has occurred and can exercise any remedies such
Holder may have upon a Change of Control.
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Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder of the Notes 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 telegram, telex, facsimile transmission or
letter 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.
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
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 mail 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 will 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.
Limitations on Transactions with Affiliates
The Company will not, and will 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 the "Limitation on Restricted Payments" covenant described above, 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
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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 covenant 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 the
"Limitation on Restricted Payments" covenant described above or (e) the
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.
EVENTS OF DEFAULT
An Event of Default, as defined in the Indenture and applicable to the
8.50% Notes or the 8.875% Debentures, will occur with respect to the 8.50% Notes
or the 8.875% Debentures, as the case may be, if: (i) the Company defaults in
the payment of all or any part of principal, the Change of Control purchase
price or premium, if any, on any 8.50% Note or 8.875% Debenture, as the case may
be, 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 8.50% Note or 8.875% Debenture, as the case may be,
when the same becomes due and payable, and such default continues for a period
of 30 days; (iii) 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 (a) 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 (b) 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 the "Limitation on Debt" covenant described above; and
provided, further however, that, subject to certain provisions, 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; (iv) the Company defaults in the performance of
or breaches any other covenant or agreement of the Company in the Indenture with
respect to the Notes or under the Notes and such default or breach continues for
a period of 60 consecutive days after written notice by the Trustee or by the
Holders of 25% or more in aggregate principal amount of the Notes; (v) 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 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
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applicable 60 day period, incur at least $1 of Debt under the "Limitation on
Debt" covenant described above; (vi) a court having jurisdiction in the premises
enters a decree or order for (A) relief in respect of the Company or any of its
Material 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 Material Subsidiaries or for all or
substantially all of the property and assets of the Company or any of its
Material Subsidiaries or (C) the winding up or liquidation of the affairs of the
Company or any of its Material Subsidiaries and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (vii) the Company or any of its Material 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 Material
Subsidiaries or for all or substantially all of the property and assets of the
Company or any of its Material Subsidiaries or (C) effects any general
assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in clauses
(vi) or (vii) above that occurs with respect to the Company) occurs with respect
to the Notes and is continuing under the Indenture, then, and in each and every
such case either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding (or, in the case of an Event of
Default specified in clauses (i) or (ii) above, the Holders of not less than 25%
in the aggregate amount of the series so affected) 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
Notes to be immediately due and payable. Upon a declaration of acceleration,
such principal of, and accrued interest shall be immediately due and payable. If
an Event of Default specified in clauses (vi) or (vii) above occurs with respect
to the Company, the principal of, and accrued interest on the Notes then
outstanding shall ipso facto become and be immediately due and payable, subject
to the prior payment in full of all Senior Debt, 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 Notes may, by written notice to
the Company and to the Trustee, waive all past defaults with respect to the
Notes and rescind and annul a declaration of acceleration with respect to the
Notes and its consequences if (i) all existing Events of Default applicable to
the Notes, other than the nonpayment of the principal of, Change in Control
purchase price or premium, if any, and interest on the Notes 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.
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes 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 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 the Notes 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 the Notes. A
Holder may not pursue any remedy with respect to the Indenture or the Notes
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 the
outstanding Notes make a written request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer and, if requested, provide 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 at least a majority in aggregate principal amount of the
outstanding Notes do not give the Trustee a direction that is inconsistent with
the request. However, such limitations do not apply to the right of any Notes to
receive payment of the principal of, premium, if any, or interest on, such Notes
or to bring suit for the enforcement of any such payment, on or after the due
date expressed in the Notes, which right shall not be impaired or affected
without the consent of the Holder.
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The Indenture will require certain officers of the Company to 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 the Indenture. The Company will also be obligated to notify
the Trustee of any default or defaults in the performance of any covenants or
agreements under the Indenture.
MODIFICATION AND WAIVER
The Indenture provides that the Company and the Trustee may amend or
supplement the Indenture or the Notes without notice to or the consent of any
Holder: (i) to cure any ambiguity, defect, or inconsistency in the 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 the Indenture under the Trust Indenture Act of 1939, as
amended; (iv) to evidence and provide for the acceptance of appointment with
respect to the Notes of a successor Trustee; (v) to provide for uncertificated
Notes and to make all appropriate changes for such purpose; and (vi) to make any
change that does not materially and adversely affect the rights of any Holder.
The Indenture also provides that modifications and amendments of the
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 Notes; provided, however, that no such modification or amendment
may, without the consent of each Holder affected thereby, (i) change the stated
maturity of the principal of, or any installment of interest on, any Note, (ii)
reduce the principal amount of, or premium, if any, or interest on, any Note,
(iii) reduce the above-stated percentage of outstanding Notes the consent of
whose Holders is necessary to modify or amend the Indenture with respect to the
Notes, or (iv) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults. It shall not be necessary for the consent of the Holders 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 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
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 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 and the 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)
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
the first paragraph of the "Limitation on Debt" covenant described above.
Notwithstanding the foregoing, clause (iii) of 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 this covenant.
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DEFEASANCE
Defeasance and Discharge
The Indenture provides that the Company shall be deemed to have paid and
shall be discharged from any and all obligations in respect of the Notes of any
series, on the 123rd day after the deposit referred to below has been made, and
the provisions of the Indenture shall no longer be in effect with respect to the
Notes of such series (except for, among other matters, certain obligations to
register the transfer or exchange of the Notes, to replace stolen, lost, or
mutilated Notes, to maintain paying agencies, and to hold monies for payment in
trust) if, among other things, (A) the Company has irrevocably 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 Notes of such series on the Stated
Maturity thereof or earlier redemption (irrevocably provided for under
arrangements satisfactory to the Trustee), as the case may be, in accordance
with the terms of the Indenture and the Notes of such series, (B) the Company
has delivered to the Trustee (i) either (x) an Opinion of Counsel to the effect
that holders of the Notes 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 "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 (and accompanied by a copy
of) a ruling of the Internal Revenue Service to the same effect unless there has
been a change in applicable federal income tax law after the date of the
Indenture such that a ruling is no longer required or (y) a ruling directed to
the Trustee received from the Internal Revenue Service to the same effect as the
aforementioned Opinion of Counsel and (ii) an Opinion of Counsel to the effect
that the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and after the passage of 123 days following the deposit, the
trust fund will not be subject to the effect of section 547 of the United States
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 Notes of such series by the subordination provisions contained in the
Indenture and (E) if at such time the Notes 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 Notes of such series will not be
delisted as a result of such deposit, defeasance, and discharge.
Defeasance of Certain Covenants and Certain Events of Default
The Indenture further provides that the provisions of the Indenture will no
longer be in effect with respect to the covenants described in this Prospectus
under "Covenants" and clause (iv) under "Events of Default" with respect to such
covenants and clauses (iii) and (v) under "Events of Default" shall be deemed
not to be Events of Default with respect to the Notes of any series, upon, among
other things, the deposit with the Trustee, in trust, of money and/or U.S.
government obligations 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
Notes of such series, on the Stated Maturity thereof or earlier redemption
(irrevocably provided for under agreements satisfactory to the Trustee), as the
case may be, in accordance with the terms of the Indenture and the Notes of such
series, the satisfaction of the provisions described in clauses (B)(ii), (C),
(D), and (E) of the preceding paragraph and the delivery by the Company to the
Trustee of an Opinion of Counsel to the effect that, among other things, the
holders of the Notes of such series will not recognize income,
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gain, or loss for federal income tax purposes as a result of such deposit and
defeasance of the covenants and Events of Default 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.
Defeasance and Certain Other Events of Default
If the Company exercises its option to omit compliance with certain
covenants and provisions of the Indenture with respect to the Notes of any
series as described in the immediately preceding paragraph and the Notes of such
series are declared due and payable because of the occurrence of an Event of
Default that remains applicable, the amount of money and/or U.S. Government
Obligations on deposit with the Trustee will be sufficient to pay amounts due on
the Notes of such series at the time of their Stated Maturity, but may not be
sufficient to pay amounts due on the Notes of such series at the time of the
acceleration resulting from such Event of Default. However, the Company shall
remain liable for such payments.
CERTAIN DEFINITIONS
"Acquisition Debt" is defined to mean 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" is defined to mean, 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 the "Limitation on
Restricted Payments" covenant described above (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 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" is defined to mean AES Hawaii Management Co., Inc., a Delaware
corporation and a Subsidiary of the Company, and its successors.
"AES Oklahoma" is defined to mean AES Oklahoma Management Co., Inc., a
Delaware corporation and a Subsidiary of the Company, and its successors.
"Affiliate" is defined to mean, 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",
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"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" is defined to mean (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" is defined to mean, 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 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 the "Restriction on
Mergers, Consolidations and Sales of Assets" covenant described above. 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" is defined to mean 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" is defined to mean, 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" is defined to mean 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.
"Bank Credit Agreement" is defined to mean 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.
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"Banks" is defined to mean the lenders who are from time to time parties to
the Bank Credit Agreement.
"Board of Directors" is defined to mean 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 under
the Indenture.
"Business Day" is defined to mean 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" is defined to mean, 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" is defined to mean, 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 Lease Obligation" is
defined to mean the rental obligations, as aforesaid, under such lease.
"Change of Control" is defined to mean the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company to any Person or group (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of Persons,
(ii) a Person or group (as so defined) of Persons (other than management of the
Company on the date of the 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.
"Closing Date" is defined to mean the date on which the Notes are
originally issued under the Indenture.
"Common Stock" is defined to mean, 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 date of the Indenture, including, without
limitation, all series and classes of such common stock.
"Consolidated EBITDA" of any Person for any period is defined to mean 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 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.
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"Consolidated Fixed Charges" of any Person is defined to mean, 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 is defined to mean, 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 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" is defined to mean 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" is defined to mean, 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" is defined to mean, 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" 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 Bank Credit
Agreement and (ii) Debt constituting Senior Debt which, at the time of its
determination, (A) has an aggregate principal
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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.
"Excess Cash Flow" of any Person for any period is defined to mean
Consolidated EBITDA less Consolidated Fixed Charges less any income taxes
actually paid by such Person during such period.
"Finance Subsidiary" is defined to mean 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 8.50% Notes, (ii) the issuance of Capital
Stock and (iii) any activity necessary, incidental or related to the foregoing.
"Fixed Charge Ratio" is defined to mean 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 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) in the "Limitation on Debt"
covenant described above. 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" is defined to mean 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" is defined to mean generally accepted accounting principles in the
U.S. as in effect as of the date of the Indenture 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 entity as is approved by a significant
segment of the accounting profession.
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"Guarantee" is defined to mean 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" is defined to mean, 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.
"Independent Financial Advisor" is defined to mean 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 Rate Agreement" is defined to mean, 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" is defined to mean 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 is defined to mean 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 the "Limitation on Restricted Payments" covenant described
above, "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" is defined to mean, 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" is defined to mean 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.
"Lien" is defined to mean, 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 the 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.
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"Material AES Entity" is defined to mean (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 is defined to mean, as of any date, any
Restricted Subsidiary that would constitute a "significant subsidiary" within
the meaning of Article 1 of Regulation S-X.
"Net Cash Proceeds" from an Asset Disposition is defined to mean 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 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 is defined to mean 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 is defined to mean, 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) is
defined to mean 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.
"Opinion of Counsel" is defined to mean an opinion in writing signed by
legal counsel who may be an employee of or counsel to the Company or who may be
other counsel satisfactory to the Trustee. Each such opinion shall comply with
Section 314 of the Trust Indenture Act of 1939, as amended, and include the
statements provided for in the Indenture, if and to the extent required thereby.
"Permitted Investment" is defined to mean 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 the first paragraph of the "Limitation on Debt"
covenant described above; (ii) at the 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)
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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
the "Limitation on Business" covenant described above; 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 the "Limitation on
Restricted Payments" covenant described above.
"Permitted Payments" is defined to mean 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 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, the "Repurchase
of Notes Upon a Change in Control" and "Limitation on Asset Dispositions"
covenants described above) 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" is defined to mean 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.
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"Power Supply Business" is defined to mean 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.
"Preferred Stock" is defined to mean, 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 date of the Indenture.
"Property" of any Person is defined to mean 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" is defined to mean any Capital Stock of a Person
that is not Redeemable Stock.
"Redeemable Stock" is defined to mean 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 8.50% 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 8.50% 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 Securities 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 the "Limitation on Asset Dispositions" and "Repurchase
of Notes upon a Change of Control" covenants described above, 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 the "Limitation on
Asset Dispositions" and "Repurchase of Notes upon a Change of Control" covenants
described above.
"Reference Period" is defined to mean 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 is defined to
mean any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Restricted Payment" is defined to mean, with respect to any Person, (i)
any dividend or other distribution on any shares of such Person's Capital 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 date of the Indenture 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" is defined to mean any Subsidiary other than an
Unrestricted Subsidiary.
"Security" or "Securities" is defined to mean any Notes or Notes, as the
case may be, authenticated and delivered under the Indenture.
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"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 issuance of the Securities; provided that Senior
Debt shall not include (i) the Company's 101/4% Senior Subordinated Notes due
2006, 83/8% Senior Subordinated Notes due 2007, 8.50% Notes and 8.875%
Debentures which rank pari passu to each series of the Notes, (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 Notes and (v) Redeemable Stock of
the Company.
"Significant Subsidiary" of a Person is defined to mean, 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" is defined to mean, with respect to any debt security or
any installment of interest thereon, the date specified in such debt security as
the fixed date on which any principal of such debt security or any such
installment of interest is due and payable.
"Subsidiary" is defined to mean, 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" is defined to mean (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 Ratings Group and Baa3 or higher by Moody's Investors Service, Inc., AES
Oklahoma and AES Hawaii, and (ii) on and after such first day, if any, AES
Hawaii.
"Trade Payables" is defined to mean, 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" is defined to mean any business not of the same
general type now conducted by the Company and its Restricted Subsidiaries.
"Unrestricted Subsidiary" is defined to mean (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 the "Limitation on Restricted
Payments" covenant described below and (C) if applicable, the Incurrence of Debt
and the Investment referred to in clause (A) of this proviso would be permitted
under the "Limitation on Restricted Subsidiary Debt" and "Limitation on
Restricted Payments" covenants described above. The Board of Directors may
designate any 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 the Indenture and (y) no Default or
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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" is defined to mean 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" is defined to mean, 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" is defined to mean, 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.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not result in any federal income tax consequences to Holders. When a Holder
exchanges an Old Note for a New Note pursuant to the Exchange Offer, the Holder
will have the same adjusted basis and holding period in the New Note as in the
Old Note immediately before the exchange.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any such broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal.
The Company has agreed in the Registration Rights Agreement to indemnify
each broker-dealer reselling New Notes pursuant to this Prospectus, and their
officers, directors and controlling persons, against certain liabilities in
connection with the offer and sale of the New Notes, including liabilities under
the Securities Act, or to contribute to payments that such broker-dealers may be
required to make in respect thereof.
The Company does not intend to list the Notes on any securities exchange.
The Company has been advised by the Initial Purchasers that they currently
intend to make a market in the Notes as permitted by applicable laws and
regulations. The Initial Purchasers are not obligated, however, to make a market
in the Notes and any such market-making may be discontinued at any time at the
sole discretion of the Initial Purchasers. Accordingly, no assurance can be
given as to the liquidity of, or trading market for, the Notes.
LEGAL MATTERS
The legality of the New Notes 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, have been audited by Deloitte & Touche LLP, independent auditors, 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.
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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.
The financial statements of Companhia Centro-Oeste de Distribuicao de
Energia Electrica -- CEEE D2 (formerly Midwest Division of Companhia Estadual de
Energia Eletrica -- CEEE) as at and for the nine-month period ended September
30, 1997, prepared in accordance with accounting practices originating in
Brazil's Corporation Law, incorporated by reference in this Prospectus from Item
7 of the Current Report on Form 8-K of The AES Corporation, filed January 9,
1998, have been audited by Ernst & Young Auditores Independentes S.C., Porto
Alegre, 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.
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PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Company's By-Laws, and in accordance with Section 145 of the
Delaware General Corporation Law ("GCL"), the Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than any action or suit by or in the
right of the Company to procure a judgment in its favor, which is hereinafter
referred to as a "derivative action") by reason of the fact that such person is
or was a director, officer or employee of the Company, or is or was serving in
such capacity or as an agent at the request of the Company for another entity,
to the full extent authorized by Delaware law, against expenses (including, but
not limited to, attorneys' fees), judgments, fines and amounts actually and
reasonably incurred in connection with the defense or settlement of such action,
suit or proceeding if such person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe was unlawful. Agents of the Company may be similarly
indemnified, at the discretion of the Board of Directors.
Under Section 145 of the GCL, a similar standard of care is applicable in
the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such an action and then, where the person is adjudged to be liable
to the Company, only if and to the extent that the Court of Chancery of the
State of Delaware or the court in which such action was brought determines that
such person is fairly and reasonably entitled to such indemnity and only for
such expenses as the court shall deem proper.
Pursuant to Company's By-Laws, a person eligible for indemnification may
have the expenses incurred in connection with any matter described above paid in
advance of a final disposition by the Company. However, such advances will only
be made upon the delivery of an undertaking by or on behalf of the indemnified
person to repay all amounts so advanced if it is ultimately determined that such
person is not entitled to indemnification.
In addition, under the Company's By-Laws, the Company may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Company or of another corporation against any liability
asserted against and incurred by such person in such capacity, or arising out of
the person's status as such whether or not the Company would have the power or
the obligation to indemnify such person against such liability under the
provisions of the Company's By-Laws.
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
4.1 Indenture dated as of October 29, 1997 between The AES Corporation and The First National
Bank of Chicago, as trustee
4.1.2 First Supplemental Indenture dated as of November 21, 1997 between The
AES Corporation and The First National Bank of Chicago, as trustee
4.2 Registration Rights Agreement dated as of October 29, 1997 among The AES Corporation and
J.P. Morgan Securities Inc. and Salomon Brothers Inc.
5 Opinion of Davis Polk & Wardwell
12 Statement re: Computation of ratio of earnings to fixed charges
(incorporated by reference to Exhibit 12.1 to Amendment No. 1 to
Registration Statement No. 333-39857 filed by The AES Corporation on
November 19, 1997).
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Price Waterhouse
23.3 Consent of Ernst & Young
23.4 Consent of Davis Polk & Wardwell (included in Exhibit 5.)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- ------------
<S> <C>
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Clients
99.4 Form of Letter to Nominees
99.5 Form of Instructions to Registered Holder and/or Book-Entry Transfer Participant from Owner
</TABLE>
- ----------------
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) 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
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, 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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant 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 controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Arlington, State of
Virginia on January 23, 1998.
THE AES CORPORATION
By: /s/ Dennis W. Bakke
----------------------------------
Dennis W. Bakke
President and Chief Executive
Officer
The Registrant and each person whose signature appears below constitutes
and appoints Dennis W. Bakke and William R. Luraschi and any agent for service
named in this Registration Statement and each of them, his, her or its true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him, her or it and in his, her, or its name, place and
stead, in any and all capacities, to sign and file any and all amendments
(including post-effective amendments) to this Registration Statement to sign any
related registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he, she, or it might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROGER W. SANT Chairman of the Board January 23, 1998
---------------------------
Roger W. Sant
/s/ DENNIS W. BAKKE President, Chief Executive January 23, 1998
--------------------------- Officer and Director (Principal
Dennis W. Bakke Executive Officer)
/s/ VICKI-ANN ASSEVERO Director January 23, 1998
---------------------------
Vicki-Ann Assevero
/s/ DR. ALICE F. EMERSON Director January 23, 1998
----------------------------
Dr. Alice F. Emerson
/s/ ROBRET F. HEMPHILL, JR. Director January 23, 1998
-----------------------------
Robert F. Hemphill, Jr.
/s/ FRANK JUNGERS Director January 23, 1998
---------------------------
Frank Jungers
/s/ DR. HENRY R. LINDEN Director January 23, 1998
---------------------------
Dr. Henry R. Linden
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JOHN H. MCARTHUR Director January 23, 1998
- ---------------------------
John H. McArthur
/s/ HAZEL O'LEARY Director January 23, 1998
---------------------------
Hazel O'Leary
/s/ THOMAS I. UNTERBERG Director January 23, 1998
---------------------------
Thomas I. Unterberg
/s/ ROBERT H. WATERMAN, JR. Director January 23, 1998
---------------------------
Robert H. Waterman, Jr.
/s/ BARRY J. SHARP Vice President and January 23, 1998
--------------------------- Chief Financial Officer
Barry J. Sharp (Principal Financial and
Accounting Officer)
By: /s/ WILLIAM R. LURASCHI January 23, 1998
---------------------------
William R. Luraschi
Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBITS DESCRIPTION OF EXHIBIT NUMBERED PAGE
- -------- ---------------------- -------------
<S> <C> <C>
4.1 Indenture dated as of October 29, 1997 between The AES Corporation
and The First National Bank of Chicago, as trustee
4.1.2 First Supplemental Indenture dated as of November 21, 1997 between
The AES Corporation and The First National Bank of Chicago, as
trustee
4.2 Registration Rights Agreement dated as of October 29, 1997 among The
AES Corporation and J.P. Morgan Securities Inc. and Salomon Brothers
Inc.
5 Opinion of Davis Polk & Wardwell
12 Statement re: Computation of ratio of earnings to fixed charges
(incorporated by reference to Exhibit 12.1 to Amendment No. 1 to
Registration Statement No. 333-39857 filed by The AES Corporation on
November 19, 1997).*
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Price Waterhouse
23.3 Consent of Ernst& Young
23.4 Consent of Davis Polk & Wardwell (included in Exhibit 5.)
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The First National Bank of Chicago, as Trustee
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Clients
99.4 Form of Letter to Nominees
99.5 Form of Instructions to Registered Holder and/or Book-Entry Transfer Partic-
ipant from Owner
</TABLE>
- ----------------
* Incorporated by reference to other documents (see Item 16) and not included
herein.
EXHIBIT 4.1
THE AES CORPORATION
as Issuer
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
--------------------
INDENTURE
Dated as of October 29, 1997
--------------------
8.50% Senior Subordinated Notes due 2007
8.875% Senior Subordinated Debentures due 2027
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
---------------------
TIA Indenture
Section Section
- ------- ---------
ss. 310(a)(1)................................................. 7.10
(a)(2)................................................. 7.10
(a)(3)................................................. N.A.
(a)(4)................................................. N.A.
(a)(5)................................................. 7.10
(b).................................................... 7.8; 7.10;
10.2
(c).................................................... N.A.
ss. 311(a).................................................... 7.11
(b).................................................... 7.11
(c).................................................... N.A.
ss. 312(a).................................................... 2.5
(b).................................................... 10.3
(c).................................................... 10.3
ss. 313(a).................................................... 7.6
(b)(1)................................................. 7.6
(b)(2)................................................. 7.6
(c).................................................... 7.6; 10.2
(d).................................................... 7.6
ss. 314(a).................................................... 4.6; 4.7;
10.2
(b).................................................... N.A.
(c)(1)................................................. 10.4
(c)(2)................................................. 10.4
(c)(3)................................................. 10.4
(d).................................................... N.A.
(e).................................................... 10.5
(f).................................................... N.A.
ss. 315(a).................................................... 7.1(b)
(b).................................................... 7.5; 10.2
(c).................................................... 7.1(a)
(d).................................................... 7.1(c)
(e).................................................... 6.11
ss. 316(a) (last sentence).................................... 2.9
(a)(1)(A).............................................. 6.5
(a)(1)(B) ............................................. 6.4
(a)(2)................................................. N.A.
(b).................................................... 6.6, 6.7
(c).................................................... 9.4
ss. 317(a)(1)................................................. 6.8
(a)(2)................................................. 6.9
(b).................................................... 2.4
ss. 318(a).................................................... 10.1
(c).................................................... 10.1
_________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table Shall not, for any purpose, be deemed to be a
part of this Indenture
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.....................................................1
SECTION 1.2 Incorporation by Reference of Trust Indenture Act..............24
SECTION 1.3 Rules of Construction..........................................25
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.................................................26
SECTION 2.2 Execution and Authentication....................................28
SECTION 2.3 Registrar and Paying Agent......................................29
SECTION 2.4 Paying Agent To Hold Money in Trust.............................29
SECTION 2.5 Securityholder Lists............................................29
SECTION 2.6 Transfer and Exchange...........................................30
SECTION 2.7 Replacement Securities..........................................40
SECTION 2.8 Temporary Securities............................................41
SECTION 2.9 Cancellation....................................................41
SECTION 2.10 Defaulted Interest..............................................42
SECTION 2.11 CUSIP or CINS Number............................................43
SECTION 2.12 Payments of Interest............................................43
SECTION 2.13 Outstanding Securities..........................................44
SECTION 2.14 Treasury Securities.............................................44
ARTICLE III
REDEMPTION OF SECURITIES
SECTION 3.1 Right of Redemption.............................................45
SECTION 3.2 Applicability of Article........................................45
SECTION 3.3 Election To Redeem; Notice to Trustee...........................45
SECTION 3.4 Selection by Trustee of Securities To Be Redeemed...............45
SECTION 3.5 Notice of Redemption............................................46
SECTION 3.6 Deposit of Redemption Price.....................................46
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<PAGE>
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SECTION 3.7 Securities Payable on Redemption Date...........................47
SECTION 3.8 Sinking Fund....................................................47
SECTION 3.9 Selection of Debentures.........................................48
SECTION 3.10 Credit for Debentures Previously
Acquired..........Error! Bookmark not defined.
SECTION 3.11 Securities Redeemed in Part............ ........................49
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities...........................................49
SECTION 4.2 Maintenance of Office or Agency.................................49
SECTION 4.3 Corporate Existence.............................................50
SECTION 4.4 Limitation on Business..........................................50
SECTION 4.5 Limitation on Restricted Subsidiary Investments and Mergers.....51
SECTION 4.6 Compliance Certificates.........................................51
SECTION 4.7 Reports.........................................................52
SECTION 4.8 Limitation on Debt..............................................52
SECTION 4.9 Limitation on Restricted Subsidiary Debt........................54
SECTION 4.10 Limitation on Additional Tiers of Senior Subordinated Debt......57
SECTION 4.11 Change of Control...............................................58
SECTION 4.12 Limitation on Transactions with Affiliates......................60
SECTION 4.13 Limitation on Restricted Payments...............................61
SECTION 4.14 Limitation on Dividend and other Payment Restrictions
Affecting Subsidiaries......................................63
SECTION 4.15 Limitation on Asset Dispositions................................65
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 Merger, Consolidation, Etc......................................71
SECTION 5.2 Successor Entity Substituted....................................71
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default...............................................72
SECTION 6.2 Acceleration....................................................74
-ii-
<PAGE>
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SECTION 6.3 Other Remedies..................................................75
SECTION 6.4 Waiver of Past Default..........................................75
SECTION 6.5 Control by Majority.............................................76
SECTION 6.6 Limitation on Suits.............................................76
SECTION 6.7 Rights of Holders To Receive Payment............................76
SECTION 6.8 Collection Suit by Trustee......................................77
SECTION 6.9 Trustee May File Proofs of Claim................................77
SECTION 6.10 Priorities......................................................78
SECTION 6.11 Undertaking for Costs...........................................78
SECTION 6.12 Rights and Remedies Cumulative..................................78
SECTION 6.13 Delay or Omission Not Waiver....................................79
SECTION 6.14 Restoration of Rights and Remedies..............................79
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee...............................................79
SECTION 7.2 Rights of Trustee...............................................81
SECTION 7.3 Individual Rights of Trustee....................................82
SECTION 7.4 Trustee's Disclaimer............................................82
SECTION 7.5 Notice of Defaults..............................................82
SECTION 7.6 Reports by Trustee to Holders...................................83
SECTION 7.7 Compensation and Indemnity......................................83
SECTION 7.8 Replacement of Trustee..........................................84
SECTION 7.9 Successor Trustee by Merger, Etc................................85
SECTION 7.10 Eligibility; Disqualification...................................85
SECTION 7.11 Preferential Collection of Claims Against Company...............86
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 8.1 Satisfaction and Discharge of Indenture.........................86
SECTION 8.2 Application by Trustee of Funds Deposited for Payment of
Securities..................................................88
SECTION 8.3 Repayment of Moneys Held by Paying Agent........................88
SECTION 8.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed
for Two Years...............................................88
SECTION 8.5 Defeasance and Discharge of Indenture...........................88
-iii-
<PAGE>
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----
SECTION 8.6 Defeasance of Certain Obligations...............................90
SECTION 8.7 Reinstatement...................................................92
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders......................................92
SECTION 9.2 With Consent of Holders.........................................93
SECTION 9.3 Compliance with Trust Indenture Act.............................94
SECTION 9.4 Revocation and Effect of Consents...............................95
SECTION 9.5 Notation on or Exchange of Securities...........................95
SECTION 9.6 Trustee to Sign Amendments, Etc.................................96
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Trust Indenture Act Controls....................................96
SECTION 10.2 Notices.........................................................96
SECTION 10.3 Communications by Holders with Other Holders....................98
SECTION 10.4 Certificate and Opinion of Counsel as to Conditions Precedent...98
SECTION 10.5 Statements Required in Certificate and Opinion of Counsel.......98
SECTION 10.6 Rules by Trustee, Paying Agent, Registrar.......................99
SECTION 10.7 Legal Holidays..................................................99
SECTION 10.8 Governing Law...................................................99
SECTION 10.9 No Recourse Against Others......................................99
SECTION 10.10 Successors.....................................................100
SECTION 10.11 Counterparts...................................................100
SECTION 10.12 Severability...................................................100
SECTION 10.13 Table of Contents, Headings, Etc...............................100
SECTION 10.14 No Adverse Interpretation of Other Agreements..................100
SECTION 10.15 Benefits of Indenture..........................................100
SECTION 10.16 Independence of Covenants......................................100
ARTICLE XI
SUBORDINATION OF SECURITIES
SECTION 11.1 Agreement to Subordinate.......................................101
-iv-
<PAGE>
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----
SECTION 11.2 Payments to Securityholders....................................101
SECTION 11.3 Subrogation of Securities......................................103
SECTION 11.4 Authorization by Securityholders...............................105
SECTION 11.5 Notice to Trustee..............................................105
SECTION 11.6 Trustee's Relation to Senior Debt..............................106
SECTION 11.7 o Impairment of Subordination..................................107
SIGNATURES ...........................................................S-1
EXHIBIT A - Form of Note
EXHIBIT B - Form of Debenture
EXHIBIT C - Form of Certificate of Transfer
EXHIBIT D - Form of Certificate of Exchange
-v-
<PAGE>
INDENTURE dated as of October 29, 1997, between THE AES CORPORATION, a
Delaware corporation, as Issuer (the "Company"), and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association, as Trustee (the "Trustee").
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of the 8.50% Senior
Subordinated Notes due 2007 of the Company (the "Notes") and 8.875% Senior
Subordinated Debentures due 2027 (the "Debentures" and collectively with the
Notes, the "Securities") to be issued as provided for in this Indenture. All
things necessary to make this Indenture a valid, binding agreement of the
Company, in accordance with its terms, have been done.
The parties hereto agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
SECTION 1.1 Definitions.
-----------
"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).
"Additional Interest" shall have the meaning set forth in the
Registration Rights Agreement.
"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
<PAGE>
-2-
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 4.13 (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 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.
<PAGE>
-3-
"Agent" means any Registrar, Paying Agent, transfer agent or
Authenticating Agent.
"Applicable Procedures" means, with respect to any transfer or
exchange of interests in a Global Security, the rules and procedures of DTC,
Euroclear or Cedel that apply to such transfer or exchange.
"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 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
<PAGE>
-4-
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.
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
Federal or state law for the relief, reorganization, adjustment or recomposition
of debtors.
"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.
"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.
<PAGE>
-5-
"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 Lease Obligation" is defined to
mean the rental obligations, as aforesaid, under such lease.
"Cedel" means Cedel Bank, societe anonyme.
"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 this
Indenture or their Affiliates) shall have become the beneficial owner of more
than 35% of the outstanding Voting Stock of the Company, or (iii) during any
one-year period, individuals who at the beginning of such period constitute the
Board of Directors (together with any new director whose election or nomination
was approved by a major-
<PAGE>
-6-
ity 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 4.11.
"Closing Date" means the date on which the Securities are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
"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 date of this Indenture, including, without limitation,
all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article V of this Indenture
and thereafter means the successor.
"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 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
<PAGE>
-7-
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 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
<PAGE>
-8-
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.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
administered, which office is, at the date of this Indenture, located at One
First National Plaza, Suite 0216, Chicago, Illinois 60670-0126.
"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.
"Debenture" or "Debentures" means any Debenture or Debentures, as the
case may be, authenticated and delivered under this Indenture.
"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
<PAGE>
-9-
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.
"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.
"Defaulted Interest" has the meaning specified in Section 2.10.
"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.
"DTC" means The Depository Trust Company or its successors.
"Euroclear" means Morgan Guaranty Trust Company of New York (Brussels
Office) as operator of the Euroclear system.
"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.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Registration Statement" shall have the meaning set forth in
the Registration Rights Agreement.
"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 Securities and (y) provides for no
payments of
<PAGE>
-10-
principal by way of sinking fund, mandatory redemption or otherwise prior to the
maturity of the Securities, (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 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 4.8(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
<PAGE>
-11-
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 date of this Indenture 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 entity as is approved by a significant segment of the
accounting profession.
"Global Security" means each global security, without coupons,
representing all or a portion of the Notes or the Debentures, respectively,
deposited with DTC, substantially in the form of Exhibit A and Exhibit B,
respectively, attached hereto.
"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
<PAGE>
-12-
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.
"Initial Global Securities" means the Regulation S Global Securities
and the 144A Global Securities, each of which contains a Securities Act Legend.
"Initial Securities" means the Securities containing a Securities Act
Legend.
"Interest Payment Date," when used with respect to any Security, means
the stated maturity of an installment of interest specified in such Security.
"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
<PAGE>
-13-
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 4.13, "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.
"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.
<PAGE>
-14-
"Mandatory Sinking Fund Payment Amount" shall have the meaning set
forth in Section 3.8.
"Mandatory Sinking Fund Redemption Date" shall have the meaning set
forth in Section 3.8.
"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 Security, means the
date specified in such Security as the fixed date on which the final installment
of principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to Section 6.2 or any Change of Control Offer
pursuant to Section 4.11).
"Net Cash Proceeds" from an Asset Disposition means cash opayments
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 located or (iii) as a result of
any repatriation to the U.S. of any proceeds of
<PAGE>
-15-
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 Securities), 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.
"Note" or "Notes" means any Note or Notes, as the case may be,
authenticated and delivered under this Indenture.
"Offering Memorandum" means the offering memorandum dated October 24,
1997 relating to the Securities.
"Officer" means, with respect to the Company, the chairman of
the board of directors, the president or chief executive officer, any vice
president, the chief financial officer, the treasurer or any assistant
treasurer, or the secretary or any assistant secretary.
<PAGE>
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"Officers' Certificate" means a certificate signed in the name of the
Company (i) by the chairman of the board of directors, the president or chief
executive officer or a vice president and (ii) by the chief financial officer,
the treasurer or any assistant treasurer, or the secretary or any assistant
secretary, complying with Section 10.5 and delivered to the Trustee. Each such
certificate shall comply with Section 314 of the TIA and include (except as
otherwise expressly provided in this Indenture) the statements provided in
Section 10.5.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel who may be an employee of or counsel to the Company or who may be other
counsel. Each such opinion shall comply with Section 314 of the TIA and include
the statements provided in Section 10.5, if and to the extent required thereby.
"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of authentication of such Security or (b) the date of
any Security (or portion thereof) for which such Security was issued (directly
or indirectly) on registration of transfer, exchange or substitution.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person
who has an account with DTC, Euroclear or Cedel, respectively (and, with respect
to DTC, it shall include Euroclear or Cedel).
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Payment Blockage Period" shall have the meaning set forth in Section
11.2.
"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 4.8(a); (ii) at the 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 di-
<PAGE>
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rect 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 4.4; 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 4.13.
"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 Securities with the proceeds from the issuance of (x)
Debt which is also pari passu with the Securities or subordinate to the
Securities 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 Securities; provided that such new pari passu or subor-
<PAGE>
-18-
dinated 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 4.11
and 4.15) 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.
"Physical Securities" means those Securities issued pursuant to
Section 2.6(a).
"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.
<PAGE>
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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 date of this Indenture.
"principal" of a Security means the principal amount of, and, unless
the context indicates otherwise, includes any premium payable on, the Security.
"Private Exchange Securities" shall have the meaning set forth in the
Registration Rights Agreement.
"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.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"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 Securities, (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 Securities 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 Securities; 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 Securities 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 4.11 and 4.15, 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 Securities
required to be repurchased by the Company under Sections 4.11 and 4.15.
<PAGE>
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"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture and such Security.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture and such Security.
"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.
"Registrar" has the meaning provided in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the date hereof among the Company, J.P. Morgan Securities Inc.
and Salomon Brothers Inc.
"Regular Record Date" for the interest payable on any Interest Payment
Date means April 15 or October 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S promulgated under the Securities Act
(including any successor registration thereto) as it may be amended from time to
time.
"Repurchase Date" shall have the meaning provided in Section 4.11.
"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 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
Securities and having a maturity date after the maturity of the Securities; (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 date of this Indenture or shall thereafter
have outstanding any Debt, shall happen and be
<PAGE>
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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 Physical Security" means a Physical Security containing a
Securities Act Legend.
"Restricted Subsidiary" means any Subsidiary other than an
Unrestricted Subsidiary.
"Rule 144" shall have the meaning set forth in the Registration Rights
Agreement.
"Rule 144A" shall have the meaning set forth in the Registration
Rights Agreement.
"SEC" means the Securities and Exchange Commission.
"Security" or "Securities" means any Security or Securities, as the
case may be, authenticated and delivered under this Indenture and then
outstanding under the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"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 10 1/4% Senior Subordinated Notes due
2006 and 8 3/8% Senior Subordinated Notes due 2007 which rank pari passu to the
Securities and the Notes (in the case of the Debentures) and the Debentures (in
the case of the Notes), (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.
<PAGE>
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"Series" shall mean either the Notes or the Debentures, but not both,
as the context requires.
"Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"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.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 2.10.
"Stated Maturity" means, with respect to any debt security or any
installment of interest thereon, the date specified in such debt security as 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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
Section 9.3.
"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
<PAGE>
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such Person or any of its Restricted Subsidiaries arising in the ordinary course
of business in connection with the acquisition of goods or services.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article VII and thereafter means such successor.
"Unrelated Business" means any business not of the same general type
now conducted by the Company and its Restricted Subsidiaries.
"Unrestricted Global Securities" means one or more Global Securities
that do not and are not required to bear the Securities Act Legend.
"Unrestricted Physical Securities" means one or more Physical
Securities that do not and are not required to bear the Securities Act Legend.
"Unrestricted Securities" means the Securities that do not and are not
required to bear the Securities Act Legend.
"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 4.13 and (C) if applicable, the Incurrence of Debt
and the Investment referred to in clause (A) of this proviso would be permitted
under Sections 4.9 and 4.13. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving effect to such designation (x) all Liens and Debt of such
Unre-
<PAGE>
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stricted 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 1.2 Incorporation by Reference
of Trust Indenture Act.
---------------------------
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a
<PAGE>
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part of this Indenture. The following terms used in this Indenture that are
defined in the TIA have the following meanings:
(a) "Commission" means the SEC;
(b) "indenture securities" means the Securities;
(c) "indenture security holder" means a Securityholder;
(d) "indenture to be qualified" means this Indenture;
(e) "indenture trustee" or "institutional trustee" means the
Trustee; and
(f) "obligor" on the indenture securities means the Company or
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by reference in the TIA to another statute or defined by the
Securities Act or the Exchange Act and not otherwise defined herein have the
meanings so assigned to them therein.
SECTION 1.3 Rules of Construction.
----------------------
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) provisions apply to successive events and transactions;
(e) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other Subdivision; and
(f) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP.
<PAGE>
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ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.
---------------
(a) Global Securities. Notes and Debentures offered and sold to QIBs
in reliance on Rule 144A shall be issued initially substantially in the form of
Exhibit A and Exhibit B hereto, respectively, in the name of Cede & Co. as
nominee of DTC, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. Any such Security shall be referred to herein as the "144A
Global Security." Notes and Debentures offered and sold in reliance on
Regulation S shall be issued initially substantially in the form of Exhibit A
and Exhibit B hereto, respectively, in the name of Cede & Co. as nominee of DTC,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. Any such Security shall be referred to herein as the "Regulation S
Global Security." Unrestricted Global Securities shall be issued initially in
accordance with Sections 2.6(b)(iv), 2.6(c)(ii) and 2.6(e) in the name of Cede &
Co. as nominee of DTC, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of each Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee as hereinafter provided.
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Securities from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Securities represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions and transfers of interests
therein in accordance with the terms of this Indenture. Any change in the
aggregate principal amount of a Global Security to reflect the amount of any
increase or decrease in the principal amount of outstanding Securities
represented thereby shall be made by the Trustee in accordance with reasonable
instructions given by the Holder thereof as required by Section 2.6 hereof and
shall be conclusively reflected on the books and records of the Trustee.
Upon the issuance of the Global Security to DTC, DTC shall credit, on
its internal book-entry registration and transfer system, its Participant's
accounts with the respective
<PAGE>
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interests owned by such Participants. Interests in the Global Securities shall
be limited to Participants, including Euroclear and Cedel, and indirect
Participants.
The Participants shall not have any rights either under this Indenture
or under any Global Security with respect to such Global Security held on their
behalf by DTC, and DTC may be treated by the Company, the Trustee and any agent
of the Company or the Trustee as the absolute owner of such Global Security for
the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, interest and Additional Interest,
if any, on the Global Securities and for all other purposes. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by DTC or impair, as between DTC and its
Participants, the operation of customary practices of DTC governing the exercise
of the rights of an owner of a beneficial interest in any Global Security.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel, as in effect from
time to time, shall be applicable to interests in the Regulation S Global
Security that are held by the Participants through Euroclear or Cedel.
(b) Physical Securities. All Securities will initially be issued in
the form of Global Securities pursuant to Section 2.1(a). If Physical Securities
are issued in accordance with Section 2.6(a), the Physical Securities which
represent Notes and the Physical Securities which represent Debentures shall be
issued initially substantially in the form of Exhibit A and Exhibit B hereto,
respectively, in certificated form and issued in the names of the then
beneficial holders thereof (or their nominees), duly executed by the Company and
authenticated by the Trustee as hereinafter provided.
(c) Securities. The provisions of the form of Securities contained in
Exhibit A and Exhibit B hereto are incorporated herein by reference. The Notes
and the Trustee's Certificates of Authentication shall be substantially in the
form of Exhibit A hereto. The Debentures and the Trustee's Certificate of
Authentication shall be substantially in the form of Exhibit B hereto. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage
<PAGE>
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and provided to the Trustee in writing by the Company. The Company shall approve
the form of the Securities and any notation, legend or endorsement on them. If
required, the Securities may bear the appropriate legend regarding original
issue discount for federal income tax purposes. Each Security shall be dated the
date of its authentication. The terms and provisions contained in the Securities
shall constitute, and are hereby expressly made, a part of this Indenture.
SECTION 2.2 Execution and Authentication.
-----------------------------
Two Officers of the Company shall sign the Securities for the Company
by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Securities for original
issue from time to time, (ii) Private Exchange Securities from time to time for
original issue or in exchange for a like principal amount of Initial Securities
and (iii) Unrestricted Securities from time to time for original issue or in
exchange for a like principal amount of Initial Securities, in each case upon a
written order signed by an Officer of the Company. The order shall be based upon
a Board Resolution of the Company and shall specify the amount of Securities to
be authenticated and the date on which the original issue of Securities is to be
authenticated. The order shall also provide instructions concerning
registration, legends, if any, pursuant to Section 2.6(f), amounts for each
Holder and delivery. If Notes or Debentures are to be issued after the date
hereof, then the Company shall deliver Global Securities in the Form of Exhibit
A or Exhibit B hereto, respectively, together with an order for the
authentication and delivery by the Trustee of such Global Security or Securities
and the Trustee shall, in accordance with this Section 2.2, authenticate and
deliver such Global Security or Securities. The Securities shall be issued only
in registered form, without coupons and only in denominations of $1,000 and any
integral multiple thereof.
<PAGE>
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SECTION 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment ("Paying Agent").
The Company may have one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent and shall, if required,
incorporate the provisions of the TIA. The Company shall notify the Trustee of
the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation in accordance with the provisions of Section 7.7.
The Company initially appoints the Trustee as Registrar and Paying
Agent. The Company shall give written notice to the Trustee in the event that
the Company decides to act as Registrar.
SECTION 2.4 Paying Agent To Hold Money in Trust.
-----------------------------------
The Company shall require each Paying Agent to agree in writing to
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities (whether such money has been paid to it by the Company or any other
obligor on the Securities), and the Company and the Paying Agent shall each
notify the Trustee of any default by the Company (or any other obligor on the
Securities) in making any such payment. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and account for any
funds disbursed and the Trustee may at any time during the continuance of any
payment default, upon written request to a Paying Agent, require such Paying
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed. Upon making such payment the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.5 Securityholder Lists.
---------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is
<PAGE>
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not the Registrar, the Company shall furnish to the Trustee at least five
Business Days before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6 Transfer and Exchange.
----------------------
(a) Transfer and Exchange of Global Securities. Transfer of the Global
Securities shall be by delivery. Global Securities may not be transferred as or
exchanged for Physical Securities except (i) if DTC notifies the Company that it
is unwilling or unable to continue to act as depositary with respect to the
Global Securities or ceases to be a clearing agency registered under the
Exchange Act and, in either case, a successor depositary registered as a
clearing agency under the Exchange Act is not appointed by the Company within
120 days, (ii) at any time if the Company in its sole discretion determines that
the Global Securities (in whole but not in part) should be exchanged for
Physical Securities or (iii) if the owner of an interest in the Global
Securities requests such Physical Securities, following an Event of Default
under this Indenture, in a writing delivered through DTC to the Trustee.
Upon the occurrence of any of the events specified in the previous
paragraph, Physical Securities shall be issued in such names as DTC shall
instruct the Trustee and the Trustee shall cause the aggregate principal amount
of the applicable Global Security to be reduced accordingly and direct DTC to
make a corresponding reduction in its book-entry system. The Company shall
execute and the Trustee shall authenticate and cause to be delivered to the
Person designated in such instructions a Physical Security in the appropriate
principal amount and of the appropriate Series. The Trustee shall deliver such
Physical Securities to the Persons in whose names such Securities are so
registered. Physical Securities issued in exchange for an Initial Global
Security pursuant to this Section 2.6(a) shall bear the Securities Act Legend
and shall be subject to all restrictions on transfer contained therein. Global
Securities may also be exchanged or replaced, in whole or in part, as provided
in Sections 2.7 and 2.8. Every Security authenticated and delivered in exchange
for, or in lieu of, a Global Security or any portion thereof, pursuant to
Section 2.7 or 2.8, shall be authenticated and delivered in the form of, and
shall be, a Global Security. A Global Security may not be exchanged for another
Security other than as provided in this Section 2.6(a).
<PAGE>
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(b) Transfer and Exchange of Interests in Global Securities. The
transfer and exchange of interests in Global Securities shall be effected
through DTC, in accordance with this Indenture and the procedures of DTC
therefor. Interests in Initial Global Securities shall be subject to
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. The Trustee shall have no obligation to
ascertain DTC's compliance with any such restrictions on transfer. Transfers of
interests in Global Securities shall also require compliance with subparagraph
(i) below, as well as one or more of the other following subparagraphs as
applicable:
(i) All Transfers and Exchanges of Interests in Global
Securities. In connection with all transfers and exchanges of interests
in Global Securities (other than transfers of interests in a Global
Security to Persons who take delivery thereof in the form of an
interest in the same Global Security), the transferor of such interest
must deliver to the Registrar (1) instructions given in accordance with
the Applicable Procedures from a Participant or an indirect Participant
directing DTC to credit or cause to be credited an interest in the
specified Global Security of the specified Series in an amount equal to
the interest to be transferred or exchanged, (2) a written order given
in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase and
(3) instructions given by the Holder of the Global Security of the
specified Series to effect the transfer referred to in (1) and (2)
above.
(ii) Transfer of Interests in the Same Initial Global
Security. Interests in any Initial Global Security may be transferred
to Persons who take delivery thereof in the form of an interest in the
same Initial Global Security of the same Series in accordance with the
transfer restrictions set forth in Section 2.6(f) hereof.
(iii) Transfer of Interests to Another Initial Global
Security. Interests in any Initial Global Security may be transferred
to Persons who take delivery thereof in the form of an interest in
another Initial Global Security of the same series if the Registrar
receives the following:
(A) if the transferee will take delivery in the form
of an interest in a 144A Global Security of the same Series,
then the transferor must deliver a cer-
<PAGE>
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tificate in the form of Exhibit C hereto, including the
certifications in item 1 thereof; or
(B) if the transferee will take delivery in the form
of an interest in a Regulation S Global Security of the same
Series, then the transferor must deliver a certificate in the
form of Exhibit C hereto, including the certifications in item
2 thereof.
(iv) Transfer and Exchange of Interests in Initial Global
Security for Interests in an Unrestricted Global Security. Interests in
any Initial Global Security may be exchanged by the holder thereof for
an interest in an Unrestricted Global Security of the same Series or
transferred to a Person who takes delivery thereof in the form of an
interest in an Unrestricted Global Security of the same Series if:
(A) such exchange or transfer is effected pursuant to
the Exchange Registration Statement in accordance with the
Registration Rights Agreement;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement; or
(C) the Registrar receives the following:
(1) if the holder of such an interest in an
Initial Global Security proposes to exchange it for
an interest in an Unrestricted Global Security of the
same Series, a certificate from such Holder in the
form of Exhibit D hereto, including the
certifications in item 1(a) thereof;
(2) if the holder of such an interest in an
Initial Global Security proposes to transfer it to a
Person who shall take delivery thereof in the form of
an interest in an Unrestricted Global Security of the
same Series, a certificate in the form of Exhibit C
hereto, including the certification in item 4
thereof; and
(3) in each such case set forth in this
paragraph (C), an Opinion of Counsel in form
reasonably acceptable to the Company and the Trustee,
to the effect that such exchange or transfer is in
compliance with the Securities
<PAGE>
-33-
Act and, that the restrictions on transfer contained
herein and in Section 2.6(f) hereof are not required
in order to maintain compliance with the Securities
Act.
If any such transfer is effected pursuant to paragraph (B) above at a
time when an Unrestricted Global Security of the appropriate Series has
not yet been issued, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.2, the Trustee shall
authenticate one or more Unrestricted Global Securities of the
appropriate Series in an aggregate principal amount equal to the
principal amount of interests in the Initial Global Security
transferred pursuant to paragraph (B) above, provided the Company has
made appropriate arrangements with DTC prior to delivery of such an
authentication order to the Trustee.
(v) Notation by the Trustee of Transfer of Interests Among
Global Securities. Upon satisfaction of the requirements for transfer
of interests in Global Securities of the same Series pursuant to
clauses (iii) or (iv) above, the Trustee shall reduce or cause to be
reduced the aggregate principal amount of the relevant Global Security
from which the interests are being transferred, and increase or cause
to be increased the aggregate principal amount of the Global Security
to which the interests are being transferred, in each case, by the
principal amount so transferred and shall direct DTC to make
corresponding adjustments in its book-entry system. No transfer of
interests of a Global Security shall be effected until, and any
transferee pursuant thereto shall succeed to the rights of a holder of
such interests only when, the Registrar has made appropriate
adjustments to the applicable Global Security in accordance with this
paragraph.
(c) Transfer or Exchange of Physical Securities for Interests in a
Global Security.
(i) If any Holder of Physical Securities required to contain
the Securities Act Legend proposes to exchange such Securities for an
interest in a Global Security, then, upon receipt by the Registrar of a
certificate from such Holder in the form of Exhibit D hereto, including
the certifications in item 2 thereof which may be submitted by
facsimile;
<PAGE>
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the Trustee shall cancel the Physical Securities, increase or cause to
be increased the aggregate principal amount of, the 144A Global
Security or the Regulation S Global Security of the same Series, as the
case may be, and direct DTC to make a corresponding increase in its
book-entry system.
(ii) A Holder of Physical Securities required to contain the
Securities Act Legend may exchange such Securities for an interest in
an Unrestricted Global Security of the same Series only:
(A) if such exchange or transfer is effected pursuant
to the Exchange Registration Statement in accordance with the
Registration Rights Agreement;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) upon receipt by the Registrar of the following
documentation (all of which may be submitted by facsimile):
(1) if the Holder of such Physical
Securities proposes to exchange such Securities for
an interest in an Unrestricted Global Security of the
same Series, a certificate from such Holder in the
form of Exhibit D hereto, including the
certifications in item 1(b) thereof;
(2) an Opinion of Counsel in form reasonably
acceptable to the Company, to the effect that such
exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
contained herein and in Section 2.6(f) hereof are not
required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to paragraph (B) above at a
time when an Unrestricted Global Security of the appropriate Series has
not yet been issued, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.2, the Trustee shall
authenticate (i) one or more Unrestricted Global Securities of the
appropriate Series in an aggregate principal amount equal to the
principal amount of Physical Securities transferred pursuant to
paragraph (B) above.
<PAGE>
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(d) Transfer and Exchange of Physical Securities.
(i) Transfer of a Physical Security to Another Physical
Security. Following the occurrence of one or more of the events
specified in Section 2.6(a), a Physical Security may be transferred to
Persons who take delivery thereof in the form of another Physical
Security of the same Series if the Registrar receives the following:
(A) if the transfer is being effected pursuant to and
in accordance with Rule 144A, then the transferor must deliver
a certificate in the form of Exhibit C hereto, including the
certifications in item 3(a) thereof; or
(B) if the transfer is being effected pursuant to and
in accordance with Regulation S, then the transferor must
deliver a certificate in the form of Exhibit C hereto,
including the certifications in item 3(b) thereof.
(ii) Transfer and Exchange of Restricted Physical Security
for Physical Security Which Does Not Bear the Securities Act Legend.
Following the occurrence of one or more of the events specified in
Section 2.6(a) and the receipt by the Trustee of an Officers'
Certificate stating that such events have occurred, a Restricted
Physical Security may be exchanged by the Holder thereof for a Physical
Security of the same Series or transferred to a Person who takes
delivery thereof in the form of a Physical Security of the same Series
which does not bear the Securities Act Legend if:
(A) such exchange or transfer is effected pursuant to
the Exchange Registration Statement in accordance with the
Registration Rights Agreement;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement; or
(C) the Registrar receives a certificate from such
Holder in the form of Exhibit D hereto, including the
certifications in item 1(c) thereof and an Opinion of Counsel
in form reasonably acceptable to the Company, to the effect
that such exchange or transfer is in compliance with the
Securities Act and, that the restrictions on transfer
contained
<PAGE>
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herein and in Section 2.6(f) hereof are not required in order
to maintain compliance with the Securities Act.
(iii) Exchange of Physical Securities. When Physical
Securities are presented by a Holder to the Registrar with a request to
register the exchange of such Physical Securities for an equal
principal amount of Physical Securities of the same Series but of other
authorized denominations, the Registrar shall make the exchange as
requested only if the Physical Securities are endorsed or accompanied
by a written instrument of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney duly
authorized in writing and shall be issued only in the name of such
Holder or its nominee. The Physical Securities issued in exchange for
Physical Securities of the same Series shall bear the Securities Act
Legend and shall be subject to all restrictions on transfer contained
herein in each case to the same extent as the Physical Securities so
exchanged.
(iv) Return of Physical Securities. In the event of a
transfer pursuant to clauses (i) or (ii) above and the Holder thereof
has delivered certificates representing an aggregate principal amount
of Securities in excess of that to be transferred, the Company shall
execute and the Trustee shall authenticate and make available for
delivery to the Holder of such Security without service charge, a new
Physical Security or Securities of the same Series of any authorized
denomination requested by the Holder, in an aggregate principal amount
equal to the portion of the Security not so transferred.
(e) Exchange Offer. Upon the occurrence of the Exchange Offer (as
defined in the Registration Rights Agreement) in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Officers' Certificate stating that the Exchange Registration Statement has
become effective and that the Exchange Offer has occurred and an authentication
order in accordance with Section 2.2, the Trustee shall authenticate one or more
Unrestricted Global Securities of the appropriate Series in an aggregate
principal amount equal to the principal amount of the interests in the Initial
Global Securities. Concurrently with the issuance of such Securities, the
Trustee shall cause the aggregate principal amount of the applicable Initial
Global Securities of the appropriate Series to be reduced accordingly and direct
DTC to make a corresponding reduction in its book-entry system.
<PAGE>
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In the case that one or more of the events specified in Section 2.6(a)
have occurred, upon the occurrence of such Exchange Offer, the Company shall
issue and, upon receipt of an authentication order in accordance with Section
2.2, the Trustee shall authenticate Unrestricted Physical Securities of the
appropriate Series in an aggregate principal amount equal to the principal
amount of the Restricted Physical Securities tendered for acceptance by persons
participating therein.
(f) Legends.
Each Initial Global Security and, if applicable, each Restricted
Physical Security shall bear the legend (the "Securities Act Legend") in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO AES OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THE SECURITY, THE
HOLDER MUST SUBMIT A CERTIFICATE WITH RESPECT TO SUCH TRANSFER TO THE
TRUSTEE (A FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE); AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE
<PAGE>
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INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(g) Global Security Legend. Each Global Security shall bear a legend
in substantially the following form:
"UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC") TO A NOMINEE OF DTC, OR BY ANY SUCH NOMINEE OF DTC,
OR BY DTC TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC). ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.6 OF THE INDENTURE."
(h) Cancellation and/or Adjustment of Global Securities. At such time
as all interests in the Global Securities of a Series have been exchanged for
Physical Securities of the same Series, all Global Securities of that Series
shall be returned to or retained and canceled by the Trustee in accordance with
Section 2.9 hereof. At any time prior to such cancellation, if any interest in a
Global Security is exchanged for an interest in another Global Security or for
Physical Securities of the same Series, the principal amount of Securities
represented by such Global Security shall be reduced accordingly and all such
changes to such Global Security shall be reflected on the books and records of
the Trustee, by the Trustee to reflect such reduction.
<PAGE>
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(i) General Provisions Relating to All Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global
Securities of the appropriate Series and, following the occurrence of
one or more of the events specified in Section 2.6(a), Physical
Securities of the appropriate Series upon a written order signed by an
Officer of the Company or at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any stamp or transfer tax or
similar governmental charge payable in connection therewith (other than
any such stamp or transfer taxes or similar governmental charge payable
upon exchange or transfer pursuant to Sections 2.8, 3.8, 4.11 and 4.15
hereof).
(iii) All Global Securities and Physical Securities issued
upon any registration of transfer or exchange of Global Securities or
Physical Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Securities or Physical Securities surrendered
upon such registration of transfer or exchange.
(iv) The Company shall not be required (A) to issue, to
register the transfer of or to exchange Securities during a period
beginning at the opening of business 15 days before the day of the
mailing of the notice of redemption of Securities and ending at the
close of business such mailing, (B) to register the transfer of or to
exchange any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed in part or
(C) to register the transfer of or to exchange a Security between a
record date and the next succeeding Interest Payment Date.
(v) Prior to due presentment for the registration of a
transfer of any Security, the Trustee, any Agent and the Company may
deem and treat the Person in whose name any Security is registered as
the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Securities and for all
other purposes, and none of the Trustee, any Agent or the Company shall
be affected by notice to the contrary.
<PAGE>
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(vi) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Participants or beneficial owners of interests in any
Global Security) other than to require delivery of such certificates
and other documentation or evidence as are expressly required by, and
to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.7 Replacement Securities.
-----------------------
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor, principal amount and Series and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be reasonably required by them to
save each of them and any agent of either of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has been acquired by
a bona fide purchaser, the Company shall execute and upon its request the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of like tenor and principal amount and Series,
having endorsed thereon and bearing a number not contemporaneously outstanding.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of the same Series duly issued hereunder.
<PAGE>
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8 Temporary Securities.
---------------------
Pending the preparation of definitive Securities, the Company may
execute and, upon Company Order, the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities of the same Series upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
10.2, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Securities of authorized denominations and like
tenor and Series. Until so exchanged the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of the same Series.
SECTION 2.9 Cancellation.
-------------
All Securities surrendered for payment, redemption or registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Securities held by
the Trustee shall be returned to the Company.
<PAGE>
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SECTION 2.10 Defaulted Interest.
-------------------
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Company shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days prior to the date of the proposed payment. The Company shall
promptly notify the Trustee of such Special Record Date and, in the
name and at the expense of the Company, the Trustee shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less
than five Business Days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be
paid not later than the fifteenth day after such Special Record Date to
the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date.
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on
<PAGE>
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which the Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause, such manner of
payments shall be deemed practicable by the Trustee.
SECTION 2.11 CUSIP or CINS Number.
---------------------
The Company in issuing the Securities may use a "CUSIP" or "CINS"
number, and if so, such CUSIP or CINS number shall be included in notices of
redemption or exchange as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP or CINS number printed in the notice or on the Securities,
and that reliance may be placed only on the other identification numbers printed
on the Securities. The Company will promptly notify the Trustee of any change in
the CUSIP or CINS number.
SECTION 2.12 Payments of Interest.
---------------------
(a) The Holder of a Physical Security at the close of business on the
Regular Record Date with respect to any Interest Payment Date shall be entitled
to receive the interest and Additional Interest, if any, payable on such
Interest Payment Date notwithstanding any transfer or exchange of such Physical
Security subsequent to the regular record date and prior to such Interest
Payment Date, except if and to the extent the Company shall default in the
payment of the interest or Additional Interest due on such Interest Payment
Date, in which case such Defaulted Interest and Additional Interest, if any,
shall be paid in accordance with Section 2.10; provided that, in the event of an
exchange of a Physical Security for a beneficial interest in any Global Security
subsequent to a Regular Record Date or any Special Record Date and prior to or
on the related Interest Payment Date or other payment date under Section 2.10,
any payment of the interest and Additional Interest payable on such payment date
with respect to any such Physical Security shall be made to the Person in whose
name such Physical Security was registered on such record date. Payments of
interest on the Global Securities will be made to the Holder of the Global
Security on each Interest Payment Date; provided that, in the event of an
exchange of all or a portion of a Global Security for Physical Security
subsequent to the Regular Record Date or any Special Record Date and prior to or
on the related Interest Payment Date or other payment date under Section 2.10
any payment of interest or Additional Interest payable on such Interest Payment
Date or other payment
<PAGE>
-44-
date with respect to the Physical Security shall be made to the Holder of the
Global Security.
(b) The Trustee shall pay interest and Additional Interest, if any, to
DTC, with respect to any Global Security held by DTC, on the applicable Interest
Payment Date in accordance with instructions received from the Company at least
five Business Days before the applicable Interest Payment Date. The Company
shall deliver such instructions in the form of an Officers' Certificate setting
forth Additional Interest in the aggregate and per $1,000 principal amount of
Securities to be paid on such Interest Payment Date.
SECTION 2.13 Outstanding Securities.
-----------------------
Securities outstanding at any time are all Securities that have been
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation and those described in this Section as not outstanding. A
Security does not cease to be outstanding because the Company or one of its
Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a redemption date or Maturity Date money
sufficient to pay the principal of, and interest on Securities payable on that
date, then on and after that date such Securities cease to be outstanding and
interest on them ceases to accrue.
SECTION 2.14 Treasury Securities.
--------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, any Subsidiary or any of their respective Affiliates shall be
disregarded, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.
The Trustee may require an Officers' Certificate listing securities
owned by the Company, any Subsidiary or any of their respective Affiliates.
<PAGE>
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ARTICLE III
REDEMPTION OF SECURITIES
SECTION 3.1 Right of Redemption.
--------------------
The Securities may be redeemed at the election of the Company as
provided by the terms of the Securities, as a whole or from time to time in
part, at the times and at the Redemption Prices specified in the form of
Security set forth in Exhibit A and Exhibit B together with any applicable
accrued interest to the Redemption Date.
SECTION 3.2 Applicability of Article.
-------------------------
Redemption of Securities at the election of the Company, as permitted
by the Securities or any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 3.3 Election To Redeem; Notice to Trustee.
--------------------------------------
The election of the Company to redeem any Securities pursuant to
Section 3.1 shall be evidenced by a Board Resolution of the Company delivered to
the Trustee. The Company shall, at least 30 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee) notify the Trustee of such Redemption Date and of the principal amount
of Securities to be redeemed.
SECTION 3.4 Selection by Trustee of
Securities To Be Redeemed.
--------------------------
If less than all the Securities of a Series are to be redeemed, the
particular Securities to be redeemed shall be selected by the Trustee, from all
outstanding Securities of a Series not previously called for redemption, by such
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $1,000 or any integral
multiple thereof) of the principal amount of Securities of a denomination larger
than $1,000.
The Trustee shall promptly notify the Company and the Registrar in
writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
<PAGE>
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For all purposes of this Indenture, all provisions relating to the
redemption of Securities shall relate, in the case of any Securities redeemed or
to be redeemed only in part, to the portion of the principal amount of such
Securities which has been or is to be redeemed.
SECTION 3.5 Notice of Redemption.
---------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the outstanding Securities of a Series
are to be redeemed, the identification including CUSIP numbers, (and,
in the case of partial redemption, the principal amounts) of the
particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and that,
unless the Company shall default in the payment of the Redemption Price
and any applicable accrued interest, interest thereon will cease to
accrue on and after said date, and
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 3.6 Deposit of Redemption Price.
----------------------------
On or prior to 10:00 a.m. New York City time on any Redemption Date,
the Company shall deposit with the Trustee or with a Paying Agent an amount of
money sufficient to pay the Redemption Price of and accrued interest on all the
Securities which are to be redeemed on that date.
<PAGE>
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SECTION 3.7 Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and any applicable
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Paying Agent at the Redemption Price, together
with any applicable accrued interest to the Redemption Date.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) and
accrued interest on such unpaid principal shall, until paid, bear interest from
the Redemption Date at the rate provided by the Security.
SECTION 3.8 Sinking Fund.
-------------
(a) As and for a sinking fund for the retirement of the Debentures, the
Company covenants and agrees that (so long as any of the Debentures are
outstanding) it will, no later than 10:00 a.m. on each November 1st commencing
with the year 2008 to and including the year 2026 (each such November 1st being
herinafter referred to as a "Mandatory Sinking Fund Redemption Date"), deposit
with the Trustee or any Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust), a sum in cash sufficient to redeem
on each such November 1st $6,250,000 aggregate principal amount of the
Debentures (subject to adjustment as provided in paragraph (b)) at a price equal
to 100% of the principal amount thereof plus accrued interest (not otherwise
paid or provided to be paid on or before the Redemption Date); provided,
however, that the sinking fund requirement for any year shall never exceed the
principal amount of Notes at the time outstanding. Each sum payable as provided
in this Secton 3.9 is herein called a "Mandatory Sinking Fund Payment Amount".
(b) The Mandatory Sinking Fund Payment Amount shall be subject to
adjustment in the event that on or prior to any Mandatory Sinking Fund
Redemption Date the Company delivers or causes to be delivered to the Trustee
for cancellation Debentures with an aggregate principal amount in excess of the
Mandatory Sinking Fund Payment Amount for such next succeeding Mandatory Sinking
Fund Redemption Date, in which case the Mandatory Sinking Fund Payment Amount
applicable to each Mandatory
<PAGE>
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Sinking Fund Redemption Date after the next succeeding Mandatory Sinking Fund
Redemption Date shall be adjusted to be the quotient obtained by dividing (i)
the aggregate principal amount of Debentures outstanding after giving effect to
such cancellation by (ii) the number of remaining Mandatory Sinking Fund
Redemption Dates including the next succeeding Mandatory Sinking Fund Redemption
Date.
SECTION 3.9 Selection of Debentures.
------------------------
The Trustee shall select and call for redemption on each Mandatory
Sinking Fund Redemption Date, on a pro rata basis, such an aggregate principal
amount of outstanding Debentures as will exhaust the Mandatory Sinking Fund
Payment Amount, as nearly as in the opinion of the Trustee may be practical, at
the redemption price of 100% of the principal amount thereof plus interest
accrued to the Redemption Date, and the Company shall cause notice of redemption
of such Debentures on such Mandatory Sinking Fund Redemption Date to be give in
the name of the Company and in the manner provided in Section 3.5 for the
redemption of Securities in part at the option of the Company except that the
notice of redemption shall also state that the Debentures are being redeemed
pursuant to the operation of the sinking fund; and on and after such Mandatory
Sinking Fund Redemption Date, if the necessary funds have been deposited with
it, the Trustee shall apply or cause to be applied such sinking fund monies in
the manner provided in Section 3.7 to the redemption of the Securities so
selected.
SECTION 3.10 Credit for Debentures Previously Acquired.
------------------------------------------
Notwithstanding any provision of Section 3.8 calling for payment of the
Mandatory Sinking Fund Payment Amount in cash, the Company at its option in
satisfaction of all or any part of any Mandatory Sinking Fund Payment Amount
may, from time to time, by delivering to the Trustee not less than 45 days prior
to the date of such Mandatory Sinking Fund Redemption Date, in lieu of paying
all or any part of any Mandatory Sinking Fund Payment Amount in cash, Debentures
for cancellation previously authenticated and delivered by the Trustee which
were acquired during the 12-month period preceding such Mandatory Sinking Fund
Redemption Date.
The Debentures to be credited pursuant to this Section 3.10 shall be
accompanied by an Officers' Certificate which shall specify (i) the amount of
such Mandatory Sinking Fund Payment Amount to be made in cash and (ii) the
aggregate
<PAGE>
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principal amount of Debentures being delivered and credited against payment
pursuant to this Section 3.10 and confirming that no Default in the payment of
interest of the Debentures or Event of Default has occurred and is continuing.
SECTION 3.11 Securities Redeemed in Part.
----------------------------
Upon surrender of a Security that is redeemed in part (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing), the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities.
----------------------
The Company shall pay the principal of and interest on the Notes and
Debentures on the dates and in the manner provided in the Notes and Debentures,
respectively, and this Indenture.
An installment of principal or interest shall be considered paid on the
date due if the Trustee or Paying Agent (other than the Company or any
Subsidiary of the Company or any Affiliate of any thereof) holds on such date by
10:00 a.m., New York City time, immediately available funds designated for and
sufficient to pay such installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest, in each case at the rate per annum specified in the
Notes and Debentures, respectively, to the extent lawful.
SECTION 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency, where Securi-
<PAGE>
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ties may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 10.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations,
provided that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby initially designates the offices of the Trustee as
set forth in Section 10.2 as an agency of the Company in accordance with Section
2.3.
SECTION 4.3 Corporate Existence.
--------------------
Subject to Article V hereof, the Company shall do or cause to be done,
at its own cost and expense, all things necessary to preserve and keep in full
force and effect the corporate existence and rights (charter and statutory),
licenses and/or franchises of the Company, provided that the Company shall not
be required to preserve any such right, license or franchise, if in the
reasonable and good faith judgment of the Board of Directors of the Company (i)
such preservation or existence is not desirable in the conduct of business of
the Company and (ii) the loss of such right, license or franchise is not adverse
in any material respect to the Holders or to the Company or the ability of the
Company to satisfy its obligations hereunder.
SECTION 4.4 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 Re-
<PAGE>
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stricted 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 4.5 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 Securities 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 4.9(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 4.9(b).
SECTION 4.6 Compliance Certificates.
------------------------
The Company shall furnish to the Trustee annually, on or before a date
not more than four months after the end of its fiscal year (which, on the date
hereof, is a calendar year), a brief certificate (which need not contain the
statements required by Section 10.4) from its principal executive, financial or
accounting officer as to his or her knowledge of the compliance of the Company
with all conditions and covenants under
<PAGE>
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this Indenture (such compliance to be determined without regard to any period of
grace or requirement of notice provided under this Indenture) which certificate
shall comply with the requirements of the TIA.
SECTION 4.7 Reports.
--------
So long as any Security is outstanding, the Company shall file with the
SEC the annual reports, quarterly reports and the information, documents and
other reports required to be filed by the Company with the SEC pursuant to
Sections 13 and 15(d) of the Exchange Act, whether or not the Company has or is
required to have a class of securities registered under the Exchange Act, at the
time it is or would be required to file the same with the SEC and within 15 days
after it is or would be required to file such reports, information or documents
with the SEC shall mail such reports, information and documents to the Holders
at their addresses set forth in the Register of Securities maintained by the
Registrar and the Trustee. The Company also shall comply with the other
provisions of TIA ss. 314(a). Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.8 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 Securities or other Debt of the
Company in an amount (or, if such new
<PAGE>
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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 Securities 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 Securities or
other Debt of the Company that is subordinated in right of payment to
the Securities shall only be permitted under this clause (ii) if (x) in
case the Securities 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 Securities, (y) in
case the Debt to be exchanged or refinanced is subordinated in right of
payment to the Securities, 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 Securities, at
least to the extent that the Debt to be exchanged or refinanced is
subordinated in right of payment to the Securities and (z) in case the
Securities are exchanged or refinanced in part or the Debt to be
exchanged or refinanced is subordinated in right of payment to the
Securities, as of the date the new Debt is Incurred, the Average Life
of the new Debt shall be equal to or greater than the Average Life of
the Securities 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 Securities; 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 4.8, Guarantees of, or obligations with respect to letters of
credit supporting, Debt oth-
<PAGE>
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erwise included in the determination of such particular amount shall not be
included. For purposes of determining compliance with this Section 4.8, (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 4.9 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
Securities 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 4.8;
(iii) Debt Incurred to finance the development, acquisition,
construction, maintenance, working capital requirements in the ordinary
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
<PAGE>
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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 Securities 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 4.8(a) and (y) the proceeds from such new Debt are
not to be used to make any Restricted Payments;
(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
<PAGE>
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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
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
<PAGE>
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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 4.10 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 Securities, 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 Securities; 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.
<PAGE>
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SECTION 4.11 Change of Control.
------------------
(a) Upon a Change of Control, each Holder of the Securities shall have,
subject to Article XI, the right to require that the Company repurchase such
Holder's Securities 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 4.11(b) hereof.
(b) Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder of the Securities 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
Securities 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 and
which shall be the same date for the Notes, if then outstanding, and
the Debentures), (the "Repurchase Date");
(4) that any Security not tendered will continue to accrue
interest;
(5) that any Security 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 Security purchased
pursuant to a Change of Control Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
Repurchase Date;
<PAGE>
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(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 setting forth the name of the Holder, the principal amount of
Securities the Holder delivered for purchase, and a statement that such
Holder is withdrawing his election to have such Securities purchased;
and
(8) that Holders which elect to have their Securities
purchased only in part will be issued new Securities in a principal
amount equal to the unpurchased portion of the Securities surrendered.
(c) On the Repurchase Date, the Company shall:
(i) accept for payment Securities 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 Securities
or portions thereof so tendered; and
(iii) deliver or cause to be delivered to the Trustee
Securities so accepted together with an Officers' Certificate
identifying the Securities or portions thereof tendered to the
Company.
The Trustee shall promptly mail to the Holders of the Securities so
accepted payment in an amount equal to the purchase price, and promptly
authenticate and make available for delivery to such Holders a new Security of
the same Series in a principal amount equal to any unpurchased portion of the
Security 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.
<PAGE>
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SECTION 4.12 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 4.13, 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 4.12 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 Com-
<PAGE>
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pany 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 4.13 or (e) the 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 4.13 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 4.8(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
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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 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 4.13.
<PAGE>
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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 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 Securities 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 4.13 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 4.13 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 4.14 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
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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 Securities become Investment Grade.
This Section 4.14 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 4.9(b) or
with respect to any portion thereof that is also Debt of the Company and
permitted under Section 4.8; 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 4.9(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
<PAGE>
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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 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 Securities 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 4.14 shall not prevent the Company from granting any Liens not expressly
prohibited hereby.
SECTION 4.15 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
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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
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 4.4; 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 Securities 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 (if then outstanding), the Debentures 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
<PAGE>
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(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 4.15. To the extent that dividends or 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
<PAGE>
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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 4.15.
(b) If the aggregate purchase price of Securities 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 Securities
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 4.15 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.
(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 Securities, a written notice stating
that:
(A) an Asset Disposition has occurred and that such Holders may tender
all or any portion of their Securities pursuant to the Offer in
integral multiples of $1,000 principal amount, at the applicable
purchase price;
(B) any Security not tendered or accepted for payment will continue to
accrue interest;
(C) any Security accepted for payment pursuant to the Offer shall
cease to accrue interest after the Purchase Date (as defined below);
and
(D) holders of Securities will be entitled to withdraw their election
in the manner described in clause (iii) of this Section 4.15(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 Securities to
tender Secu-
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rities 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 Securities 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 pursuant to which such
Offer is being made and (C) the compliance of such allocation with the
provisions of this Section 4.15. 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 4.15. Upon the expiration of the period for which the Offer remains
open (the "Offer Period"), the Company shall deliver to the Trustee the
Securities 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 Securities 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 Securities electing to have his Securities
purchased will be required to surrender such Securities, with an appropriate
form duly completed, to the Trus-
<PAGE>
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tee at the address specified in the notice by the close of business at least one
Business Day prior to the Purchase Date. Holders of Securities 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 Securities purchased. If at the expiration of the Offer Period the
aggregate principal amount of Securities surrendered by holders of Securities
exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000 or
integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities of the same Series equal in
principal amount to the unpurchased portion of the Securities surrendered.
(iv) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company will also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.15. A Security
shall be deemed to have been accepted for purchase at the 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 Securities 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 4.15(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 4.15, 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.
<PAGE>
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ARTICLE V
SUCCESSOR CORPORATION
---------------------
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 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 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; (iii) 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 4.8(a) and (iv) 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. Notwithstanding the foregoing, clause (iii) of 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 this covenant.
SECTION 5.2 Successor Entity Substituted.
-----------------------------
Upon any consolidation or merger, or any conveyance, lease or transfer
of all or substantially all of the assets of the Company in accordance with
Section 5.1, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, lease or transfer is made shall
succeed to, and be substituted for, and may exercise
<PAGE>
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every right and power of, the Company under this Indenture with the same effect
as if such successor Person had been named as the Company herein; and thereafter
(except in the case of a sale, assignment, transfer, conveyance, lease or other
disposition) the Company shall be discharged from all obligations and covenants
under this Indenture and the Securities.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default.
------------------
An Event of Default, wherever used herein, shall occur with respect to
the Securities of a Series if:
(a) the Company defaults in the payment of all or any part of
principal, the Change of Control purchase price or premium, if any, on any
Security of such Series when the same becomes due and payable at maturity, upon
acceleration, redemption, mandatory repurchase, or otherwise;
(b) the Company defaults in the payment of interest on any Security of
such Series when the same becomes due and payable, and such default continues
for a period of 30 days;
(c) 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
<PAGE>
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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 4.8(a); and
provided, further, however that, subject to the provisions of Sections
7.1 and 7.2, 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
Securities at the time outstanding;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture with respect to the
Securities or under the Securities and such default or breach continues for a
period of 60 consecutive days after written notice, specifying such failure and
demanding that the Company remedy the same, shall have been given by registered
mail, return-receipt requested to the Company by the Trustee or by the Holders
of 25% or more in aggregate principal amount of the Securities;
(e) 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
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 4.8;
(f) a court having jurisdiction in the premises enters a decree or
order for (i) relief in respect of the Company or any of its Material
Subsidiaries in an involuntary case un-
<PAGE>
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der 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 its Material
Subsidiaries or for all or substantially all of the property and assets of the
Company or any of its Material Subsidiaries or (iii) the winding up or
liquidation of the affairs of the Company or any of its Material Subsidiaries
and, in each case, such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or
(g) the Company or any of its Material Subsidiaries (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 the Company or any of its Material
Subsidiaries or for all or substantially all of the property and assets of the
Company or any of its Material Subsidiaries or (iii) effects any general
assignment for the benefit of creditors.
SECTION 6.2 Acceleration.
-------------
(a) If an Event of Default (other than an Event of Default specified
in clauses (f) or (g) of Section 6.1 that occurs with respect to the Company)
occurs with respect to the Securities and is continuing under this Indenture,
then, and in each and every such case either the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Securities then outstanding
(or in the case of an Event of Default specified in clauses (a) or (b), the
Holders of not less than 25% of the aggregate principal amount of the Series so
affected) 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 Securities to be immediately due and payable. Upon a
declaration of acceleration, such principal of, and accrued interest shall be
immediately due and payable.
(b) If an Event of Default specified in clauses (f) or (g) of Section
6.1 occurs with respect to the Company, the principal of, and accrued interest
on the Securities then outstanding shall ipso facto become and be immediately
due and payable, subject to the prior payment in full of all Senior Debt,
without any declaration or other act on the part of the
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Trustee or any Holder. The Holders of at least a majority in principal amount of
the outstanding Securities may, by written notice to the Company and to the
Trustee, waive all past defaults with respect to the Securities and rescind and
annul a declaration of acceleration with respect to the Securities and its
consequences if (i) all existing Events of Default applicable to the Securities,
other than the nonpayment of the principal of, Change in Control purchase price
or premium, if any, and interest on the 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.
SECTION 6.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 6.4 Waiver of Past Default.
-----------------------
Subject to Sections 6.2, 6.7 and 9.2, the Holders of, in the
aggregate, at least a majority in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences, except a Default or Event of Default specified in
Section 6.1(a) or (b) or a Default or Event of Default in respect of any
provision hereof which cannot be modified or amended without the consent of the
Holder so affected pursuant to Section 9.2. When a Default or Event of Default
is so waived, it shall be deemed cured and cease to exist; but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereto.
<PAGE>
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SECTION 6.5 Control by Majority.
--------------------
The Holders of at least a majority in aggregate principal amount of
the outstanding the Securities 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 this 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 the 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 the
Securities.
SECTION 6.6 Limitation on Suits.
--------------------
A Holder may not pursue any remedy with respect to this Indenture or
the Securities unless:
(a) the Holder has previously given to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in aggregate principal
amount of the then outstanding Securities make a written request to
the Trustee to pursue a remedy;
(c) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity reasonably satisfactory to the Trustee
against any costs, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and offer of indemnity; and
(e) during such 60-day period the Holders of at least a
majority in aggregate principal amount of the then outstanding
Securities do not give the Trustee a direction which is inconsistent
with the request.
A Holder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.7 Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal
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of and interest on a Security, on or after the respective due dates expressed in
the Security, or to bring suit for the enforcement of any such payment on or
after such respective dates, is absolute and unconditional and shall not be
impaired or affected without the consent of such Holder.
SECTION 6.8 Collection Suit by Trustee.
---------------------------
If an Event of Default specified in Section 6.1(a) or (b) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company or any other obligor on the Securities
for the whole amount of principal and accrued interest remaining unpaid,
together with interest overdue on principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the Interest Rate and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.9 Trustee May File Proofs of Claim.
---------------------------------
The Trustee shall be entitled and empowered to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders allowed in any judicial proceedings relative to the
Company or any of its Subsidiaries (or any other obligor upon the Securities),
its creditors or its property and shall be entitled and empowered to collect and
receive any monies or other property payable or deliverable on any such claims
and to distribute the same, and any Custodian in any such judicial proceedings
is hereby authorized by each Securityholder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agent and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
<PAGE>
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SECTION 6.10 Priorities.
-----------
If the Trustee collects any money pursuant to this Article VI, it
shall, subject to the provisions of Article XI hereof, pay out such money in the
following order:
First: to the Trustee for amounts due under Section 7.7;
Second: subject to Article XI, to Holders for interest accrued on the
Securities, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for
interest; and
Third: subject to Article XI, to Holders for principal amounts owing
under the Securities, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11 Undertaking for Costs.
----------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7, or a suit by any Holder, or group of Holders,
holding in the aggregate more than 10% in principal amount of the outstanding
Securities.
SECTION 6.12 Rights and Remedies Cumulative.
-------------------------------
No right or remedy herein conferred upon or reserved to the Trustee or
to the Holders is intended to be exclusive of any other right or remedy, and
every remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall
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not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.13 Delay or Omission Not Waiver.
-----------------------------
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article 6 or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 6.14 Restoration of Rights and Remedies.
-----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
------------------
(a) If an Event of Default actually known to a Responsible Officer of
the Trustee has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture or the TIA
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and no others and no implied covenants or obligations shall be read
into this Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificate or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine such certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) This paragraph does not limit the effect of paragraph
(b) of this Section 7.1.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(iii) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 6.2, 6.4 and 6.5.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee
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need not be segregated from other funds except to the extent required by law.
SECTION 7.2 Rights of Trustee.
------------------
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in acting
or refraining from acting upon any document reasonably believed by it
to be genuine and to have been signed or presented by the proper
Person. The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled during normal
business hours and upon reasonable advance notice to the Company to
examine the books, records and premises of the Company, personally or
by agent or attorney.
(b) Before the Trustee acts or refrains from acting with
respect to any matter contemplated by this Indenture, it may require
an Officers' Certificate or an Opinion of Counsel, which shall
conform to the provisions of Section 10.5. The Trustee shall not be
liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any
agent (other than the negligence or willful misconduct of an agent
who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith and without negligence which it
reasonably believes to be authorized or within its rights or powers
conferred upon it by this Indenture or the TIA.
(e) The Trustee may consult with counsel of its selection
and the advice or opinion of such counsel as to matters of law shall
be full and complete authorization
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and protection from liability in respect of any action taken, omitted
or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any
event which is in fact such a default is received by the Trustee at
the Corporate Trust Office of the Trustee, and such notice references
the Securities and this Indenture.
SECTION 7.3 Individual Rights of Trustee.
-----------------------------
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company, or its Subsidiaries and Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer.
---------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in this Indenture, or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.5 Notice of Defaults.
-------------------
If a Default or an Event of Default with respect to the Securities
occurs and is continuing and a Responsible Officer of the Trustee receives
written notice of such Default or Event of Default, the Trustee shall mail to
each Securityholder notice of the Default or Event of Default within 90 days
after the occurrence thereof in accordance with TIA ss. 313(c). Except in the
case of a Default or an Event of Default in payment of principal of or interest
on any Security, including on acceleration, and the failure to make payment when
required by Section 4.11, and except in the case of a failure to comply with
Article V hereof, the Trustee may withhold the notice to the Securityholders for
a period not to exceed 60 days if and so long as a committee of its Trust
Officers in good faith deter-
<PAGE>
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mines that withholding the notice is in the interest of Securityholders.
SECTION 7.6 Reports by Trustee to Holders.
-----------------------------
To the extent required by TIA ss. 313(a), within 60 days after July 1
of each year commencing with 1998 and for as long as there are Securities
outstanding hereunder, the Trustee shall mail to each Holder the Company's brief
report dated as of such date that complies with TIA ss. 313(a). The Trustee also
shall comply with TIA ss. 313(b) and TIA ss. 313(c) and (d). A copy of such
report at the time of its mailing to Securityholders shall be filed with the
SEC, if required, and each stock exchange, if any, on which the Securities are
listed.
The Company shall promptly notify the Trustee if the Securities
become listed on any stock exchange and the Trustee shall comply with TIA ss.
313(d).
SECTION 7.7 Compensation and Indemnity.
---------------------------
The Company shall pay to the Trustee, the Paying Agent and the
Registrar from time to time such compensation as shall be agreed in writing with
the Company from time to time for their respective services rendered hereunder.
The Trustee's, the Paying Agent's and the Registrar's compensation shall not be
limited by any law in regard to the compensation of a trustee of an express
trust. The Company shall reimburse the Trustee, the Paying Agent and the
Registrar upon request for all reasonable out-of-pocket disbursements, expenses
and advances (including reasonable fees and expenses of counsel) incurred or
made by each of them in connection with entering into this Indenture and the
performance of its duties under this Indenture, in addition to the compensation
for their respective services under this Indenture. Such expenses shall include
the reasonable compensation, out-of-pocket disbursements and expenses of the
Trustee's, the Paying Agent's and the Registrar's agents and counsel.
The Company shall indemnify the Trustee, the Paying Agent and the
Registrar for, and hold each of them harmless against, any and all claims,
demands, expenses (including but not limited to attorneys' fees and expenses),
loss or liability incurred by each of them arising out of or in connection with
the acceptance or administration of this Indenture and their respective duties
hereunder. Each of the Trustee, the Paying Agent and the Registrar shall notify
the Company promptly of any claim asserted against it for which it may seek
indemnity.
<PAGE>
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However, failure by the Trustee, the Paying Agent or the Registrar to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee, the Paying Agent or the Registrar through the
Trustee's, the Paying Agent's or the Registrar's, as the case may be, own
willful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 7.7, each
of the Trustee, the Paying Agent and the Registrar shall have a lien prior to
the Securities on all money or property held or collected by it, in its capacity
as Trustee, Paying Agent or Registrar, as the case may be, except money or
property held in trust to pay principal of or interest on particular Securities.
When any of the Trustee, the Paying Agent and the Registrar incurs
expenses or renders services after an Event of Default specified in Section
6.1(f) or (g) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any Bankruptcy Law. The
provisions of the Section shall survive the termination of this Indenture.
SECTION 7.8 Replacement of Trustee.
-----------------------
The Trustee may resign at any time by so notifying the Company in
writing, such resignation to be effective upon the appointment of a successor
Trustee. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee in writing and may
appoint a successor Trustee with the Company's consent which consent shall not
be unreasonably withheld. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee),
<PAGE>
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the Company shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the lien provided in Section 7.7), the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 25% in principal amount of then outstanding Securities may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall be the successor Trustee, provided such corporation or national banking
association shall be otherwise qualified and eligible under this Article VII.
SECTION 7.10 Eligibility; Disqualification.
------------------------------
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2). There shall
<PAGE>
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at all times be a Trustee hereunder which shall be a Person that is eligible
pursuant to the TIA to act as such and has combined capital and surplus of at
least $150,000,000. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. The Trustee shall
comply with TIA ss. 310(b), provided that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding if the requirements for such exclusion set forth in
TIA ss. 310(b)(1) are met. The provisions of TIA ss. 310 shall apply to the
Company, as obligor of the Securities.
SECTION 7.11 Preferential Collection of Claims Against
Company.
--------
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
provisions of TIA ss. 311 shall apply to the Company as obligor on the
Securities.
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 8.1. Satisfaction and Discharge of
Indenture.
----------
If at any time (a) the Company shall have paid or caused to be paid
the principal of and interest on all the Securities of a Series outstanding
hereunder (other than Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.7) as and when the
same shall have become due and payable, or (b) the Company shall have delivered
to the Trustee for cancellation all Securities of such Series theretofore
authenticated (other than any Securities of such Series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.7) or (c) (i) all the Securities of a Series not theretofore
delivered to the Trustee for cancellation shall
<PAGE>
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have become due and payable, or are by their terms to become due and payable
within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption,
and (ii) the Company shall have irrevocably deposited or caused to be deposited
with the Trustee as trust funds the entire amount in cash (other than moneys
repaid by the Trustee or any paying agent to the Company in accordance with
Section 8.4) or U.S. Government Obligations, maturing as to principal and
interest in such amounts and at such times as will insure the availability of
cash sufficient to pay at maturity or upon redemption all Securities of such
Series (other than those Securities of such Series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.7) not theretofore delivered to the Trustee for cancellation,
including principal and interest due or to become due on or prior to such date
of maturity as the case may be, and if, in any such case, the Company shall also
pay or cause to be paid all other sums payable hereunder by the Company with
respect to Securities, then this Indenture shall cease to be of further effect
with respect to Securities of such Series (except as to (i) rights of
registration of transfer and exchange of Securities of such Series, and the
Company's right of optional redemption, if any, (ii) substitution of mutilated,
defaced, destroyed, lost or stolen Securities of such Series, (iii) rights of
holders to receive payments of principal thereof and interest thereon, upon the
original stated due dates therefor (but not upon acceleration), (iv) the rights,
obligations and immunities of the Trustee hereunder and (v) the rights of the
Security holders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them, and the Trustee, on
demand of the Company accompanied by an Officers' Certificate and an Opinion of
Counsel and at the cost and expense of the Company, shall execute proper
instruments acknowledging such satisfaction of and discharging this Indenture
with respect to Securities of such Series; provided, that the rights of Holders
of the Securities of such Series to receive amounts in respect of principal of
and interest on the Securities of such Series held by them shall not be delayed
longer than required by then-applicable mandatory rules or policies of any
securities exchange upon which the Securities are listed. The Company agrees to
reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with this
Indenture or the Securities.
<PAGE>
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SECTION 8.2. Application by Trustee of Funds
Deposited for Payment of Securities.
------------------------------------
Subject to Section 8.4 and to the subordination provisions of Article
XI hereof, all moneys deposited with the Trustee pursuant to Section 8.1 shall
be held in trust and applied by it to the payment, either directly or through
any paying agent (including the Company acting as its own paying agent), to the
Holders of the particular Securities of such Series for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest; but such money
need not be segregated from other funds except to the extent required by law.
SECTION 8.3. Repayment of Moneys Held by Paying
Agent.
------
In connection with the satisfaction and discharge of this Indenture
with respect to the Securities of a Series, all moneys then held by any Paying
Agent under the provisions of this Indenture with respect to the Securities of
such Series shall, upon demand of the Company, be repaid to it or paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 8.4. Return of Moneys Held by Trustee and
Paying Agent Unclaimed for Two Years.
-------------------------------------
Any moneys deposited with or paid to the Trustee or any Paying Agent
for the payment of the principal of or interest on any Security and not applied
but remaining unclaimed for two years after the date upon which such principal
or interest shall have become due and payable, shall, upon the written request
of the Company and unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be repaid to the
Company by the Trustee or such Paying Agent, and the Holder of the Security
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Company for
any payment which such Holder may be entitled to collect, and all liability of
the Trustee or any Paying Agent with respect to such moneys shall thereupon
cease.
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 Secu-
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rities of any Series, 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 of such Series, (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 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 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;
(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
<PAGE>
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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 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 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 XI 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 V or Sections 4.5 through 4.15 and clauses (c) and (e)
of Section 6.1 shall not be deemed to be an Event of Default with respect to the
Securities of a Series, if
(A) with reference to this Section 8.6, the Company has
deposited or caused to be irrevocably deposited with
<PAGE>
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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 this Indenture 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 of such Series on the due date thereof or
earlier redemption (irrevocably provided for under arrangements
satisfactory to the Trustee), as the case may be;
(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 on the date of such deposit or during
the period ending on the 123rd day after the date of such de-
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posit, 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 XI hereof; and
(E) if at such time the Securities are listed on a
national securities exchange, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the Securities will
not be delisted as a result of such deposit, defeasance and
discharge.
SECTION 8.7 Reinstatement.
--------------
If the Trustee or Paying Agent is unable to apply any monies or U.S.
Government Obligations in accordance with Article 8 with respect to a Series of
Securities by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and such Series of Securities shall be revived and reinstated as
though no deposit had occurred pursuant to this Article until such time as the
Trustee or Paying Agent is permitted to apply all such monies or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that if the
Company has made any payment of principal of or interest on any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
monies or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders.
---------------------------
Without the consent of any Holders, the Company, when authorized by
resolutions of its Board of Directors (copies of which shall be delivered to the
Trustee) and the Trustee may amend, waive or supplement this Indenture or the
Securities
<PAGE>
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without notice to or consent of any Holder for any of the following purposes:
(a) to cure any ambiguity, defect or inconsistency in the
Indenture, provided that such amendments or supplements do not
adversely affect the interests of the Holders in any material
respect;
(b) to provide for uncertificated Securities in addition
to or in place of certificated Securities;
(c) to comply with any requirements of the SEC under the
TIA;
(d) to evidence the succession in accordance with Article
V hereof of another Person to the Company and the assumption by any
such successor of the covenants of the Company herein and in the
Securities;
(e) to evidence and provide for the acceptance of
appointment hereunder by a separate or successor Trustee with respect
to the Securities; or
(f) to make any other change that does not materially and
adversely affect the rights of any Holder;
provided, however, that in making such change, the Trustee may rely upon an
Opinion of Counsel stating that such change does not adversely affect the rights
of any Holder.
SECTION 9.2 With Consent of Holders.
------------------------
Subject to Section 6.7 and the provisions of this Section 9.2, the
Company, when authorized by resolution of its Board of Directors (copies of
which shall be delivered to the Trustee) and the Trustee may amend or supplement
this Indenture, the Securities with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding. Subject
to Section 6.7 and the provisions of this Section 9.2, the Holders of, in the
aggregate, at least a majority in principal amount of the then outstanding
Securities affected may waive compliance by the Company with any provision of
this Indenture, the Securities without notice to any other Securityholder.
However, without the consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.4, may not:
<PAGE>
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(a) reduce the principal amount of Securities the Holders
of which must consent to an amendment, supplement or waiver of any
provision of or with respect to this Indenture or the Securities; or
(b) reduce the principal amount of, premium, if any, or
interest, on any Security; or
(c) change the Stated Maturity of or any installment of
interest on, any Security; or
(d) make the principal of, or interest on, any Security
payable in money other than as provided herein, or
(e) make any change in provisions relating to waivers of
defaults, the ability of Holders to enforce their rights under this
Indenture or in the matters discussed in clauses (a) through (h); or
(f) adversely affect the ranking of the Securities this
Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.2 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 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. 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.
Notwithstanding the foregoing, no amendment shall modify any provision of this
Indenture so as to affect adversely the rights of any holder of Senior
Indebtedness of the Company or Guarantor Senior Indebtedness to the benefits of
the subordination provisions under this Indenture without the consent of such
holder.
SECTION 9.3 Compliance with Trust Indenture Act.
------------------------------------
Every amendment to or supplement of this Indenture or the Securities
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.
<PAGE>
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SECTION 9.4 Revocation and Effect of Consents.
----------------------------------
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of that Security or portion of that Security that evidences the same debt
as the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security. Such revocation shall be
effective only if the Trustee receives the notice of revocation before the date
the amendment, supplement or waiver becomes effective. Notwithstanding the
above, nothing in this paragraph shall impair the right of any Securityholder
under ss. 316(b) of the TIA.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver which record date shall be at least 10 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the second and third sentences of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date. Such
consent shall be effective only for actions taken within 90 days after such
record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder unless it makes a change described in any of clauses
(a) through (h) of Section 9.2. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it.
SECTION 9.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee shall (in accordance with the specific written direction
of the Company) request the Holder of the Security to deliver it to the Trustee.
The Trustee shall (in accordance with the specific direction of the Company)
place an appropriate notation on the Security about the changed terms and return
it to the Holder. Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Secu-
<PAGE>
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rity that reflects the changed terms. Failure to make the appropriate notation
or issue a new Security shall not affect the validity and effect of such
amendment, supplement or waiver.
SECTION 9.6 Trustee to Sign Amendments, Etc.
-------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article IX if the amendment, supplement or waiver does not
adversely affect the rights, duties or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing any amendment, supplement or
waiver, the Trustee shall be entitled to receive, if requested, an indemnity
reasonably satisfactory to it and to receive, and shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article IX is authorized or permitted by this Indenture and that it constitutes
the legal, valid and binding obligation of the Company and subject to the
customary exceptions.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Trust Indenture Act Controls.
-----------------------------
The provisions of TIA ss.ss. 310 through 317 that impose duties on
any person (including the provisions automatically deemed included unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by the above paragraph, the imposed duties shall
control.
SECTION 10.2 Notices.
--------
Any notice or communication shall be sufficiently given if in writing
and delivered in person or mailed by first-class mail or by telecopier, followed
by first-class mail, or by overnight service guaranteeing next-day delivery,
addressed as follows:
<PAGE>
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(a) if to the Company:
The AES Corporation
1001 North 19th Street
Suite 2000
Arlington, Virginia 22209
Attention: General Counsel
Telecopier Number: (703) 528-4510
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Richard D. Truesdell, Jr.
Telecopier Number: (212) 450-4800
(b) if to the Trustee:
The First National Bank of Chicago
One First National Plaza
Suite 0216
Chicago, Illinois 60670-0216
Attention: Corporate Trust Administration
Telecopier Number: (312)407-1708
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder, including any
notice delivered in connection with TIA ss. 310(b), TIA ss. 313(c), TIA ss.
314(a) and TIA ss. 315(b), shall be mailed to such Holder, first-class postage
prepaid, at his address as it appears on the registration books of the Registrar
and shall be sufficiently given to such Holder if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given only
when received by an officer in the corporate trust department of the Trustee, if
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it. In case by reason of the
suspension of regular mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such notification as shall be
made
<PAGE>
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with the approval of the Trustee shall constitute a sufficient notification for
every purpose hereunder.
SECTION 10.3 Communications by Holders with
Other Holders.
--------------
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA ss. 312(c).
SECTION 10.4 Certificate and Opinion of Counsel
as to Conditions Precedent.
---------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee (a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with (which officer signing
such certificate may rely, as to matters of law, on an Opinion of Counsel), (b)
an Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of counsel, all such conditions have been
complied with (which counsel, as to factual matters, may rely on an Officers'
Certificate) and (c) where applicable, a certificate or opinion by an
independent certified public accountant satisfactory to the Trustee that
complies with TIA ss. 314(c).
SECTION 10.5 Statements Required in Certificate
and Opinion of Counsel.
-----------------------
Each certificate and Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
rendering such Opinion of Counsel has read such covenant or
condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or Opinion of Counsel are based;
<PAGE>
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(c) a statement that, in the opinion of such Person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
SECTION 10.6 Rules by Trustee, Paying Agent,
Registrar.
----------
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Securityholders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.7 Legal Holidays.
---------------
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 10.8 GOVERNING LAW.
--------------
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE
SECURITIES WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. THE COMPANY AGREES
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE
SECURITIES.
SECTION 10.9 No Recourse Against Others.
---------------------------
A trustee, director, officer, employee, stockholder or beneficiary,
as such, of the Company shall not have any liability for any obligations of the
Company under the Securities or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. Each Security
holder by accepting a Security waives and releases all such liability.
<PAGE>
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SECTION 10.10 Successors.
-----------
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 10.11 Counterparts.
-------------
The parties may sign any number of counterparts of this Indenture.
Each such counterpart shall be an original, but all of them together represent
the same agreement.
SECTION 10.12 Severability.
-------------
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
SECTION 10.13 Table of Contents, Headings, Etc.
---------------------------------
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, and are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 10.14 No Adverse Interpretation
of Other Agreements.
--------------------
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.15 Benefits of Indenture.
----------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture or the Securities.
SECTION 10.16 Independence of Covenants.
--------------------------
All covenants and agreements in this Indenture and the
Securities shall be given independent effect so that if any
<PAGE>
-101-
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.
ARTICLE XI
SUBORDINATION OF SECURITIES
SECTION 11.1 Agreement to Subordinate.
-------------------------
The Company covenants and agrees, and each Holder of Securities
issued hereunder by his acceptance thereof likewise covenants and agrees, that
all Securities shall be issued subject to the provisions of this Article; and
each person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof accepts and agrees that the Principal of and
interest on all Securities issued hereunder shall, to the extent and in the
manner herein set forth, be subordinated and subject in right to the prior
payment in full of all Senior Debt.
SECTION 11.2 Payments to Securityholders.
----------------------------
No payments on account of Principal of, Change of Control purchase
price, or interest on the Securities shall be made if at the time of such
payment or immediately after giving effect thereto there shall exist a default
in any payment with respect to any Senior Debt, and such event of default shall
not have been cured or waived or shall not have ceased to exist. In addition,
during the continuance of any other event of default (other than a payment
default) with respect to Designated Senior Debt pursuant to which the maturity
thereof may be accelerated, from and after the date of receipt by the Trustee of
written notice from the holders of such Designated Senior Debt or from an agent
of such holders, no payments on account of Principal, Change of Control purchase
price, or interest in respect of the Securities may be made by the Company for a
period ("Payment Blockage Period") commencing on the date of delivery of such
notice and ending 179 days thereafter (unless 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 Securities
<PAGE>
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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.
Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshalling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings of the Company, all amounts due or
to become due upon all Senior Debt shall first be paid in full, in cash or cash
equivalents, or payment thereof provided for in accordance with its terms,
before any payment is made on account of the Principal of, Change of Control
purchase price, or interest on the indebtedness evidenced by the Securities, and
upon any such liquidation, dissolution, winding up, receivership,
reorganization, assignment, marshalling or proceeding, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or the Trustee
under this Indenture would be entitled, except for the provisions hereof, shall
be paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Holders of the Securities or by the Trustee under this Indenture if received by
them or it, directly to the holders of Senior Debt (pro rata to such holders on
the basis of the respective amounts of Senior Debt held by such holders) or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Debt in full (including, without limitation, except
to the extent, if any, prohibited by mandatory provisions of law, post-petition
interest, in any such proceedings), after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt, before any payment
or distribution is made to the holders of the indebtedness evidenced by the
Securities or to the Trustee under this Indenture.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited
<PAGE>
-103-
by the foregoing, shall be received by the Trustee under this Indenture or the
holders of the Securities before all Senior Debt is paid in full or provision is
made for such payment in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the holders of such Senior Debt or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Senior Debt
remaining unpaid until all such Senior Debt shall have been paid in full in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Debt.
For purposes of this Article, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of arrangement, reorganization or readjustment, the
payment of which is subordinated (at least to the extent provided in this
Article with respect to the Securities) to the payment of all Senior Debt which
may at the time be outstanding; provided, that (i) the Senior Debt is assumed by
the new corporation, if any, resulting from any such arrangement, reorganization
or readjustment, and (ii) the rights of the holders of the Senior Debt are not,
without the consent of such holders, altered by such arrangement, reorganization
or readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article V shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article V. Nothing in this
Section shall apply to claims of, or payments to, the Trustee under or pursuant
to Article VII, except as provided therein. This Section shall be subject to the
further provisions of Section 11.5.
SECTION 11.3 Subrogation of Securities.
--------------------------
Subject to the payment in full of all Senior Debt, the holders of the
Securities shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of the Company
applicable
<PAGE>
-104-
to the Senior Debt until the principal of and interest on the Securities shall
be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the holders of the Securities or the Trustee on their behalf
would be entitled except for the provisions of this Article, and no payment over
pursuant to the provisions of this Article to the holders of Senior Debt by
holders of the Securities or the Trustee on their behalf shall, as between the
Company, its creditors other than holders of Senior Debt and the holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Senior Debt; and no payments or distributions of cash, property or securities to
or for the benefit of the Securityholders pursuant to the subrogation provision
of this Article, which would otherwise have been paid to the holders of Senior
Debt shall be deemed to be a payment by the Company to or for the account of the
Securities. It is understood that the provisions of this Article are and are
intended solely for the purpose of defining the relative rights of the holders
of the Securities, on the one hand, and the holders of the Senior Debt, on the
other hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Debt, and the holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Securities the principal of and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
holders of the Securities and creditors of the Company other than the holders of
the Senior Debt, nor shall anything herein or therein prevent the holder of any
Security or the Trustee on his behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Debt in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
and the holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such liquidation,
dissolution, winding up, receivership, reorganization, assignment or marshalling
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidating
<PAGE>
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trustee, agent or other person making such payment or distribution, delivered to
the Trustee or to the holders of the Securities, for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of the
Senior Debt and other indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article.
SECTION 11.4 Authorization by Securityholders.
---------------------------------
Each holder of a Security by his acceptance thereof authorizes the
Trustee in his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
SECTION 11.5 Notice to Trustee.
------------------
The Company shall give prompt written notice to the Trustee and to any
Paying Agent of any fact known to the Company which would prohibit the making of
any payment of moneys to or by the Trustee or any Paying Agent in respect of the
Securities pursuant to the provisions of this Article. Regardless of anything to
the contrary contained in this Article or elsewhere in this Indenture, the
Trustee shall not be charged with knowledge of the existence of any Senior Debt
or of any default or event of default with respect to any Senior Debt or of any
other facts which would prohibit the making of any payment of moneys to or by
the Trustee, unless and until the Trustee shall have received notice in writing
at its principal Corporate Trust Office to that effect signed by an officer of
the Company, or by a holder or agent of a holder of Senior Debt who shall have
been certified by the Company or otherwise established to the reasonable
satisfaction of the Trustee to be such holder or agent, or by the trustee under
any indenture pursuant to which Senior Debt shall be outstanding, and, prior to
the receipt of any such written notice, the Trustee shall, subject to Sections
7.1 and 7.2, be entitled to assume that no such facts exist; provided that if on
a date at least three Business Days prior to the date upon which by the terms
hereof any such moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of, or interest on any Security) the
Trustee shall not have received with respect to such moneys the notice provided
for in this Section, then, regardless of anything herein to the contrary, the
Trustee shall have full power and authority to receive such moneys and to apply
the same to the purpose for which they were received, and
<PAGE>
-106-
shall not be affected by any notice to the contrary which may be received by it
on or after such prior date.
Regardless of anything to the contrary herein, nothing shall prevent
(a) any payment by the Company or the Trustee to the Securityholders of amounts
in connection with a redemption of Securities if (i) notice of such redemption
has been given pursuant to Article III prior to the receipt by the Trustee of
written notice as aforesaid, and (ii) such notice of redemption is given not
earlier than 60 days before the redemption date, or (b) any payment by the
Trustee to the Securityholders of amounts deposited with it pursuant to Section
8.1.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior Debt
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of Senior Debt or a trustee on behalf of any such holder. In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt held by such person, the extent to
which such person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such person under this Article, and
if such evidence is not furnished the Trustee may defer any payment to such
person pending judicial determination as to the right of such person to receive
such payment.
SECTION 11.6 Trustee's Relation to Senior Debt.
----------------------------------
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article with respect to any Senior
Debt which may at any time be held by it in its individual or any other capacity
to the same extent as any other holder of Senior Debt and nothing in this
Indenture shall deprive the Trustee or any such agent, of any of its rights as
such holder. Nothing in this Article shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.7.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture
<PAGE>
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against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt and, subject to the provisions of Sections 7.1 and
7.2, the Trustee shall not be liable to any holder of Senior Debt if it shall
pay over or deliver to holders of Securities, the Company or any other person
moneys or assets to which any holder of Senior Debt shall be entitled by virtue
of this Article or otherwise.
SECTION 11.7 No Impairment of Subordination.
--------------------------------------------
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.
<PAGE>
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
THE AES CORPORATION,
as Issuer
By:____________________________
Name: Title:
THE FIRST NATIONAL BANK
OF CHICAGO,
as Trustee
By:____________________________
Name: Title:
<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
No. [ ] $ CUSIP NO.: 00130HAH8
8.50% SENIOR SUBORDINATED NOTE DUE 2007
THE AES CORPORATION promises to pay
to [ ] or registered assigns the
principal sum of[ ] Dollars on
November 1, 2007.
Interest Payment Dates: May 1, November 1 and at maturity
Record Dates: April 15 or October 15 as the case may be, next preceding such
Interest Payment Date
By:
----------------------------
Authorized Signature
By:
----------------------------
Authorized Signature
Dated: October , 1997
Certificate of Authentication
This is one of the 8.50% Senior Subordinated Notes due 2007 referred
to in the within-mentioned indenture.
The First National Bank
of Chicago, as Trustee
By:
------------------------------
Authorized Signatory
A-1
<PAGE>
THE AES CORPORATION
8.50% SENIOR SUBORDINATED NOTE DUE 2007
1. Interest. THE AES CORPORATION, a Delaware corporation (the
"Company," which definition shall include any successor thereto in accordance
with the Indenture (as defined below)), promises to pay, until the principal
hereof is paid or made available for payment, interest on the principal amount
set forth on the reverse side hereof at a rate of 8.50% per annum. Interest on
the Notes will accrue from and including the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance
through but excluding the date on which interest is paid. Interest shall be
payable in arrears on May 1,and November 1, and at the stated maturity (each an
"Interest Payment Date"), commencing May 1, 1998. Interest will be computed on
the basis of a 360 day year of twelve 30 day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on April 15 and October 15 next preceding the Interest
Payment Date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. At the Company's option,
interest may be paid by check mailed to the registered address of the Holder of
this Note.
3. Paying Agent and Registrar. Initially, The First National Bank of
Chicago (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice. Neither the
Company nor any of its Subsidiaries may act as Paying Agent, Registrar or
co-Registrar.
4. Indenture. The Company issued the Notes under an Indenture dated as
of October 29, 1997 (the "Indenture") between the Company and the Trustee. This
Note is one of an issue of Notes of the Company issued under the Indenture. The
terms of the Notes include those stated in the Indenture and
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<PAGE>
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code ss.ss. 77aaa-77bbbb) as amended from time to time. The Notes are
subject to all such terms, and Securityholders are referred to the Indenture and
such Act for a statement of them. Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Indenture. The Notes are
general unsecured obligations of the Company subordinated in right of payment to
all Senior Debt of the Company. The Indenture limits, among other things, the
ability of the Company and its Restricted Subsidiaries to incur certain Debt;
pay dividends and make other distributions; make certain investments; engage in
unrelated businesses; dispose of certain Assets; engage in transactions with
certain Affiliates; and merge with or into another entity. The limitations are
subject to a number of important qualifications and exceptions. The Company must
report to the Trustee annually whether it is in compliance with the limitations
contained in the Indenture.
5. Optional Redemption.
The Notes are subject to redemption upon not less than 30 nor more
than 60 days' notice by mail, at any time on or after October 15, 2002, as a
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount): If redeemed during
the 12-month period beginning on or after August 15 of the years set forth
below,
Redemption
Year Price
---- ---------
2002 104.250%
2003 102.833%
2004 101.417%
and after November 1, 2005 at a Redemption Price equal to 100% of the principal
amount, together in the case of any such redemption with accrued interest to the
Redemption Date.
In addition prior to November 1, 2000, in the event that the Company
consummates one or more offerings of its Qualified Capital Stock, the Company
may at its option, use all or a portion of the proceeds therefrom to redeem up
to 33% of the original aggregate principal amount at maturity of the Notes at a
cash redemption price equal to 108.500% of the principal amount thereof, plus
accrued and unpaid interest thereon through the date of repurchase; provided
that at least $100
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<PAGE>
million of the original aggregate principal amount of the Notes remains
outstanding thereafter.
6. Offers to Purchase. Section 4.11 of the Indenture provides upon the
occurrence of a Change of Control and subject to further limitations contained
therein, the Company shall make an offer to purchase the Securities in
accordance with the procedures set forth in the Indenture.
7. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay to it any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
transfer or exchange any Security or portion of a Security selected for
redemption, or transfer or exchange any Securities for a period of 15 days
before the mailing of a notice of redemption of Securities to be redeemed.
8. Persons Deemed Owners. The registered holder of a Security may be
treated as the owner of it for all purposes.
9. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its written request. After that, Holders entitled to the
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another Person.
10. Amendment, Supplement, Waiver. The Company and the Trustee may,
without the consent of the holders of any outstanding Securities, amend, waive
or supplement the Indenture, the Securities for certain specified purposes,
including, among other things, curing ambiguities, defects or inconsistencies,
maintaining the qualification of the Indenture under the Trust Indenture Act of
1939 or making any other change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or the Securities
may be made by the Company and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of the outstanding
Securities, subject to certain exceptions requiring the consent of the Holders
of the particular Securities to be affected.
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<PAGE>
11. Successor Corporation. When a successor corporation assumes all
the obligations of its predecessor under the Securities and the Indenture and
the transaction complies with the terms of Article V of the Indenture, the
predecessor corporation, subject to certain exceptions, will be released from
those obligations.
12. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(f) or (g) of
the Indenture with respect to the Company) occurs and is continuing, then the
holders of not less than 25% in aggregate principal amount of the outstanding
Securities (or in the case of an Event of Default specified in Section 6.1 (a)
or (b) of the Indenture, the Holders of not less than 25% in aggregate principal
amount of the outstanding Series so affected) may, or the Trustee may, declare
the principal of, premium, if any, plus accrued interest, if any, to be due and
payable immediately. If an Event of Default specified in Section 6.1(f) or (g)
of the Indenture with respect to the Company occurs and is continuing, the
principal of, premium, if any, and accrued interest on all of the Securities
shall ipso facto become and be immediately due and payable subject to the prior
payment in full of Senior Debt without any declaration or other act on the part
of the Trustee or any Holder. Securityholders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may require
indemnity reasonably satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Securities may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Securityholders notice of
any continuing default (except a default in payment of principal or interest or
a failure to comply with Article V of the Indenture) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
14. No Recourse Against Others. A director, officer, employee,
stockholder or beneficiary, as such, of the Company shall not have any liability
for any obligations of the
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<PAGE>
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Securities.
15. Defeasance. The Indenture contains provisions (which provisions
apply to this Note) for defeasance at any time of (a) the entire indebtedness of
the Company or this Note and (b) certain restrictive covenants and related
Defaults and Events of Default, in each case upon compliance by the Company with
certain conditions set forth therein.
16. Authentication. This Note shall not be valid until the Trustee
signs the certificate of authentication on the other side of this Note.
17. Abbreviations. Customary abbreviations may be used in the name of
a Securityholder or an assignee, such as: TEN COM (= tenants in common), TENANT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18. Subordination. The Company's payment of principal of, premium, if
any, and interest on the Securities is subordinated in right of payment, to the
extent and in the manner provided in Article XI of the Indenture, to the prior
payment in full of the Senior Debt of the Company. Each Holder of the
Securities, by his acceptance hereof, covenants and agrees that all payments of
the principal of, premium, if any, and interest on the Securities by the Company
shall be subordinated in accordance with the provisions of Article XI of the
Indenture, and each Holder accepts and agrees to be bound by such provisions.
19. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
A-6
<PAGE>
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture. Requests may be made to:
THE AES CORPORATION
1001 North 19th Street, Suite 2000
Arlington, Virginia 22209
Telephone: (703) 522-1315
Telecopy: (703) 528-4510
Attention: General Counsel
A-7
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:
I or we assign and transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
_ agent to transfer this Note on the books of the Company.
The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your signature:
----------- --------------------------
(Sign exactly as your
name appears on the
other side of this
Note)
Signature Guarantee:
-------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or 4.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or 4.15 of the Indenture, state the amount: $
Date: Your Signature:
---------- ------------------
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:
-----------------------
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-9
<PAGE>
EXHIBIT B
(FORM OF FACE OF SECURITY)
No. [ ] $ CUSIP NO.:00130HAJ4
8.875% SENIOR SUBORDINATED DEBENTURE DUE 2027
THE AES CORPORATION promises to pay
to [ ] or registered assigns the
principal sum of[ ] Dollars on
November 1, 2027.
Interest Payment Dates: May 1, and November 1, and at maturity
Record Dates: April 15 or October 15 as the case may be, next preceding such
Interest Payment Date
By:
----------------------------
Authorized Signature
By:
----------------------------
Authorized Signature
Dated:
Certificate of Authentication
This is one of the 8.875% Senior Subordinated Debentures due 2027
referred to in the within-mentioned indenture.
The First National Bank
of Chicago, as Trustee
By:
----------------------------
Authorized Signatory
B-1
<PAGE>
THE AES CORPORATION
8.875% SENIOR SUBORDINATED DEBENTURE DUE 2027
1. Interest. THE AES CORPORATION, a Delaware corporation (the
"Company," which definition shall include any successor thereto in accordance
with the Indenture (as defined below)), promises to pay, until the principal
hereof is paid or made available for payment, interest on the principal amount
set forth on the reverse side hereof at a rate of 8.875% per annum. Interest on
the Debentures will accrue from and including the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance through but excluding the date on which interest is paid. Interest
shall be payable in arrears on May 1,and November 1, and at the stated maturity
(each an "Interest Payment Date"), commencing May 1, 1998. Interest will be
computed on the basis of a 360 day year of twelve 30 day months.
2. Method of Payment. The Company will pay interest on the Debentures
(except defaulted interest) to the Persons who are registered Holders of
Debentures at the close of business on April 15 and October 15 next preceding
the Interest Payment Date. Holders must surrender Debentures to a Paying Agent
to collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. At the Company's option,
interest may be paid by check mailed to the registered address of the Holder of
this Debenture.
3. Paying Agent and Registrar. Initially, The First National Bank of
Chicago (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice. Neither the
Company nor any of its Subsidiaries may act as Paying Agent, Registrar or
co-Registrar.
4. Indenture. The Company issued the Debentures under an Indenture
dated as of October 29, 1997 (the "Indenture") between the Company and the
Trustee. This Debenture is one of an issue of Debentures of the Company issued
under the Indenture. The terms of the Debentures include those
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<PAGE>
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as amended from
time to time. The Debentures are subject to all such terms, and Securityholders
are referred to the Indenture and such Act for a statement of them. Capitalized
terms used herein and not otherwise defined have the meanings set forth in the
Indenture. The Debentures are general unsecured obligations of the Company
subordinated in right of payment to all Senior Debt of the Company. The
Indenture limits, among other things, the ability of the Company and its
Restricted Subsidiaries to incur certain Debt; pay dividends and make other
distributions; make certain investments; engage in unrelated businesses; dispose
of certain Assets; engage in transactions with certain Affiliates; and merge
with or into another entity. The limitations are subject to a number of
important qualifications and exceptions. The Company must report to the Trustee
annually whether it is in compliance with the limitations contained in the
Indenture.
5. Optional Redemption.
The Debentures are subject to redemption upon not less than 30 nor more than 60
days' notice by mail, at any time on or after November 1, 2004, as a whole or in
part, at the election of the Company, at a price equal to the sum of (i) 100% of
the principal amount thereof plus accrued interest to the Redemption Date plus
(ii) the Make-Whole Amount, if any.
The term "Make-Whole Amount" shall mean, in connection with any optional
redemption of any Debenture, the excess, if any, of (i) the aggregate present
value as of the date of such redemption of each dollar of principal being
redeemed and the amount of interest (exclusive of interest accrued to the
Redemption Date) that would have been payable in respect of such dollar if such
prepayment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the Business
Day preceding the date of such redemption) from the respective dates on which
such principal and interest would have been payable if such payment had not been
made, over (ii) the aggregate principal amount of the Debentures being redeemed.
The term "Reinvestment Rate" shall mean 0.50% (one-half of one percent) plus the
arithmetic mean of the yields under the respective headings "This Week" and
"Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
cor-
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<PAGE>
responding to the maturity of the principal being prepaid. If no maturity
exactly corresponds to such maturity, yields for the two published maturities
most closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purpose of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
The term "Statistical Release" shall mean the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded U.S.
government securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonably comparable index which shall be designated by the
Company.
In addition prior to November 1, 2000, in the event that the Company
consummates one or more offerings of its Qualified Capital Stock, the Company
may at its option, use all or a portion of the proceeds therefrom to redeem up
to 33% of the original aggregate principal amount at maturity of the Debenturess
at a cash redemption price equal to 108.875% of the principal amount thereof,
plus accrued and unpaid interest thereon through the date of repurchase;
provided that at least $83.75 million of the original aggregate principal amount
of the Debentures remains outstanding thereafter.
6. Sinking Fund. The Debentures are subject to a Sinking Fund in the
amount and manner set forth in the Indenture.
7. Offers to Purchase. Section 4.11 of the Indenture provides upon the
occurrence of a Change of Control and subject to further limitations contained
therein, the Company shall make an offer to purchase the Securities in
accordance with the procedures set forth in the Indenture.
8. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay to
B-4
<PAGE>
it any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Security or portion of a Security
selected for redemption, or transfer or exchange any Securities for a period of
15 days before the mailing of a notice of redemption of Securities to be
redeemed.
9. Persons Deemed Owners. The registered holder of a Security may be
treated as the owner of it for all purposes.
10. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its written request. After that, Holders entitled to the
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another Person.
11. Amendment, Supplement, Waiver. The Company and the Trustee may,
without the consent of the holders of any outstanding Securities, amend, waive
or supplement the Indenture, the Securities for certain specified purposes,
including, among other things, curing ambiguities, defects or inconsistencies,
maintaining the qualification of the Indenture under the Trust Indenture Act of
1939 or making any other change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or the Securities
may be made by the Company and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of the outstanding
Securities, subject to certain exceptions requiring the consent of the Holders
of the particular Securities to be affected.
12. Successor Corporation. When a successor corporation assumes all
the obligations of its predecessor under the Securities and the Indenture and
the transaction complies with the terms of Article V of the Indenture, the
predecessor corporation, subject to certain exceptions, will be released from
those obligations.
13. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(f) or (g) of
the Indenture with respect to the Company) occurs and is continuing, then the
holders of not less than 25% in aggregate principal amount of the outstanding
Securities (or, in the case of an Event of Default specified in Section 6.1 (a)
or (b) of the Indenture, the
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<PAGE>
Holders of not less than 25% of the aggregate principal amount of the
outstanding Series so affected) may, or the Trustee may, declare the principal
of, premium, if any, plus accrued interest, if any, to be due and payable
immediately. If an Event of Default specified in Section 6.1(f) or (g) of the
Indenture with respect to the Company occurs and is continuing, the principal
of, premium, if any, and accrued interest on all of the Securities shall ipso
facto become and be immediately due and payable subject to the prior payment in
full of Senior Debt without any declaration or other act on the part of the
Trustee or any Holder. Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity reasonably satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Securities may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Securityholders notice of
any continuing default (except a default in payment of principal or interest or
a failure to comply with Article V of the Indenture) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee,
stockholder or beneficiary, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of, such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
16. Defeasance. The Indenture contains provisions (which provisions
apply to this Debenture) for defeasance at any time of (a) the entire
indebtedness of the Company or this Debenture and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance by the Company with certain conditions set forth therein.
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<PAGE>
17. Authentication. This Debenture shall not be valid until the
Trustee signs the certificate of authentication on the other side of this
Debenture.
18. Abbreviations. Customary abbreviations may be used in the name of
a Securityholder or an assignee, such as: TEN COM (= tenants in common), TENANT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
19. Subordination. The Company's payment of principal of, premium, if
any, and interest on the Securities is subordinated in right of payment, to the
extent and in the manner provided in Article XI of the Indenture, to the prior
payment in full of the Senior Debt of the Company. Each Holder of the
Securities, by his acceptance hereof, covenants and agrees that all payments of
the principal of, premium, if any, and interest on the Securities by the Company
shall be subordinated in accordance with the provisions of Article XI of the
Indenture, and each Holder accepts and agrees to be bound by such provisions.
19. GOVERNING LAW. THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture. Requests may be made to:
THE AES CORPORATION
1001 North 19th Street, Suite 2000
Arlington, Virginia 22209
Telephone: (703) 522-1315
Telecopy: (703) 528-4510
Attention: General Counsel
B-7
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Debenture, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
----------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably
appoint agent to transfer this Debenture on the books of the
Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your signature:
---------------- -----------------------------------
(Sign exactly as your
name appears on the
other side of this
Debenture)
Signature Guarantee:
-------------------------------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Debenture Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Debenture purchased by the Company pursuant
to Section 4.11 or 4.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Debenture purchased by the
Company pursuant to Section 4.11 or 4.15 of the Indenture, state the amount:
$
-------------
Date: Your Signature:
---------- -------------------------
(Sign exactly as your name appears on the other side of this Debenture)
Signature Guarantee:
------------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Debenture Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-9
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF TRANSFER
The AES Corporation
1001 North 19th Street, Suite 2000
Arlington, Virginia 22209
Attention: General Counsel
[Name and Address of Registrar]
Re: 8.50% Senior Subordinated Notes due 2007
8.875% Senior Subordinated Debentures due 2027
Reference is hereby made to the Indenture, dated as of October 29,
1997 (the "Indenture"), between The AES Corporation (the "Issuer") and The First
National Bank of Chicago, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
, (the "Transferor") owns and proposes to transfer the
Security[s] specified in Annex A hereto in the principal amount of $ in such
Security[s] (the "Transfer"), to (the "Transferee"), as further
specified in Annex A hereto. In the event that Transferor holds Physical
Securities, this Certificate is accompanied by one or more certificates
aggregating at least the principal amount of Securities proposed to be
Transferred. In connection with the Transfer, the Transferor hereby certifies
that:
1. [ ] CHECK IF TRANSFEREE WILL TAKE AN INTEREST IN THE 144A GLOBAL SECURITY.
The Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
Securities are being transferred to a Person that the Transferor reasonably
believes is purchasing the Securities for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
C-1
<PAGE>
Security will be subject to the restrictions on transfer enumerated in the
Securities Act Legend and in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE AN INTEREST IN THE REGULATION S GLOBAL
SECURITY PURSUANT TO REGULATION S. The Transfer is being effected pursuant to
and in accordance with Rule 904 under the Securities Act and, accordingly, the
Transferor hereby further certifies that (i) the Transfer is not being made to a
person in the United States and (x) at the time the buy order was originated,
the Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 904(b) of Regulation
S under the Securities Act and (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act. Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the Security will be subject to the restrictions on Transfer
enumerated in the Securities Act Legend printed on the Regulation S Global
Security and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A RESTRICTED
PHYSICAL SECURITY PURSUANT TO RULE 144A OR REGULATION S. One or more of the
events specified in Section 2.6(a) of the Indenture have occurred and the
Transfer is being effected in compliance with the transfer restrictions
applicable to Securities bearing the Securities Act Legend and pursuant to and
in accordance with the Securities Act, and accordingly the Transferor hereby
further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144A under the Securities Act and the Transferor certifies to the
effect set forth in paragraph 1 above; or
(b) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 904 under the Securities Act and the Transferor certifies to the
effect set forth in paragraph 2 above.
C-2
<PAGE>
4. [ ] CHECK IF TRANSFEREE WILL TAKE AN INTEREST IN THE UNRESTRICTED GLOBAL
SECURITY The Transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture, and the restrictions on transfer contained in the
Indenture and the Securities Act Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transfer Securities will no
longer be subject to the restrictions on transfer enumerated in the Securities
Act Legend and in the Indenture and the Securities Act.
5. [ ] CHECK IF TRANSFEREE WILL TAKE AN INTEREST IN THE PHYSICAL GLOBAL SECURITY
THAT DOES NOT BEAR THE SECURITIES ACT LEGEND One or more of the events specified
in Section 2.6(a) of the Indenture have occurred and the Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
and in compliance with the transfer restrictions contained in the Indenture, and
the restrictions on transfer contained in the Indenture and the Securities Act
Legend are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred Securities will no longer be subject to the
restrictions on transfer enumerated in the Securities Act Legend and in the
Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Guarantors.
-----------------------------------
[Insert Name of Transferor]
By:
--------------------------------
Name:
Title:
Dated:
----------------
C-3
<PAGE>
FORM OF ANNEX A TO CERTIFICATE
OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] Interests in the
(i) [ ] 144A Global Security (CUSIP ), or
(ii)[ ] Regulation S Global Security (CINS ).
(b) [ ]Physical Security.
Representing:
[CHECK ONE OF (a) OR (b)]
(a)[ ] 8.50% Senior Subordinated Notes due 2007
(b)[ ] 8.875% Senior Subordinated Debentures due 2027
2. That the Transferee will hold:
[CHECK ONE]
(a) [ ] Interests in the:
(i) [ ] 144A Global Security (CUSIP ), or
(ii) [ ] Regulation S Global Security (CINS ), or
(iii) [ ] Unrestricted Global Security (CUSIP ); or
(b) [ ] Physical Securities that bear the Securities Act
Legend;
(c) [ ] Physical Securities that do not bear the
Securities Act Legend;
in accordance with the terms of the Indenture.
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE OF EXCHANGE
The AES Corporation
1001 North 19th Street, Suite 2000
Arlington, Virginia 22209
Attention: General Counsel
[Name and Address of Registrar]
Re: 8.50% Senior Subordinated Notes due 2007
8.875% Senior Subordinated Notes due 2027
Reference is hereby made to the Indenture, dated as of October 29, 1997 (the
"Indenture"), between The AES Corporation (the "Issuer") and The First National
Bank of Chicago, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
, (the "Holder") owns and proposes to exchange the
Security[s] specified herein, in the principal amount of $ in such
Security[s] (the "Exchange"). In the event Holder holds Physical Securities,
this Certificate is accompanied by one or more certificates aggregating at least
the principal amount of Securities proposed to be Exchanged. In connection with
the Exchange, the Holder hereby certifies that:
1. EXCHANGE OF RESTRICTED PHYSICAL SECURITIES OR INTERESTS IN THE INITIAL GLOBAL
SECURITY FOR PHYSICAL SECURITIES THAT DO NOT BEAR THE SECURITIES ACT LEGEND OR
UNRESTRICTED GLOBAL SECURITIES
(a) [ ] CHECK IF EXCHANGE IS FROM INITIAL GLOBAL SECURITIES TO THE
UNRESTRICTED GLOBAL SECURITY. In connection with the Exchange of the Holder's
Initial Global Security to the Unrestricted Global Security in an equal
principal amount, the Holder hereby certifies (i) the Unrestricted Global
Securities are being acquired for the Holder's own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Initial Global Securities and pursuant to and in
accordance with the Securities Act of 1933, as amended (the "Securities Act")
and (iii) the restrictions on transfer contained in the Indenture
D-1
<PAGE>
and the Securities Act Legend are not required in order to maintain compliance
with the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED PHYSICAL SECURITIES TO AN
INTEREST IN THE UNRESTRICTED GLOBAL SECURITY. In connection with the Holder's
Exchange of Restricted Physical Securities for Interest in the Unrestricted
Global Security, (i) the Interest in the Unrestricted Global Security are being
acquired for the Holder's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Physical Securities and pursuant to and in accordance with the
Securities Act and (iii) the restrictions on transfer contained in the Indenture
and the Securities Act Legend are not required in order to maintain compliance
with the Securities Act.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED PHYSICAL SECURITIES TO
PHYSICAL SECURITIES THAT DO NOT BEAR THE SECURITIES ACT LEGEND. In connection
with the Holder's Exchange of a Restricted Physical Security for Physical
Securities that do not bear the Securities Act Legend, the Holder hereby
certifies (i) the Physical Securities that do not bear the Securities Act Legend
are being acquired for the Holder's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Physical Securities and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Securities Act Legend are not required in order to maintain
compliance with the Securities Act and (iv) one or more of the events specified
in Section 2.6(a) of the Indenture have occurred.
2. [ ] CHECK IF EXCHANGE IS FROM RESTRICTED PHYSICAL SECURITIES TO INTERESTS IN
AN INITIAL GLOBAL SECURITY . In connection with the Exchange of the Holder's
Restricted Physical Debenture for interests in the Initial Global Security in
the [CHECK ONE] [ ] 144A Global Security, [ ] Regulation S Global Security, with
an equal principal amount, (i) the interests in the Initial Global Security are
being acquired for the Holder's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Physical Security and pursuant to and in accordance
with the Securities Act. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Initial Global Security issued
will be subject to the restrictions on transfer enumerated in the Securities Act
Leg-
<PAGE>
end printed on the Initial Global Securities and in the Indenture and the
Securities Act.
The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a)[ ] 8.50% Senior Subordinated Notes due 2007
(b)[ ] 8.875% Senior Subordinated Debentures due 2027
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
[Insert Name of Holder]
By:
Name:
Title:
Dated:
-----------------
EXHIBIT 4.1.2
THE AES CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
AS TRUSTEE
----------------
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 21, 1997
(SUPPLEMENTAL TO INDENTURE DATED AS OF OCTOBER 29, 1997)
FIRST SUPPLEMENTAL INDENTURE dated as of November 21, 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
October 29, 1997, as may be amended or supplemented from time to time,
(hereinafter called the "INDENTURE") between the Company and the Trustee
providing for the issue of its 8.50% Senior Subordinated Notes due 2007
(hereinafter called the "NOTES") and its 8.875% Senior Subordinated Debentures
due 2027 (hereinafter called the "DEBENTURES" and together with the Notes, the
"SECURITIES"); and
WHEREAS, Section 9.2 of the Indenture provides that the Indenture may be
amended or compliance with a provision of the Indenture may be waived by the
Company and the Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the Securities affected thereby; and
WHEREAS, holders of not less than a majority in aggregate principal amount
of the Securities affected hereby outstanding on November 21, 1997 have given
and not revoked their consent to the execution by the Company and the Trustee of
the amendment set forth in this First Supplemental Indenture; and
WHEREAS, all conditions and requirements necessary to make this First
Supplemental Indenture a valid and binding instrument in accordance with its
terms and the terms of the 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 First Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires, all capitalized terms defined herein and defined in the
Indenture shall have the meanings assigned to them herein. Unless otherwise
expressly specified, all references to a "SECTION" herein refer to a section of
the First Supplemental Indenture.
Section 2. Amendment of Section 1.1 of the Indenture. The definitions of
"Finance Subsidiary" and "Redeemable Stock" in Section 1.1 of the Indenture are
hereby amended as follows:
(a) The definition of "Finance Subsidiary" is amended by replacing the
reference to "maturity of the Securities" in clause (i) thereof with a reference
to "maturity of the Notes".
(b) The definition of "Redeemable Stock" is amended by replacing each
reference to "Stated Maturity of the Securities" therein with a reference to
"Stated Maturity of the Notes".
Section 3. Amendment of Indenture. This First Supplemental Indenture
shall form a part of the Indenture as supplemented hereby. The Indenture as
supplemented by this First Supplemental Indenture is hereby in all respects
ratified and confirmed.
<PAGE>
Section 4. Acceptance by Trustee. The Trustee, for itself and its successor
or successors, accepts the trust of the Indenture as amended by this First
Supplemental Indenture, and agrees to perform the same, but only upon the terms
and conditions set forth in the 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 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 First Supplemental Indenture other than as
to the validity of its execution and delivery by the Trustee.
Section 5. Counterparts. This First Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this 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
REGISTRATION RIGHTS AGREEMENT
Dated as of October 29, 1997
among
THE AES CORPORATION
and
J.P. MORGAN SECURITIES INC.,
and
SALOMON BROTHERS INC
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of October
29, 1997, by and among THE AES CORPORATION, a Delaware corporation (the
"Company"), and J.P. MORGAN SECURITIES INC. and SALOMON BROTHERS INC
(collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated as of October 24, 1997, among the Company and the Initial Purchasers (the
"Purchase Agreement") relating to the sale by the Company to the Initial
Purchasers, severally, of $375,000,000 aggregate principal amount of its 8.50%
Senior Subordinated Notes due 2007 (the "Notes") and $125,000,000 aggregate
principal amount of its 8.875% Senior Subordinated Debentures due 2027 (the
"Debentures" and, collectively with the Notes, the "Securities"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement for
the equal benefit of the Initial Purchasers and their direct and indirect
transferees. The execution and delivery of this Agreement is a condition to the
Initial Purchasers' obligation to purchase the Securities under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4.
Advice: See Section 5.
Applicable Period: See Section 2(b).
Closing Date: The Closing Date as defined in the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Consummation Date: The 180th day after the Closing Date.
<PAGE>
2
Debentures: See the preamble to this Agreement.
DTC: See Section 5(a).
Effectiveness Date: The 150th day after the Closing Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Exchange Securities: See Section 2(a).
Filing Date: The 90th day after the Closing Date.
Holder: Any record holder of Registrable Securities.
Indemnified Person: See Section 7.
Indemnifying Person: See Section 7.
Indenture: The Indenture, dated as of October 29, 1997, between the Company
and The First National Bank of Chicago, as trustee, pursuant to which the
Securities are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(p).
Issue Date: The original issue date of the Securities.
NASD: See Section 5(t).
Notes: See the preamble to this Agreement.
<PAGE>
3
Participant: See Section 7.
Participating Broker-Dealer: See Section 2(b).
Person: 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.
Private Exchange: See Section 2(b).
Private Exchange Securities: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Records: See Section 5(p).
Registrable Securities: The Securities upon original issuance of the
Securities and at all times subsequent thereto, each Exchange Security as to
which Section 2(c)(1)(i) hereof is applicable upon original issuance and at all
times subsequent thereto and, if issued, the Private Exchange Securities, until
in the case of any such Notes, Debentures, Exchange Securities or Private
Exchange Securities, as the case may be, (i) a Registration Statement (other
than, with respect to any Exchange Security as to which Section 2(c)(1)(i)
hereof is applicable, the Exchange Registration Statement) covering such Notes,
Debentures, Exchange Securities or Private Exchange Securities has been declared
effective by the SEC and such Notes, Debentures, Exchange Securities or Private
Exchange Securities, as the case may be, have been disposed of in accordance
with such effective Registration Statement, (ii) such Notes, Debentures,
Exchange Securities or Private Exchange Securities, as the case may be, are sold
in compliance with Rule 144, or (iii) such Notes, Debentures, Exchange
Securities or Private Exchange Securities, as the case may be, cease to be
outstanding.
<PAGE>
4
Registration Statement: Any registration statement of the Company,
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such rule may
be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the preamble to this Agreement.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee as defined in the Indenture and, if existent, the
trustee under any indenture governing the Exchange Securities and Private
Exchange Securities (if any).
<PAGE>
5
Underwritten registration or underwritten offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
--------------
(a) The Company agrees to file with the SEC as soon as practicable
after the Closing Date, but in no event later than the Filing Date, an
offer to exchange (the "Exchange Offer") any and all of the Registrable
Securities for a like aggregate principal amount of debt securities of the
Company which are identical, in the case of the Notes, in all material
respects to the Notes and, in the case of the Debentures, in all material
respects to the Debentures (collectively, the "Exchange Securities") (and
which are entitled to the benefits of a trust indenture which is identical
in all material respects to the Indenture (other than such changes as are
necessary to comply with any requirements of the SEC to effect or maintain
the qualification of such trust indenture under the TIA) and which has been
qualified under the TIA), except that the Exchange Securities shall have
been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Company
agrees to use its reasonable best efforts to keep the Exchange Offer open
for at least 20 business days (or longer if required by applicable law)
after the date notice of the Exchange Offer is mailed to Holders and to
consummate the Exchange Offer on or prior to the Consummation Date. The
Exchange Offer will be registered under the Securities Act on the
appropriate form (the "Exchange Registration Statement") and will comply
with all applicable tender offer rules and regulations under the Exchange
Act. If after such Exchange Registration Statement is initially declared
effective by the SEC, the Exchange Offer or the issuance of the Exchange
Securities thereunder is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or
court such Exchange Registration Statement shall be deemed not to have
become effective for purposes of this Agreement. Each Holder who
participates in the Exchange Offer will be deemed to represent that any
Exchange Securities received by it will be acquired in the ordinary course
of its business, that at the time of the consummation of the Exchange Offer
such Holder will have no arrangement or understanding with any person to
participate in the distribution of the Exchange Securities in violation of
the provisions of the Securities Act, and
<PAGE>
6
that such Holder is not an affiliate of the Company within the meaning of
the Securities Act. Upon consummation of the Exchange Offer in accordance
with this Section 2, the provisions of this Agreement shall continue to
apply, mutatis, mutandis, solely with respect to Registrable Securities
that are Private Exchange Securities and Exchange Securities held by
Participating Broker-Dealers, and the Company shall have no further
obligation to register Registrable Securities (other than Private Exchange
Securities and other than Exchange Securities as to which clause (c)(1)(i)
hereof applies) pursuant to Section 3 of this Agreement. No securities
other than the Exchange Securities shall be included in the Exchange
Registration Statement.
(b) The Company shall include within the Prospectus contained in the
Exchange Registration Statement one or more section(s) reasonably
acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC
with respect to the potential "underwriter" status of any broker-dealer
that is the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of Exchange Securities received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies
have been publicly disseminated by the Staff of the SEC or such positions
or policies, in the reasonable judgment of the Initial Purchasers,
represent the prevailing views of the Staff of the SEC. Such section(s)
shall also allow the use of the Prospectus by all persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Securities.
Each participating Broker-Dealer will be required to acknowledge that it
will deliver a Prospectus in connection with any resale of Exchange
Securities.
The Company shall use its reasonable best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of
the Securities Act for such period of time as such persons must comply with
such requirements in order to resell the Exchange Securities, provided that
such period shall not exceed 90 days (or such longer period if
<PAGE>
7
extended pursuant to the last paragraph of Section 5) (the "Applicable
Period").
If, prior to consummation of the Exchange Offer, an Initial Purchaser
holds any Securities acquired by it and having the status of an unsold
allotment in the initial distribution, the Company upon the request of such
Initial Purchaser shall, simultaneously with the delivery of the applicable
Exchange Securities in the Exchange Offer, issue and deliver to each such
Initial Purchaser, in exchange (the "Private Exchange") for the Notes
and/or Debentures held by such Initial Purchaser, a like principal amount
of debt securities of the Company that are identical in all material
respects to the applicable Exchange Securities (the "Private Exchange
Securities") (and which are issued pursuant to the same indenture as the
Exchange Securities) except for the placement of a restrictive legend on
such Private Exchange Securities. The Private Exchange Securities shall
bear the same CUSIP numbers as the respective Exchange Securities. Interest
on the Exchange Securities and Private Exchange Securities will accrue from
the last interest payment date on which interest was paid on the Securities
surrendered in exchange therefor or, if no interest has been paid on the
Securities, from the Issue Date.
Other than as provided in the Indenture with respect to certain
separate voting rights for the holders of Notes and Debentures, any
indenture under which the Exchange Securities or the Private Exchange
Securities will be issued shall provide that the holders of any of the
Exchange Securities and the Private Exchange Securities will vote and
consent together on all matters (to which such holders are entitled to vote
or consent) as one class and that none of the holders of the Exchange
Securities and the Private Exchange Securities will have the right to vote
or consent as a separate class on any matter (to which such holders are
entitled to vote or consent).
(c) If (1) prior to the consummation of the Exchange Offer, the
Company reasonably determines in good faith or Holders of at least a
majority in aggregate principal amount of the Registrable Securities notify
the Company that they have reasonably determined in good faith that (i) in
the opinion of counsel, the Exchange Securities would not, upon receipt, be
tradeable by such Holders who are not affiliates of the Company without
restriction under the Securities Act and without restrictions under ap-
<PAGE>
8
plicable blue sky or state securities laws or (ii) in the opinion of
counsel, the SEC is unlikely to permit the consummation of the Exchange
Offer and/or (2) subsequent to the consummation of the Private Exchange,
holders of at least a majority in aggregate principal amount of the Private
Exchange Securities so request with respect to the Private Exchange
Securities and/or (3) the Exchange Offer is commenced and not consummated
prior to the 45th day following the Consummation Date for any reason, then
the Company shall promptly deliver to the Holders and the Trustee notice
thereof (the "Shelf Notice") and shall thereafter file an Initial Shelf
Registration as set forth in Section 3 (which only in the circumstances
contemplated by clause (2) of this sentence will relate solely to the
Private Exchange Securities) pursuant to Section 3. The parties hereto
agree that, following the delivery of a Shelf Notice to the Holders of
Registrable Securities (only in the circumstances contemplated by clauses
(1) and/or (3) of the preceding sentence), the Company shall not have any
further obligation to conduct the Exchange Offer or the Private Exchange
under this Section 2.
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Company shall as promptly as
reasonably practicable prepare and file with the SEC a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415 covering all of the Registrable Securities (the "Initial Shelf
Registration"). If the Company shall have not yet filed an Exchange
Registration Statement, the Company shall use its reasonable best efforts
to file with the SEC the Initial Shelf Registration on or prior to the
Filing Date. Otherwise, the Company shall use its reasonable best efforts
to file with the SEC the Initial Shelf Registration within 60 days of the
delivery of the Shelf Notice. The Initial Shelf Registration shall be on
Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by such holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
offerings). The Company shall not permit any securities other than the
Registrable Securities to be included in the Initial Shelf Registration or
any Subsequent Shelf Registration (as defined below). The Company shall use
its reasonable best efforts to cause the
<PAGE>
9
Initial Shelf Registration to be declared effective under the Securities
Act on or prior to the 180th day after the filing thereof with the SEC and
to keep the Initial Shelf Registration continuously effective under the
Securities Act until the date which is 24 months from the Issue Date
(subject to extension pursuant to the last paragraph of Section 5 hereof)
(the "Effectiveness Period"), or such shorter period ending when (i) all
Registrable Securities covered by the Initial Shelf Registration have been
sold in the manner set forth and as contemplated in the Initial Shelf
Registration or (ii) a Subsequent Shelf Registration covering all of the
Registrable Securities has been declared effective under the Securities
Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the Effectiveness Period (other than because of the sale
of all of the securities registered thereunder), the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 45 days
of such cessation of effectiveness amend the Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Securities (a
"Subsequent Shelf Registration"). If a Subsequent Shelf Registration is
filed, the Company shall use its reasonable best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration or any Subsequent Shelf Registration was
previously continuously effective. As used herein the term "Shelf
Registration" means the Initial Shelf Registration and any Subsequent Shelf
Registration.
(c) Supplements and Amendments. The Company shall promptly supplement
and amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested
by the Holders of a majority in aggregate principal amount of the
Registrable Securities covered by
<PAGE>
10
such Registration Statement or by any underwriter of such Registrable
Securities.
4. Additional Interest
-------------------
(a) The Company and the Initial Purchasers agree that the Holders of
Registrable Securities will suffer damages if the Company fails to fulfill
its obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision.
Accordingly, the Company agrees to pay, as liquidated damages, additional
interest on the Registrable Securities ("Additional Interest") under the
circumstances and to the extent set forth below (each of which shall be
given independent effect and shall not be duplicative):
(i) if either the Exchange Registration Statement or the Initial Shelf
Registration (in the event the Exchange Offer is not permitted under
applicable law or Commission policy) has not been filed on or prior to the
Filing Date, as the case may be, Additional Interest shall accrue on the
Registrable Securities over and above the stated interest at a rate of .50%
per annum for the first 90 days immediately following the Filing Date, such
Additional Interest rate increasing to 1.0% per annum thereafter;
(ii) if either the Exchange Registration Statement is not declared
effective by the Commission, or the Initial Shelf Registration is not filed
with the Commission, on or prior to the Effectiveness Date, as the case may
be, Additional Interest shall accrue on the Registrable Securities which
are or should have been included in such Registration Statement over and
above the stated interest at a rate of .50% per annum for the first 90 days
immediately following the day after the Effectiveness Date, such Additional
Interest rate increasing to 1.0% thereafter; and
(iii) if (A) the Company has not exchanged Exchange Securities for all
Securities validly tendered in accordance with the terms of the Exchange
Offer on or prior to the Consummation Date, (B) the Exchange Registration
Statement ceases to be effective at any time prior to the time that the
Exchange Offer is consummated or (C)(1) if applicable, the Shelf
Registration has not been declared effective on or prior to the
Consummation Date or (2) such Shelf Registration ceases to be effective at
any time from and after the Consummation Date and during the Effectiveness
Period, then Additional Interest shall accrue on the
<PAGE>
11
Registrable Securities (over and above any interest otherwise payable on
the Registrable Securities) at a rate of .50% per annum for the first 90
days commencing on the (x) 181st day after the Issue Date, in the case of
(A) and (C)(1) above, (y) the day the Exchange Registration Statement
ceases to be effective in the case of (B) above, or (z) the day such Shelf
Registration ceases to be effective in the case of (C)(2) above, such
Additional Interest rate increasing to 1.0% thereafter;
provided, however, that (1) upon the filing of the Exchange Registration
Statement or a Shelf Registration as required hereunder (in the case of clause
(i) of this Section 4), (2) upon the effectiveness of the Exchange Registration
Statement or filing of the Shelf Registration as required hereunder (in the case
of clause (ii) of this Section 4), or (3) upon the exchange of Exchange
Securities for all Securities tendered (in the case of clause (iii)(A) of this
Section 4), or upon the effectiveness of the Exchange Registration Statement
which had ceased to remain effective (in the case of (iii)(B) of this Section
4), or upon the effectiveness of the Shelf Registration (in the case of (iii)(c)
1 of this Section 4) which had or upon the effectiveness of the Shelf
Registration which had ceased to remain effective (in the case of (iii)(C)(2) of
this Section 4), Additional Interest on the Registrable Securities as a result
of such clause (or the relevant subclause thereof), as the case may be, shall
cease to accrue. It being understood and agreed that, notwithstanding any
provision to the contrary, so long as any Registrable Security is then covered
by an effective Shelf Registration Statement, no Additional Interest shall
accrue on such Registrable Security.
(b) The Company shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). The Company shall pay
the Additional Interest due on the Registrable Securities by depositing
with the Trustee, in trust, for the benefit of the Holders thereof, on or
before the applicable semi-annual interest payment date, immediately
available funds in sums sufficient to pay the Additional Interest then due
to Holders of Registrable Securities. The Additional Interest due shall be
payable on each interest payment date to the record Holder of Registrable
Securities entitled to receive the interest payment to be made on such date
as set forth in the Indenture. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal
<PAGE>
12
amount of the affected Registrable Securities of such Holders, multiplied
by a fraction, the numerator of which is the number of days such Additional
Interest rate was applicable during such period (determined on the basis of
a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of
which is 360. Each obligation to pay Additional Interest shall be deemed to
accrue immediately following the occurrence of the applicable Event Date.
The parties hereto agree that the Additional Interest provided for in this
Section 4 constitutes a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of a
Shelf Registration or Exchange Offer to be filed or declared effective, or
a Shelf Registration to remain effective, as the case may be, in accordance
with this Section 4.
5. Registration Procedures
-----------------------
In connection with the registration of any Registrable Securities pursuant
to Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such Registrable Securities in accordance with the intended method
or methods of disposition thereof, and pursuant thereto the Company shall:
(a) Use its reasonable best efforts to prepare and file with the SEC,
as soon as practicable after the date hereof but in any event prior to the
Filing Date in the case of the Exchange Registration Statement or, in the
event the Exchange Offer is not permitted under applicable law or
Commission policy, a Shelf Registration Statement or the Consummation Date
in the case of the Shelf Registration Statement (filed for reasons other
than those stated above), a Registration Statement or Registration
Statements as prescribed by Section 2 or 3, and to use its reasonable best
efforts to cause each such Registration Statement to become effective and
remain effective as provided herein, provided that, if (1) such filing is
pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Securities during the Applicable Period, before
filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall upon written request furnish to and
afford the Holders of the Registrable
<PAGE>
13
Securities (which in the case of Registrable Securities in the form of
global certificates shall be The Depository Trust Company ("DTC")) and each
such Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if
any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein
and all exhibits thereto) proposed to be filed.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement,
as the case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of
any securities being sold by a Participating Broker-Dealer covered by any
such Prospectus; the Company shall not be deemed to have used its
reasonable best efforts to keep a Registration Statement effective during
the Applicable Period if the Company voluntarily takes any action that
would result in selling Holders of the Registrable Securities covered
thereby or Participating Broker-Dealers seeking to sell Exchange Securities
not being able to sell such Registrable Securities or such Exchange
Securities during that period unless such action is required by applicable
law or unless the Company complies with this Agreement, including without
limitation, the provisions of paragraph 5(k) hereof and the last paragraph
of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, notify the selling Holders of Registrable
Securities, or each such Participating Broker-Dealer, as the case may be,
their coun-
<PAGE>
14
sel and the managing underwriters, if any, who have provided the Company
with their names and addresses promptly (but in any event within two
business days), and confirm such notice in writing, (i) when a Prospectus
or any Prospectus supplement or post-effective amendment has been filed,
and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules, documents incorporated or deemed to be incorporated by reference
and exhibits), (ii) of the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (iv) of the
happening of any event or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes
in such Registration Statement, Prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (v) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
<PAGE>
15
Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, use its reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus
or suspending the qualification (or exemption from qualification) of any of
the Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer, for sale in any jurisdiction, and, if any such
order is issued, to use its reasonable best efforts to obtain the
withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Securities being
sold in connection with an underwritten offering, (i) promptly incorporate
in a prospectus supplement or post-effective amendment such information as
the managing underwriters, if any, or such Holders or counsel reasonably
request to be included therein, or (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, furnish to each selling Holder of Registrable
Securities and to each such Participating Broker-Dealer who so requests and
to counsel and each managing underwriter, if any, without charge, one
conformed copy of the Registration Statement or Statements and each
post-effective amendment thereto, including financial statements and
schedules, and if requested, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, deliver to each
<PAGE>
16
selling Holder of Registrable Securities, or each such Participating
Broker-Dealer, as the case may be, their counsel, and the underwriters, if
any, without charge, as many copies of the Prospectus or Prospectuses
(including each form of preliminary prospectus) and each amendment or
supplement thereto and any documents incorporated by reference therein as
such Persons may reasonably request; and, subject to the last paragraph of
this Section 5, the Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling holders of
Registrable Securities or each such Participating Broker-Dealer, as the
case may be, and the underwriters or agents, if any, and dealers (if any),
in connection with the offering and sale of the Registrable Securities
covered by or the sale by Participating Broker-Dealers of the Exchange
Securities pursuant to such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, to use its reasonable best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Securities or each such Participating Broker-Dealer, as the
case may be, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, Participating Broker-Dealer, or the
managing underwriters reasonably request in writing, provided that where
Exchange Securities held by Participating Broker-Dealers or Registrable
Securities are offered other than through an underwritten offering, the
Company agrees to cause its counsel to perform Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to this
Section 5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other reasonable acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Exchange Securities held by Participating
Broker-Dealers or the Registrable Securities covered by the applicable
Registration Statement, provided that the Company shall not be required to
(A) qualify generally to do business in any jurisdic-
<PAGE>
17
tion where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where it
is not then so subject or (C) subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3, reasonably
cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with DTC; and enable such Registrable Securities
to be registered in such names as the managing underwriter or underwriters,
if any, or Holders may request.
(j) Use its reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other United States governmental agencies or authorities
of the United States as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities, except as may be required solely as a consequence
of the nature of such selling Holder's business, in which case the Company
will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(iv) or 5(c)(v) above, as promptly as practicable prepare and
(subject to Section 5(a) above) file with the SEC, solely at the expense of
the Company, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder or to the purchasers of
the Exchange Securities to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Pro-
<PAGE>
18
spectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(l) Use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement or the Exchange Securities,
as the case may be, to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Securities covered by such Registration Statement or the
Exchange Securities, as the case may be, or the managing underwriters, if
any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with
printed certificates for the Registrable Securities in a form eligible for
deposit with DTC and (ii) provide a CUSIP numbers for the Registrable
Securities.
(n) Use its best efforts to cause all Registrable Securities covered
by such Registration Statement or the Exchange Securities, as the case may
be, to be (i) listed on each securities exchange, if any, on which similar
securities issued by the Company are then listed, or (ii) authorized to be
quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or the National Market System of NASDAQ if
similar securities of the Company are so authorized.
(o) In connection with an underwritten offering of Registrable
Securities pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriters in order
to expedite or facilitate the registration or the disposition of such
Registrable Securities, and in such connection, (i) make such
representations and warranties to the underwriters, with respect to the
business of the Company and its subsidiaries, if any, and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if
and when requested; (ii) obtain an opinion of counsel to the Company and
updates thereof in form and
<PAGE>
19
substance reasonably satisfactory to the managing underwriters, addressed
to the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by underwriters; (iii) obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountant(s)
of the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
of the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings and such other matters as may be
reasonably requested by underwriters; and (iv) if an underwriting agreement
is entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or
as and to the extent required thereunder.
(p) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, make available for inspection by any selling Holder
of such Registrable Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such selling holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries (collectively, the "Records"), as shall be reasonably nec-
<PAGE>
20
essary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the
Company to supply all information in each case reasonably requested by any
such Inspector in connection with such Registration Statement. Records
determined in good faith by the Company to be confidential shall not be
disclosed by any Inspector notified of such determination unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (iii) the information in such Records has been
made generally available to the public. Each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company unless
and until such is made generally available to the public. Each selling
Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to further agree that it will, upon learning
that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company at its
expense to undertake appropriate action to prevent disclosure of the
Records deemed confidential.
(q) Provide an indenture trustee for the Registrable Securities or the
Exchange Securities, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Offer or the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the trustee under
any such indenture and the holders of the Registrable Securities, to effect
such changes to such indenture as may be required for such indenture to be
so qualified in accordance with the terms of the TIA; and execute, and use
its reasonable best efforts to cause such trustee to execute, all documents
as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be
so qualified in a timely manner.
(r) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally
<PAGE>
21
available to its securityholders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 90
days after the end of any 12-month period (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in
a firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a Shelf
Registration Statement, which statements shall cover said 12-month periods.
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company (or
to such other Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be,
the Company shall mark, or caused to be marked, on such Registrable
Securities that such Registrable Securities are being cancelled in exchange
for the Exchange Securities or the Private Exchange Securities, as the case
may be; in no event shall such Registrable Securities be marked as paid or
otherwise satisfied.
(t) Reasonably cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(u) Use its reasonable best efforts to take all other steps necessary
to effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as the Company may, from time to time, reasonably request. The Company may
exclude from such registration the Registrable Securities of any seller or
Participating Broker-Dealer who unreasonably fails to furnish such informa-
<PAGE>
22
tion within a reasonable time after receiving such request. Each seller as to
which any Shelf Registration is being effected is deemed to agree to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such seller not
materially misleading.
Each Holder of Registrable Securities and each Participating Broker-Dealer
agrees by acquisition of such Registrable Securities or Exchange Securities to
be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv) or 5(c)(v), such Holder will
forthwith discontinue disposition of such Registrable Securities covered by such
Registration Statement or Prospectus or Exchange Securities to be sold by such
Participating Broker-Dealer, as the case may be, until such holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(k), or until it is advised in writing (the "Advice") by the Company that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Company shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
shall have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) or (y) the Advice.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or
not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing
fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten
offering and (B) fees and expenses of compliance with state securities or
Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Securities or Exchange Securities and determination of the
eligibility of the Registrable Securities or Exchange Securities for
invest-
<PAGE>
23
ment under the laws of such jurisdictions in the United States (x) where
the holders of Registrable Securities are located, in the case of the
Exchange Securities, or (y) as provided in Section 5(h) above, in the case
of Registrable Securities or Exchange Securities to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses (including, without limitation, expenses of printing certificates
for Registrable Securities or Exchange Securities in a form eligible for
deposit with DTC and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any, or, in
respect of Registrable Securities or Exchange Securities to be sold by any
Participating Broker-Dealer during the Applicable Period, by the Holders of
a majority in aggregate principal amount of the Registrable Securities
included in any Registration Statement or of such Exchange Securities, as
the case may be), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and fees and
disbursements of special counsel for the sellers of Registrable Securities
(subject to the provisions of Section 6(b)), (v) fees and disbursements of
all independent certified public accountants referred to in Section
5(o)(iii) (including, without limitation, the expenses of any special audit
and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Company desires such insurance, (viii) fees and expenses of all other
Persons retained by the Company, (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company performing legal or accounting duties), (x) the
expense of any annual audit, (xi) the fees and expenses incurred in
connection with the listing of the securities to be registered on any
securities exchange, if applicable, (xii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any
other documents necessary in order to comply with this Agreement and (xiii)
fees and expenses of the Trustee (including reasonable fees and expenses of
counsel to the Trustee).
(b) In connection with any Shelf Registration hereunder, the Company
shall reimburse the Holders of the Registrable Securities being registered
in such registration for the fees and disbursements of not more than one
counsel (in addition to appropriate local counsel) chosen by
<PAGE>
24
the Holders of a majority in aggregate principal amount of the Registrable
Securities to be included in such Registration Statement. Such Holders
shall be responsible for any and all other out-of-pocket expenses of the
Holders of Registrable Securities incurred in connection with the
registration of the Registrable Securities.
7. Indemnification
---------------
The Company agrees to indemnify and hold harmless each Holder of
Registrable Securities and each Participating Broker-Dealer selling Exchange
Securities during the Applicable Period, the officers and directors of each such
person, and each person, if any, who controls any such person within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Participant furnished in writing
to the Company by or on behalf of such Participant expressly for use therein;
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Participant (or to
the benefit of any person controlling such Participant) from whom the person
asserting any such losses, claims, damages, liabilities or judgments purchased
Registrable Securities or Exchange Securities if a copy of the Prospectus (as
then amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of such
Participant to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of such Registrable Securities or
Exchange Securities, as the case may be, to such person, and if the Prospectus
(as so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages, liabilities or judgments.
Each Participant will be required to agree, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who con-
<PAGE>
25
trols the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Participant, but only with reference to information
relating to such Participant furnished in writing to the Company by or on behalf
of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
The liability of any Participant under this paragraph shall in no event exceed
the proceeds received by such Participant from sales of Registrable Securities
giving rise to such obligations.
In case any action shall be brought against any person in respect of which
indemnity may be sought pursuant to either of the two preceding paragraphs, such
person (the "Indemnified Person") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Person") in writing and the
Indemnifying Person shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Person and payment of all
fees and expenses. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the employment of such counsel has been
specifically authorized in writing by the Indemnifying Person, (ii) the
Indemnifying Person has failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and such Indemnified
Party shall have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Person (in which case the Indemnifying Person
shall not have the right to assume the defense of such action on behalf of such
Indemnified Person, it being understood, however, that the Indemnifying Person
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred). Any such separate firm for the Participants
and such control persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Securities sold by
all such Participants and any such separate
<PAGE>
26
firm for the Company, its directors, officers and such control persons of the
Company shall be designated in writing by the Company. The Indemnifying Person
shall not be liable for any settlement of any such action effected without its
written consent, but if settled with the written consent, the Indemnifying
Person agrees to indemnify and hold harmless any Indemnified Person from and
against any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 10 business days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the Indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages, liabilities
or judgments in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the Participants on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities, or judgments as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
the Participants on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Participants and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
<PAGE>
27
The parties shall agree that it would not be just and equitable if
contribution pursuant to the prior paragraph were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Participant shall be
required to contribute any amount in excess of the amount by which proceeds
received by such Participant from sales of Registrable Securities exceeds the
amount of any damages that such Participant has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7 will
be in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
8. Rule 144 and Rule 144A
----------------------
The Company covenants that it will file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder in a timely manner and, if at any time the Company
is not required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. The Company further covenants that it will take such further
action as any Holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 and Rule 144A under the Securities
Act, as such rules may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
<PAGE>
28
9. Underwritten Registrations
--------------------------
If any of the Registrable Securities covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Securities included in such offering and be reasonably acceptable to the
Company.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Initial Purchasers, in the Purchase
Agreement or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agree that, in the event of any action
for specific performance in respect of such breach, the Company shall waive
the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered and shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof. The Company
has not entered and will not enter into any agreement with respect to any
of its securities which will grant to any Person piggy-back rights with
respect to a Registration Statement.
<PAGE>
29
(c) Adjustments Affecting Registrable Securities. The Company shall
not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability
of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written
consent of Holders of at least a majority of the then outstanding aggregate
principal amount of Registrable Securities. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration
Statement or to Holders of Notes or Debentures separately and that does not
directly or indirectly affect, impair, limit or compromise the rights of
other Holders of Registrable Securities or the Holder of Debentures or
Notes, respectively, may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Securities being sold by such
Holders pursuant to such Registration Statement or by Holders of at least a
majority in aggregate principal amount of the Notes or Debentures so
affected, respectively, provided that the provisions of this sentence may
not be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for
or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most current
address given by the Trustee to the Company; and
(ii) if to the Company, at 1001 North 19th Street, Suite 2000,
Arlington, Virginia 22209, Attention: William R. Luraschi; with a copy to
Davis Polk & Wardwell,
<PAGE>
30
450 Lexington Avenue, New York, New York 10017, Attention: Richard D.
Truesdell, Jr.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Securities; provided, that,
with respect to the indemnity and contribution agreements in Section 7,
each Holder of Registrable Securities subsequent to the Initial Purchasers
shall be bound by the terms thereof if such Holder elects to include
Registrable Securities in a Shelf Registration; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a
successor or assign of a Holder unless and to the extent such successor or
assign holds Registrable Securities.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
<PAGE>
31
(j) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(k) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein.
(l) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the
Company or any of its affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(m) Treatment of Notes and Debentures. The Company undertakes to
perform its obligations hereunder with respect to Registrable Securities
which are Notes and those which are Debentures in a consistent manner
including, but not limited to, registering all Exchange Securities (whether
to be exchange for Notes or Debentures in the Exchange Offer), to the
extent permitted by the rules and regulations of the Commission, in the
Exchange Registration Statement. In the event of disparite treatment of the
Holders of Notes and the Debentures hereunder, whether by action of the
Company, the Commission or otherwise, this Agreement shall apply mutatis
mutandis to the Notes and the Debentures separately and Holders of the
Notes and the Debentures will separately have all rights granted to Holders
hereunder, including, but not limited to, the right to vote separately.
<PAGE>
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
THE AES CORPORATION
By:
---------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
By: J.P. Morgan Securities Inc.
By:
---------------------------------
Name:
Title:
EXHIBIT 5
[LETTERHEAD OF DAVIS POLK & WARDWELL]
January 23, 1998
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
Ladies and Gentlemen:
We have acted as special counsel to The AES Corporation (the "Company") in
connection with the Company's offer (the "Exchange Offer") to exchange its 8.50%
Senior Subordinated Exchange Notes due 2007 (the "New 8.50% Notes") for any and
all of its outstanding 8.50% Senior Subordinated Notes due 2007 (the "Old 8.50%
Notes") and to exchange its 8.875% Senior Subordinated Exchange Debentures due
2027 (the "New 8.875% Debentures", and, together with the New 8.50% Notes, the
"New Notes") for any and all of its outstanding 8.875% Senior Subordinated
Debentures due 2027 (the "Old 8.875% Debentures" and, together with the Old
8.50% Notes, the "Old Notes").
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 or advisable for the
purpose of rendering this opinion.
Upon the basis of the foregoing and assuming the due execution and delivery
of the Notes, we are of the opinion that the New Notes, when executed,
authenticated and delivered in exchange for the Old Notes in accordance with the
Exchange Offer will be valid and binding obligations of the Company enforceable
in accordance with the terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and equitable principles.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Exchange Offer. We also consent to the
reference to us under the caption "Legal Matters" in the Prospectus contained in
such Registration Statement.
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 except
that The First National Bank of Chicago, as Exchange Agent for the Exchange
Offer may rely upon this opinion as if it were addressed directly to it.
Very truly yours,
/s/ Davis Polk & Wardwell
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The AES Corporation on Form S-4 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 to the
reference to us under the heading "Experts" in such Prospectus which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
Washington, D.C.
January 23, 1998
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The AES Corporation on Form S-4 of our report dated February 28, 1997
relating to the financial statements of Companhia Energetica de Minas Gerais --
CEMIG as at and for the years ended December 31, 1996 and 1995 prepared in
accordance with accounting principles generally accepted in Brazil, which
appears in Item 7 of the Current Report on Form 8-K of The AES Corporation dated
July 16, 1997 and to the reference to us under the headings "Experts" in the
Prospectus which is part of such Registration Statement.
/s/ Price Waterhouse
- -------------------------
Auditores Independentes
Belo Horizonte, MG-Brazil
January 23, 1998
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in this Registration Statement of The AES
Corporation on Form S-4 of our report dated December 30, 1997 relating to the
financial statements of Companhia Centro-Oeste de Energia Eletrica CEEE D2 as at
and for the nine months ended September 30, 1997 prepared in accordance with
accounting practices originating in Brazil's Corporation Law, which appears in
Item 7 of the Current Report on Form 8-K of The AES Corporation dated January 9,
1998.
/s/ ERNST & YOUNG
- -------------------------
Auditores Independentes
Porto Alegre, RS Brazil
January 22, 1998
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)
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.
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.
2
<PAGE>
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 the State of Illinois, on this 20th day of January, 1998.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
By /s/ John R. Prendiville
-----------------------
John R. Prendiville
Vice President
* EXHIBIT 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
January 20, 1998
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/ John R. Prendiville
-----------------------
John R. Prendiville
Vice President
4
<PAGE>
EXHIBIT 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 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 SEPTEMBER 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 4,499,157 1.a.
b. Interest-bearing balances(2).................................... 0071 6,967,103 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 5,251,713 2.b.
3. Federal funds sold and securities purchased under agreements to
resell 1350 5,561,976 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C).............................................................. RCFD 2122 24,171,565 4.a.
b. LESS: Allowance for loan and lease losses....................... RCFD 3123 419,216 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 23,752,349 4.d.
5. Trading assets (from Schedule RD-D)................................ 3545 6,238,805 5.
6. Premises and fixed assets (including capitalized leases)........... 2145 717,303 6.
7. Other real estate owned (from Schedule RC-M)....................... 2150 7,187 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)..................................... 2130 77,115 8.
9. Customers' liability to this bank on acceptances outstanding....... 2155 614,921 9.
10. Intangible assets (from Schedule RC-M)............................. 2143 277,105 10.
11. Other assets (from Schedule RC-F).................................. 2160 2,147,141 11.
12. Total assets (sum of items 1 through 11)........................... 2170 56,108,875 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>
Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 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
DOLLAR AMOUNTS IN
THOUSANDS BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
SCHEDULE RC-CONTINUED
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)............................................ RCON 2200 21,496,468 13.a
(1) Noninterest-bearing(1)............................................. RCON 6631 8,918,843 13.a.1
(2) Interest-bearing................................................... RCON 6636 12,577,625 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)..................................... RCFN 2200 14,164,129 13.b.
(1) Noninterest bearing................................................ RCFN 6631 352,399 13.b.1
(2) Interest-bearing................................................... RCFN 6636 13,811,730 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3,894,469 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 68,268 15.a
b. Trading Liabilities(from Schedule RC-D)................................ RCFD 3548 5,247,232 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less......................... RCFD 2332 2,608,057 16.a
b. With a remaining maturity of more than one year through three years .. A547 379,893 16.b
. c. With a remaining maturity of more than three years ................... A548 323,042 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding................... RCFD 2920 614,921 18
19. Subordinated notes and debentures (2)..................................... RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G).................................... RCFD 2930 1,222,121 20
21. Total liabilities (sum of items 13 through 20)............................ RCFD 2948 51,718,600 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 2,989,408 25
26. a. Undivided profits and capital reserves................................. RCFD 3632 1,175,518 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities............................................................ RCFD 8434 26,750 26.b.
27. Cumulative foreign currency translation adjustments...................... RCFD 3284 (2,259) 27
28. Total equity capital (sum of items 23 through 27)........................ RCFD 3210 4,390,275 28
29. Total liabilities and equity capital (sum of items 21 and 28)............ RCFD 3300 56,108,875 29
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the
bank by independent external Number
auditors as of any date during 1996 ........................................RCFD 6724 ........ N/A M.1
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
public accounting firm which submits a report on the bank chartering 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
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in work)
accordance with generally accepted auditing standards 8 = No external audit work
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
EXHIBIT 99.1
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
8.50% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
8.50% SENIOR SUBORDINATED NOTES DUE 2007
AND
8.875% SENIOR SUBORDINATED EXCHANGE DEBENTURES DUE 2027
FOR ANY AND ALL OUTSTANDING
8.875% SENIOR SUBORDINATED DEBENTURES DUE 2027
OF
THE AES CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON FEBRUARY , 1998
(THE "EXPIRATION DATE")
UNLESS EXTENDED BY THE AES CORPORATION
EXCHANGE AGENT:
THE FIRST NATIONAL BANK OF CHICAGO
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: Facsimile Transmissions: By Hand or Overnight Delivery:
(Registered or Certified Mail (Eligible Institutions Only) The First National Bank of Chicago
Recommended) (212) 240-8938 c/o First Chicago Trust
The First National Bank of Chicago Company of New York
c/o First Chicago Trust 14 Wall Street
Company of New York To Confirm by Telephone 8th Floor, Window 2
8th Floor, Window 2 or for Information Call: New York, New York 10005
New York, New York 10005 (212) 240-8801
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE
TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated January , 1998
(the "Prospectus") of The AES Corporation (the "Company") which, together with
this Letter of Transmittal (the "Letter of Transmittal"), describes the
Company's offer (the "Exchange Offer") to exchange $1,000 in principal amount of
8.50% Senior Subordinated Exchange Notes due 2007 (the "New 8.50% Notes") for
each $1,000 in principal amount of outstanding 8.50% Senior Subordinated Notes
due 2007 (the "Old 8.50% Notes") and to exchange $1,000 in principal amount of
8.875% Senior Subordinated Exchange Debentures due 2027 (the "New 8.875%
Debentures", and together with the New 8.50% Notes, the "New Notes") for each
$1,000 in principal amount of outstanding 8.875% Senior Subordinated Debentures
due 2027 (the "Old 8.875% Debentures" and together with the Old 8.50% Notes, the
"Old Notes"). The terms of the New 8.50% Notes and the New 8.875% Debentures are
identical in all material respects (including principal amount, interest rate
and maturity) to
<PAGE>
the terms of the Old 8.50% Notes and Old 8.875% Debentures for which they may
respectively be exchanged pursuant to the Exchange Offer, except that the
offering of the New Notes will have been registered under the Securities Act of
1933, as amended and, therefore, the New Notes will not bear legends restricting
the transfer thereof and certain provisions relating to an increase in the
stated rate of interest shall be eliminated.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule affixed hereto.
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD 8.50% NOTES TENDERED HEREWITH
- --------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) AMOUNT PRINCIPAL
OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBER(S)* BY OLD NOTES* TENDERED**
- --------------------------------------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL
- --------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represented by Old Notes. See Instruction 2.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD 8.875% DEBENTURES TENDERED HEREWITH
- --------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) AMOUNT PRINCIPAL
OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBER(S)* BY OLD NOTES* TENDERED**
- --------------------------------------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
TOTAL
- --------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represented by Old Notes. See Instruction 2.
- --------------------------------------------------------------------------------
<PAGE>
This Letter of Transmittal is to be used either if certificates for Old
Notes are to be forwarded herewith or if delivery of Old Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company ("DTC"), pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer" in the Prospectus. Delivery of documents
to a book-entry transfer facility does not constitute delivery to the Exchange
Agent.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder or any person whose Old
Notes are held of record by DTC or its nominee who desires to deliver such Old
Notes by book-entry transfer at DTC.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date may tender their Old Notes according to the
guaranteed delivery procedure set forth in the Prospectus under the caption "The
Exchange Offer -- Guaranteed Delivery Procedures."
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY TRUST COMPANY AND COMPLETE THE FOLLOWING:
Name of Tendering
Institution
----------------------------------------------------------------
---------------------------------------------------------------------------
The Depository Trust Company
Account Number
------------------------------------------------------------
Transaction Code Number
----------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
-----------------------------------------------
---------------------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery
---------------------------------------------------------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Account Number
------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
----------------------------------------------------------------------
Address:
-------------------------------------------------------------------
---------------------------------------------------------------------------
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described principal amount
of Old Notes. Subject to, and effective upon, the acceptance for exchange of the
Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that said Exchange Agent acts as the agent
of the undersigned in connection with the Exchange Offer) to cause the Old Notes
to be assigned, transferred and exchanged. The undersigned represents and
warrants that it has full power and authority to tender, exchange, assign and
transfer the Old Notes and to acquire New Notes issuable upon the exchange of
such tendered Old Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Old Notes or transfer ownership of such Old Notes on the
account books maintained by The Depository Trust Company.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer." The undersigned recognizes
that as a result of these conditions (which may be waived, in whole or in part,
by the Company), as more particularly set forth in the Prospectus, the Company
may not be required to exchange any of the Old Notes tendered hereby and, in
such event, the Old Notes not exchanged will be returned to the undersigned at
the address shown below the signature of the undersigned.
By tendering, each Holder of Old Notes represents to the Company that (i)
the New Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is such Holder, (ii) neither the Holder of Old Notes nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not a
broker-dealer or is a broker-dealer but will not receive New Notes for its own
account in exchange for Old Notes, neither the Holder nor any such other person
is engaged in or intends to participate in a distribution of the New Notes and
(iv) neither the Holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act of 1933, as
amended (the "Act"). If the tendering Holder is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes, it represents
that the Old Notes to be exchanged for the New Notes were acquired by it as a
result of market-making activities or other trading activities, and acknowledges
that it will deliver a prospectus meeting the requirements of the Act in
connection with any resale of such New Notes. By acknowledging that it will
deliver and by delivering a prospectus meeting the requirements of the Act in
connection with any resale of such New Notes, the undersigned is not deemed to
admit that it is an "underwriter" within the meaning of the Act.
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Tendered Old Notes may be withdrawn
at any time prior to the Expiration Date.
Certificates for all New Notes delivered in exchange for tendered Old Notes
and any Old Notes delivered herewith but not exchanged, in each case registered
in the name of the undersigned, shall be delivered to the undersigned at the
address shown below the signature of the undersigned.
<PAGE>
- --------------------------------------------------------------------------------
TENDERING HOLDER(S) SIGN HERE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Holder(s)
Dated: , 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Old Notes or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith or, if the Old
Notes are held of record by DTC or its nominee, the person in whose name such
Old Notes are registered on the books of DTC. If signature by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
the full title of such person.) See Instruction 3.
Name(s): -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
----------------------------------------------------------
Address: -----------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No:
-----------------------------------------------------
- --------------------------------------------------------------------------------
Tax Identification No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTION 3)
Authorized Signature:
-----------------------------------------------------------
Name:
--------------------------------------------------------------------------
Title:
--------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Area Code and Telephone No.:
----------------------------------------------------
Dated: , 199
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates
for all physically delivered Old Notes or confirmation of any book-entry
transfer to the Exchange Agent's account at The Depository Trust Company of Old
Notes tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT
AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED
THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO
LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other required documents to the Exchange Agent on or
prior to the Expiration Date or comply with book-entry transfer procedures on a
timely basis may tender their Old Notes pursuant to the guaranteed delivery
procedure set forth in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures." Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution (as defined therein); (ii) on or prior to
the Expiration Date the Exchange Agent must have received from such Eligible
Institution, a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram,
facsimile transmission, mail or hand delivery) setting forth the name and
address of the tendering Holder and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, the certificates of all physically tendered Old Notes, in
proper form for transfer, or a confirmation of any book-entry transfer of such
Old Notes into the Exchange Agent's account at The Depository Trust Company, as
the case may be, and all other documents required by this Letter of Transmittal,
will be deposited by the Eligible Institution with the Exchange Agent, and (iii)
all tendered Old Notes (or a confirmation of any book-entry transfer of such Old
Notes into the Exchange Agent's account at The Depository Trust Company) as well
as this Letter of Transmittal and all other documents required by this Letter of
Transmittal must be received by the Exchange Agent within five New York Stock
Exchange trading days after the date of execution of the Notice of Guaranteed
Delivery, all as provided in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Old Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted in
all denominations of $1,000 and integral multiples in excess thereof. If less
than the entire principal amount of Old Notes evidenced by a submitted
certificate is tendered, the tendering Holder must fill in the principal amount
tendered in the box entitled "Principal Amount Tendered." A newly issued
certificate for the principal amount of Old Notes submitted but not tendered
will be sent to such Holder as soon as practicable after the Expiration Date.
All Old Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Tenders of Old Notes pursuant to the Exchange Offer are irrevocable, except
that Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. To be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent at one of the addresses specified on the first page hereof. Any
such notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered Old Notes to be withdrawn, identify the Old Notes
to be withdrawn (including the principal amount of such Old Notes, where
certificates for Old Notes have been tendered) specify the name in which such
Old Notes are registered, if different from that of the withdrawing Holder, must
include a statement that such Holder is withdrawing its election to have such
<PAGE>
Old Notes exchanged, and must be signed by the Holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Old Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly following receipt of notice of withdrawal. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the withdrawing
Holder must also submit the serial numbers of the particular certificates to be
withdrawn. If Old Notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at The Depository Trust Company to be credited with the withdrawn
Old Notes or otherwise comply with The Depository Trust Company's procedures.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are not exchanged for any reason will be returned to the Holder thereof without
cost to such Holder (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at The Depository Trust Company
pursuant to the book-entry transfer procedures described above, such Old Notes
will be credited to an account maintained with The Depository Trust Company for
the Old Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described herein and in the
Prospectus under "Procedures for Tendering Old Notes" at any time on or prior to
the Expiration Date.
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of certificates without
alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered Holder or
Holders of Old Notes listed and tendered hereby, no endorsements of certificates
or separate written instruments of transfer or exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered Holder or Holders of the Old Notes listed, such Notes must be
endorsed or accompanied by separate written instruments of transfer or exchange
in form satisfactory to the Company and duly executed by the registered Holder,
in either case signed exactly as the name or names of the registered Holder or
Holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by an
Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a registered
Holder of such Old Notes and the certificates for New Notes to be issued in
exchange therefor are to be issued (or any untendered amount of Old Notes are to
be reissued) to the registered Holder; or (ii) for the account of any Eligible
Institution.
4. TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Old Notes to it or its order pursuant
to the Exchange Offer. If, however, New Notes are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
Holder of
<PAGE>
the Old Notes tendered hereby, or if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith the amount of such transfer taxes will be billed directly to
such tendering Holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
5. WAIVER OF CONDITIONS. The Company reserves the absolute right in its
sole discretion to waive, in whole or in part, any of the conditions to the
Exchange Offer set forth in the Prospectus.
6. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Old Notes
have been mutilated, lost, stolen or destroyed should contact the Exchange Agent
at the address indicated below for further instructions.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth below. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to the
Company at 1001 North 19th Street, Arlington, Virginia 22209, Attention: Barry
J. Sharp.
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or Old
Notes will be resolved by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all Letters of
Transmittal or tenders that are not in proper form or the acceptance of which
would, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the right to waive any irregularities or conditions of tender as to the
particular Old Notes covered by any Letter of Transmittal or tendered pursuant
to such letter either before or after the Expiration Date (including the right
to waive the ineligibility of any Holder who seeks to tender Old Notes in the
Exchange Offer). Unless waived, any defects or irregularities in connection with
the tenders of Old Notes for exchange must be cured within such reasonable
period of time as the Company shall determine. None of the Company, the Exchange
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification. The Company's interpretation of the terms and conditions
of the Exchange Offer as to any particular Old Notes (including the Letter of
Transmittal and the instructions thereto) either before or after the Expiration
Date shall be final and binding on all parties.
9. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR OLD NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
OFFER TO EXCHANGE
8.50% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
8.50% SENIOR SUBORDINATED NOTES DUE 2007
AND
8.875% SENIOR SUBORDINATED EXCHANGE DEBENTURES DUE 2027
FOR ANY AND ALL OUTSTANDING
8.875% SENIOR SUBORDINATED DEBENTURES DUE 2027
OF
THE AES CORPORATION
Registered holders of outstanding 8.50% Senior Subordinated Notes due 2007
(the "Old 8.50% Notes") who wish to tender their Old 8.50% Notes in exchange for
a like principal amount of 8.50% Senior Subordinated Exchange Notes due 2007
(the "New 8.50% Notes") and registered holders of outstanding 8.875% Senior
Subordinated Debentures due 2027 (the "Old 8.875% Debentures" and, together with
the Old 8.50% Notes, the "Old Notes") who wish to tender their Old 8.875%
Debentures in exchange for a like principal amount of 8.875% Senior Subordinated
Exchange Debentures due 2027 (the "New 8.875% Debentures" and, together with the
New 8.50% Notes, the "New Notes") and, in each case, whose Old Notes are not
immediately available or who cannot deliver their Old Notes and Letter of
Transmittal (and any other documents required by the Letter of Transmittal) to
The First National Bank of Chicago (the "Exchange Agent") prior to the
Expiration Date, may use this Notice of Guaranteed Delivery or one substantially
equivalent hereto. This Notice of Guaranteed Delivery may be delivered by hand
or sent by facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight delivery) or mail to the Exchange
Agent. See "The Exchange Offer - Guaranteed Delivery Procedures" in the
Prospectus.
The Exchange Agent for the Exchange Offer is:
THE FIRST NATIONAL BANK OF CHICAGO
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: Facsimile Transmissions: By Hand or Overnight Delivery:
(Registered or Certified Mail (Eligible Institutions Only) The First National Bank of Chicago
Recommended) (212) 240-8938 c/o First Chicago Trust
The First National Bank of Chicago Company of New York
c/o First Chicago Trust 14 Wall Street
Company of New York To Confirm by Telephone 8th Floor, Window 2
8th Floor, Window 2 or for Information Call: New York, New York 10005
New York, New York 10005 (212) 240-8801
</TABLE>
<PAGE>
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission to
a number other than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on Letter of Transmittal is required to be guaranteed
by an Eligible Institution, such signature guarantee must appear in the
applicable space provided on the Letter of Transmittal for Guarantee of
Signatures.
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch,
agency or correspondent in the United States, hereby guarantees to deliver to
the Exchange Agent at one of its addresses set forth above, the certificates
representing the Old Notes, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, and any other documents required by the Letter of Transmittal within
five New York Stock Exchange, Inc. trading days after the date of execution of
this Notice of Guaranteed Delivery.
Name of Firm:
----------------------------- --------------------------------
(Authorized Signature)
Address: Title:
---------------------------------- ------------------------------
- ------------------------------------------ Name:
(Zip Code) ------------------------------
(Please type or print)
Area Code and Telephone Number: Date:
- ------------------------------------------ -----------------------------
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED
DELIVERY. NOTES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
EXHIBIT 99.3
OFFER TO EXCHANGE
8.50% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
8.50% SENIOR SUBORDINATED NOTES DUE 2007
AND
8.875% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2027
FOR ANY AND ALL OUTSTANDING
8.875% SENIOR SUBORDINATED NOTES DUE 2027
OF
THE AES CORPORATION
To Our Clients:
We are enclosing herewith a Prospectus, dated January , 1998, of The AES
Corporation (the "Company"), a Delaware corporation, and a related Letter of
Transmittal (which together constitute the "Exchange Offer") relating to the
offer by the Company to exchange its 8.50% Senior Subordinated Exchange Notes
due 2007 (the "New 8.50% Notes") and 8.875% Senior Subordinated Exchange
Debentures due 2027 (the "New 8.875% Debentures" and, together with the New
8.50% Notes, the "New Notes"), pursuant to an offering registered under the
Securities Act of 1933, as amended (the "Securities Act"), for a like principal
amount of its issued and outstanding 8.50% Senior Subordinated Notes due 2007
(the "Old 8.50% Notes") or 8.875% Senior Subordinated Debentures 2027 (the "Old
8.875% Debentures" and, together with the Old 8.50% Notes, the "Old Notes"),
respectively, upon the terms and subject to the conditions set forth in the
Exchange Offer.
PLEASE NOTE THAT THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FEBRUARY , 1998, UNLESS EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
We are the holder of record and/or participant in the book-entry transfer
facility of Old Notes held by us for your account. A tender of such Old Notes
can be made only by us as the record holder and/or participant in the book-entry
transfer facility and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may on your behalf
make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired in the Exchange Offer
are being obtained in the ordinary course of business of the person receiving
such New Notes, whether or not such person is such holder, (ii) neither the
holder of the Old Notes nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) if the holder is not a broker-dealer or is a broker-dealer but will
not receive New Notes for its own account in exchange for Old Notes, neither the
holder nor any such other person is engaged in or intends to participate in a
distribution of the New Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act of 1933, as amended. If the tendering holder is a broker-dealer
(whether or not it is also an "affiliate") that will receive New Notes for its
own account in exchange for Old Notes, we will represent on behalf of such
broker-dealer that the Old Notes to be exchanged for the New Notes were acquired
by it as a result of market-making activities or other trading activities, and
acknowledge on behalf of such broker-dealer that it will deliver a prospectus
meeting the
<PAGE>
requirements of the Act in connection with any resale of such New Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Act in connection with any resale of such New Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Act.
Very truly yours,
EXHIBIT 99.4
OFFER TO EXCHANGE
8.50% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
8.50% SENIOR SUBORDINATED NOTES DUE 2007
AND
8.875% SENIOR SUBORDINATED EXCHANGE DEBENTURES DUE 2027
FOR ANY AND ALL OUTSTANDING
8.875% SENIOR SUBORDINATED DEBENTURES DUE 2027
OF
THE AES CORPORATION
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by The AES Corporation (the "Company"), a Delaware corporation, to exchange its
8.50% Senior Subordinated Exchange Notes due 2007 (the "New 8.50% Notes") and
8.875% Senior Subordinated Exchange Debentures due 2027 (the "New 8.875%
Debentures and, together with the New 8.50% Notes, the "New Notes"), pursuant to
an offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount of its issued and outstanding
8.50% Senior Subordinated Notes due 2007 (the "Old 8.50% Notes") or 8.875%
Senior Subordinated Debentures due 2027 (the "Old 8.875% Debentures" and,
together with the Old 8.50% Notes, the "Old Notes"), respectively, upon the
terms and subject to the conditions set forth in the Company's Prospectus, dated
December __, 1997, and the related Letter of Transmittal (which together
constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated January __, 1998;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry Transfer Participant
from Owner; and
5. Letter which may be sent to your clients for whose account you hold Old
Notes in your name or in the name of your nominee, to accompany the
instruction form referred to above, for obtaining such client's
instruction with regard to the Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FEBRUARY __, 1998, UNLESS
EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired in the Exchange Offer
are being obtained in the ordinary course of business of the person receiving
such New Notes, whether or not such person is such holder, (ii) neither the
holder of the Old Notes nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) if the holder is not a broker-dealer or is a broker-dealer but will
not receive New Notes for its own account in exchange for Old Notes, neither the
holder nor any such other person is engaged in or intends to participate in a
distribution of the New Notes and (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act of 1933, as amended. If the tendering holder is a broker-dealer
that will receive New Notes for its own account in exchange for Old Notes, you
will represent on behalf of such broker-dealer that the Old Notes to be
exchanged for the New Notes were acquired by it
<PAGE>
as a result of market-making activities or other trading activities, and
acknowledge on behalf of such broker-dealer that it will deliver a prospectus
meeting the requirements of the Act in connection with any resale of such New
Notes. By acknowledging that it will deliver and by delivering a prospectus
meeting the requirements of the Act in connection with any resale of such New
Notes, the undersigned is not deemed to admit that it is an "underwriter" within
the meaning of the Act.
The enclosed Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Owner contains an authorization by the beneficial owners of the
Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Offer. The Company will pay
or cause to be paid any transfer taxes payable on the transfer of Old Notes to
it, except as otherwise provided in Instruction 4 of the enclosed Letter of
Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
THE AES CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF THE AES CORPORATION OR THE FIRST NATIONAL BANK OF CHICAGO OR AUTHORIZE
YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH
THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
EXHIBIT 99.5
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER OF PARTICIPANT FROM OWNER
OF
THE AES CORPORATION
8.50% Senior Subordinated Notes due 2007
8.875% Senior Subordinated Debentures due 2027
TO REGISTERED HOLDER AND/OR PARTICIPANT OF THE BOOK-ENTRY TRANSFER FACILITY:
The undersigned hereby acknowledges receipt of the Prospectus dated
December, __, 1997 (the "Prospectus") of The AES Corporation, a Delaware
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meaning as ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Old Notes held by you for the account of the
undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount):
$------------ of the 8.50% Senior Subordinated Notes due 2007
$------------ of the 8.875% Senior Subordinated Debentures due 2027
With respect to the Exchange Offer, the undersigned hereby instructs you (check
appropriate box):
[ ] To TENDER the following Old Notes held by you for the account of the
undersigned (insert principal amount of Old Notes to be tendered, (if
any):
$------------ of the 8 3/8% Senior Subordinated Notes due 2007
$------------ of the 8.875% Senior Subordinated Debentures due 2027
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
New Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the undersigned, (ii) neither the undersigned nor
any such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the undersigned is
not a broker-dealer, or is a broker-dealer but will not receive New Notes for
its own account in exchange for Old Notes, neither the undersigned nor any such
other person is engaged in or intends to participate in the distribution of such
New Notes and (iv) neither the undersigned nor any such person is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act of 1933,
as amended (the "Securities Act"). If the undersigned is a broker-dealer that
will receive New Notes for its own account in exchange for Old Notes, it
represents that such old Notes were acquired as a result of market-making
activities or other trading activities, and it acknowledges that it will deliver
a prospectus meeting the requirements of the Securities Act in connection with
any resale of such New Notes. By acknowledging that it will deliver and by
delivering a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes, the undersigned is not deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
<PAGE>
SIGN HERE
Name of beneficial owner(s):
----------------------------------------------------
Signature(s):
-------------------------------------------------------------------
Name(s) (please print):
---------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Telephone Number:
---------------------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------
- --------------------------------------------------------------------------------
Date:
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