Exhibit 10.12
COMPOSITE COPY
$600,000,000
CREDIT AGREEMENT
dated as of
December 19, 1997
(as amended and restated as of March 31, 1999)
among
The AES Corporation,
The Banks Listed Herein,
The Fronting Banks Listed Herein,
and
Morgan Guaranty Trust Company of New York,
as Agent
-----------------------
NationsBank, N.A.
Union Bank of California, N.A.
Co-Arrangers
-----------------------------------------------
As amended by
Amendment No. 1 dated as of May 21, 1999
and
Amendment No. 2 dated as of July 27, 1999
and
Amendment No. 3 dated as of September 28, 1999
-----------------------------------------------
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS......................................................................1
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS.............................................21
SECTION 1.03. TYPES OF BORROWING..............................................................22
ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND.............................................................22
SECTION 2.02. NOTICE OF BORROWING.............................................................23
SECTION 2.03. LETTERS OF CREDIT...............................................................24
SECTION 2.04. NOTES...........................................................................31
SECTION 2.05. MATURITY OF LOANS...............................................................31
SECTION 2.06. INTEREST RATES..................................................................32
SECTION 2.07. METHOD OF ELECTING INTEREST RATES...............................................33
SECTION 2.08. COMMITMENT FEES.................................................................35
SECTION 2.09. TERMINATION OR REDUCTION OF COMMITMENTS.........................................35
SECTION 2.10. MANDATORY REPAYMENTS OF THE LOANS AND CASH
COLLATERALIZATION OF LETTERS OF CREDIT................................................36
SECTION 2.11. OPTIONAL PREPAYMENT OF THE LOANS................................................36
SECTION 2.12. GENERAL PROVISIONS AS TO PAYMENTS...............................................37
SECTION 2.13. FUNDING LOSSES..................................................................37
SECTION 2.14. COMPUTATION OF INTEREST AND FEES................................................38
SECTION 2.15. CASH COLLATERAL ACCOUNT.........................................................38
ARTICLE 3
CONDITIONS
SECTION 3.01. CLOSING.........................................................................39
SECTION 3.02. AES FINANCE SUBSIDIARY ADDITION DATE............................................41
SECTION 3.03. EXTENSION OF CREDIT.............................................................42
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. CORPORATE EXISTENCE AND POWER...................................................43
PAGE
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SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION.........................................................................43
SECTION 4.03. BINDING EFFECT..................................................................43
SECTION 4.04. FINANCIAL INFORMATION...........................................................43
SECTION 4.05. LITIGATION......................................................................44
SECTION 4.06. COMPLIANCE WITH ERISA...........................................................44
SECTION 4.07. ENVIRONMENTAL MATTERS...........................................................44
SECTION 4.08. TAXES...........................................................................45
SECTION 4.09. MATERIAL AES ENTITIES...........................................................45
SECTION 4.10. NOT AN INVESTMENT COMPANY.......................................................46
SECTION 4.11. PUBLIC UTILITY HOLDING COMPANY ACT..............................................46
SECTION 4.12. REPRESENTATIONS IN SUBSIDIARY GUARANTY TRUE AND CORRECT.........................46
SECTION 4.13. FULL DISCLOSURE.................................................................46
SECTION 4.14. EXISTING LETTERS OF CREDIT......................................................46
SECTION 4.15. YEAR 2000 COMPLIANCE............................................................46
ARTICLE 5
COVENANTS
SECTION 5.01. INFORMATION.....................................................................47
SECTION 5.02. PAYMENT OF OBLIGATIONS..........................................................50
SECTION 5.03. MAINTENANCE OF PROPERTY; INSURANCE..............................................50
SECTION 5.04. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE................................50
SECTION 5.05. COMPLIANCE WITH LAWS............................................................51
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS.......................................51
SECTION 5.07. DEBT............................................................................51
SECTION 5.08. MINIMUM CONSOLIDATED NET WORTH..................................................55
SECTION 5.09. RESTRICTED PAYMENTS.............................................................56
SECTION 5.10. SUBORDINATED DEBT AND 8% SENIOR NOTES...........................................56
SECTION 5.11. LIMITATIONS ON GUARANTEES AND COMMITMENTS.......................................56
SECTION 5.12. NEGATIVE PLEDGE.................................................................57
SECTION 5.13. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.....................................59
SECTION 5.14. USE OF PROCEEDS; CLEAN-UP PERIODS...............................................60
SECTION 5.15. CASH FLOW COVERAGE..............................................................60
SECTION 5.16. CASH FLOW TO TOTAL DEBT RATIO...................................................61
SECTION 5.17. TRANSACTION WITH AFFILIATES.....................................................61
SECTION 5.18. LIMITATION ON INVESTMENTS.......................................................61
SECTION 5.19. ADDITIONAL GUARANTORS...........................................................62
ii
PAGE
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ARTICLE 6
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT...............................................................63
SECTION 6.02. NOTICE OF DEFAULT...............................................................66
SECTION 6.03. CASH COLLATERAL.................................................................66
ARTICLE 7
THE AGENT
SECTION 7.01. APPOINTMENT AND AUTHORIZATION...................................................66
SECTION 7.02. AGENT AND AFFILIATES............................................................66
SECTION 7.03. ACTION BY AGENT.................................................................67
SECTION 7.04. CONSULTATION WITH EXPERTS.......................................................67
SECTION 7.05. LIABILITY OF AGENT..............................................................67
SECTION 7.06. INDEMNIFICATION.................................................................67
SECTION 7.07. CREDIT DECISION.................................................................67
SECTION 7.08. SUCCESSOR AGENT.................................................................68
SECTION 7.09. AGENT'S FEE.....................................................................68
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR........................68
SECTION 8.02. ILLEGALITY......................................................................69
SECTION 8.03. INCREASED COST AND REDUCED RETURN...............................................69
SECTION 8.04. TAXES...........................................................................71
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURO-DOLLAR
LOANS.................................................................................73
ARTICLE 9
GUARANTY
SECTION 9.01. THE GUARANTY....................................................................73
SECTION 9.02. GUARANTY UNCONDITIONAL..........................................................74
SECTION 9.03. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES.................................................................75
SECTION 9.04. WAIVER BY THE GUARANTORS........................................................75
SECTION 9.05. SUBROGATION.....................................................................75
SECTION 9.06. STAY OF ACCELERATION............................................................75
SECTION 9.07. LIMITATION OF LIABILITY.........................................................76
iii
PAGE
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ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES........................................................................76
SECTION 10.02. NO WAIVERS.....................................................................76
SECTION 10.03. EXPENSES; INDEMNIFICATION......................................................76
SECTION 10.04. SHARING OF SET-OFFS............................................................77
SECTION 10.05. AMENDMENTS AND WAIVERS.........................................................78
SECTION 10.06. SUCCESSORS AND ASSIGNS.........................................................78
SECTION 10.07. COLLATERAL.....................................................................80
SECTION 10.08. GOVERNING LAW; SUBMISSION TO JURISDICTION......................................80
SECTION 10.09. COUNTERPARTS; INTEGRATION; EFFECTIVENESS.......................................80
SECTION 10.10. WAIVER OF JURY TRIAL...........................................................80
SECTION 10.11. SEVERABILITY; MODIFICATION TO CONFORM TO LAW...................................80
SECTION 10.12. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS....................................81
SECTION 10.13. JUDGMENT CURRENCY..............................................................81
iv
Appendix
Pricing Schedule
Schedule I- Existing Agreements with Affiliates
Schedule II - Existing Letters of Credit
Schedule III - Non-Conforming Letter of Credit
Exhibit A - Note
Exhibit B - Subsidiary Guaranty
Exhibit C - Closing Date Opinion of the General
Counsel of AES
Exhibit D - Opinion of Davis Polk & Wardwell,
Special Counsel for the Agent
Exhibit E - AES Finance Subsidiary Addition Date Opinion of
the General Counsel of AES
Exhibit F - Opinion of Counsel to an AES Finance Subsidiary in
such AES Finance Subsidiary's Jurisdiction of Incorporation
Exhibit G - Assignment and Assumption Agreement
Exhibit H - Form of Extension Agreement
v
CREDIT AGREEMENT
(as amended and restated as of March 31, 1999)
AGREEMENT dated as of December 19, 1997 among THE AES CORPORATION,
the BANKS listed on the signature pages hereof, the FRONTING BANKS listed
herein and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms, as used herein,
have the following meanings:
"ADDITIONAL GUARANTORS" means either (i) AES Cilcorp or (ii) both of
AES Southland and AES Warrior Run, as designated by AES by notice to the
Agent on or prior to the earlier of (x) the date of the consummation of the
Cilcorp Acquisition and (y) the date that is six months after the date upon
which the First Amendment and Restatement is effective; PROVIDED that if AES
shall not have so designated the "Additional Guarantors" by such earlier
date, the Agent shall so notify the Banks and the Required Banks shall have
the right to so designate either (i) AES Cilcorp or (ii) both of AES
Southland and AES Warrior Run as the "Additional Guarantors".
"ADDITIONAL PERMITTED SUBORDINATED DEBT AGREEMENT" means an
indenture or other agreement pursuant to which any Additional Permitted
Subordinated Debt is issued or incurred, as the same may, subject to Section
5.10, be amended, modified or supplemented and in effect from time to time.
"ADDITIONAL PERMITTED SUBORDINATED DEBT" means Debt of AES (other
than Debt evidenced by the Existing Subordinated Notes and the Existing
Convertible Subordinated Debentures) which does not require any scheduled
payment of principal prior to December 19, 2003 and which has subordination
provisions no less favorable to the Banks than those applicable to the
Existing 8 3/8% Subordinated Notes and other terms and provisions applicable
to AES and its Subsidiaries that are no more restrictive in any material
respect (including, without limitation, covenants and events of default) than
those applicable to the Existing 8 3/8% Subordinated Notes or those otherwise
acceptable to the Required Banks.
"ADJUSTED LONDON INTERBANK OFFERED RATE" has the meaning set forth
in Section 2.06(b).
"ADJUSTED PARENT OPERATING CASH FLOW" means, for any period, (i)
Parent Operating Cash Flow for such period less (ii) the sum of the following
expenses (determined without duplication), in each case to the extent paid by
a Borrower during such period and regardless of whether any such amount was
accrued during such period:
(A) development expenses;
(B) income tax expenses of AES and its subsidiaries; and
(C) corporate overhead expenses.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted
to the Agent (with a copy to AES) duly completed by such Bank.
"AES" means The AES Corporation, a Delaware corporation, and its
successors.
"AES CEMIG FUNDING" means AES CEMIG Funding Corporation, a Delaware
corporation, and its successors.
"AES CILCORP" means AES Cilcorp Funding LLC, a Delaware limited
liability company and a Wholly-Owned Consolidated Subsidiary of AES, and its
successors.
"AES ELECTRIC" means Applied Energy Services Electric Limited, an
English corporation, and its successors.
"AES FINANCE SUBSIDIARY" means (i) if less than all of the Banks
approve the First Amendment and Restatement, a single Wholly-Owned
Consolidated Subsidiary of AES organized under the laws of The British Virgin
Islands, The Netherlands or The Cayman Islands and designated by AES in
writing as the AES Finance Subsidiary, and the successors of such Subsidiary,
and (ii) if all of the Banks approve the First Amendment and Restatement, any
Wholly-Owned Consolidated Subsidiary of AES organized under the laws of
England, The British Virgin Islands, The Netherlands, the Netherlands
Antilles or The Cayman Islands and designated by AES in writing as an AES
Finance Subsidiary, and the successors of each such Subsidiary.
2
"AES FINANCE SUBSIDIARY ADDITION DATE" means, with respect to any
AES Finance Subsidiary, the date on or after the Closing Date on which the
Agent shall have received the documents specified in or pursuant to Section
3.02 with respect to such AES Finance Subsidiary.
"AESEBA FUNDING" means AESEBA Funding Corporation, a Delaware
corporation, and its successors.
"AES HAWAII MANAGEMENT" means AES Hawaii Management Company, Inc., a
Delaware corporation and a Subsidiary of AES, and its successors.
"AES MANAGEMENT GROUP" means (i) individuals who are members of the
board of directors or officers of AES or the president of any Material AES
Entity, (ii) their respective spouses, children, grandchildren, siblings and
parents, (iii) trusts established for the sole or principal benefit of
Persons described in clauses (i) and (ii) above, (iv) heirs, executors,
administrators and personal or legal representatives of Persons described in
clauses (i) and (ii) above, and (v) any corporation or other Person that is
controlled by, and a majority of the equity interests in which are directly
owned by, Persons described in clauses (i) and (ii) above.
"AES 1996 FORM 10-K" means AES's annual report on Form 10-K for the
year ended December 31, 1996, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"AES OKLAHOMA" means AES Oklahoma Management Co., Inc., a Delaware
corporation and a Subsidiary of AES, and its successors.
"AES PLACERITA" means AES Placerita, Inc., a Delaware corporation
and an indirect Subsidiary of AES, and its successors.
"AES SEPTEMBER 1997 FORM 10-Q" means AES's quarterly report on Form
10-Q for the fiscal quarter ended September 30, 1997, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"AES SOUTHLAND" means AES Southland Funding LLC, a Delaware limited
liability company and a Wholly-Owned Consolidated Subsidiary of AES, and its
successors.
"AES WARRIOR RUN" means AES Warrior Run Funding LLC, a Delaware
limited liability company and a Wholly-Owned Consolidated Subsidiary of AES,
and its successors.
3
"AFFILIATE" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls AES (a "Controlling Person") or
(ii) any Person (other than AES or a Subsidiary) which is controlled by or is
under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"AGENT" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such
capacity.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in
the case of its Base Rate Loans, its Domestic Lending Office and (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"ASSET DISPOSITION" has the meaning set forth in the Existing
Subordinated Note Indentures.
"ASSIGNEE" has the meaning set forth in Section 10.06(c).
"AUTOMATIC ACCELERATION EVENT" means the occurrence, with respect to
any Borrower, of any of the Events of Default listed in clauses (g) and (h)
of Section 6.01.
"BANK" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 10.06(c), and their
respective successors.
"BASE RATE" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"BASE RATE LOAN" means a Loan which bears interest at the Base Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.07(a) or Article 8.
"BENEFIT ARRANGEMENT" means, at any time, an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"BORROWER" means (i) prior to the first AES Finance Subsidiary
Addition Date, AES and (ii) from and after the first AES Finance Subsidiary
Addition Date,
4
AES or an AES Finance Subsidiary, as the context may require; prior to the
first AES Finance Subsidiary Addition Date, "Borrowers" means AES and from
and after the first AES Finance Subsidiary Addition Date, "Borrowers" means
AES and each AES Finance Subsidiary.
"BORROWING" means a borrowing hereunder consisting of Loans made to
a single Borrower at the same time by the Banks pursuant to Article II. A
Borrowing is a "Base Rate Borrowing" if such Loans are Base Rate Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans.
"CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 2.15.
"CASH FLOW COVERAGE RATIO" means, for any period, the ratio of (i)
Adjusted Parent Operating Cash Flow for such period to (ii) Corporate Charges
for such period.
"CASH FLOW TO TOTAL DEBT RATIO" means, at any date, the ratio of (i)
Adjusted Parent Operating Cash Flow for the period of four consecutive fiscal
quarters ended on, or most recently prior to, such date to (ii) Debt (other
than Specified Equity-Related Debt, but only to the extent that the sum of
the aggregate principal amount of all Specified Equity-Related Debt plus the
liquidation preference of all preferred stock of AES does not exceed 25% of
the sum (without duplication) of the aggregate principal amount of such
Specified Equity-Related Debt, such preferred stock and Consolidated Net
Worth at such date) of the Borrowers at such date.
"CILCORP" means Cilcorp Inc., an Illinois corporation.
"CILCORP ACQUISITION" means the acquisition by AES or any of its
Subsidiaries of any capital stock of Cilcorp.
"CLOSING DATE" means the date on or after the Effective Date on
which the Agent shall have received the fees and documents specified in or
pursuant to Section 3.01.
"COMMITMENT" means, with respect to each Bank, the amount set forth
opposite the name of such Bank in the Appendix hereto, as such amount may be
reduced from time to time pursuant to Section 2.09.
"CONSOLIDATED DEBT" means, at any date, the Debt of AES and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
5
"CONSOLIDATED NET INCOME" means, for any period, the consolidated
net income (or loss) of AES and its Consolidated Subsidiaries for such period.
"CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of AES and its Consolidated Subsidiaries determined as
of such date without giving effect to any currency translation adjustments
after September 30, 1997.
"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.
"CORPORATE CHARGES" means, for any period, the sum of the following
amounts (determined without duplication), in each case to the extent paid by
a Borrower during such period and regardless of whether any such amount was
accrued during such period:
(A) interest expense (including, without limitation, interest
expense in respect of Specified Equity-Related Debt) of any Borrower for such
period;
(B) rental expense of any Borrower for such period; and
(C) dividends paid on AES's capital stock during such period.
"DEBT" of any Person means at any date, without duplication, (i) all
obligations 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 to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all obligations (whether contingent or non-contingent) of such Person to
reimburse any bank or other Person in respect of amounts paid under a letter
of credit, surety or performance bond or similar instrument, (vi) all Debt
secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, and (vii) all Debt of others
Guaranteed by such Person. For purposes hereof, contingent obligations of the
type described in clause (v) of this definition with respect to letters of
credit not issued hereunder shall not be treated as "Debt" hereunder to the
extent that such obligations are cash collateralized or to the extent that
the issuer of any such letter of credit is entitled to draw under a Letter of
Credit issued hereunder which by its terms requires that drawings under such
6
Letter of Credit be applied only to reimburse such issuer for amounts paid by
such issuer under such letter of credit.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DESIGNATED SUBSIDIARY" means each of AES Connecticut Management
Co., Inc., AES Oklahoma Management Co., Inc., AES Hawaii Management Co.,
Inc., AES Thames, Inc., AES Hawaii, Inc., AES Shady Point, Inc. and, from and
after the earlier of (i) the date of the consummation of the Cilcorp
Acquisition and (ii) the date that is six months after the date upon which
the First Amendment and Restatement is effective, each Additional Guarantor,
each Subsidiary of any Additional Guarantor and each Subsidiary of AES that
holds a direct or indirect interest in any Additional Guarantor.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Domestic Lending Office) or such
other office as such Bank may hereafter designate as its Domestic Lending
Office by notice to AES and the Agent.
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 10.09.
"8% SENIOR NOTES" means AES's 8% Senior Notes due 2008 issued
pursuant to the 1998 Senior Note Indenture.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
7
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
"ERISA GROUP" means AES, its Subsidiaries and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with AES or any of its
Subsidiaries, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to AES and the Agent.
"EURO-DOLLAR LOAN" means a Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election.
"EURO-DOLLAR MARGIN" has the meaning set forth in Section 2.06(b).
"EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in
Section 2.06(b).
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXISTING AESEBA FUNDING NON-RECOURSE FACILITY" means the Loan
Agreement dated as of August 28, 1997 among AESEBA Funding, the lenders named
therein and Morgan Guaranty Trust Company of New York, as agent, as amended,
and the Financing Documents (as defined therein).
"EXISTING AES CEMIG FUNDING NON-RECOURSE FACILITY" means the Loan
Agreement dated as of August 28, 1997 among CEMIG Funding, the lenders named
therein and Morgan Guaranty Trust Company of New York, as agent, as amended,
and the Financing Documents (as defined therein).
"EXISTING CREDIT FACILITY" means the Credit Agreement dated as of
October 24, 1997 among AES, the banks listed therein, Barclays Bank PLC,
Union Bank of California, N.A., NationsBank, N.A., Australia and New Zealand
8
Banking Group Limited, BankBoston, N.A. and Morgan Guaranty Trust Company of
New York, as Fronting Banks, and Morgan Guaranty Trust Company of New York,
as Agent, as amended.
"EXISTING 8 3/8% SUBORDINATED NOTES" means AES's 8 3/8% Senior
Subordinated Notes due 2007 issued pursuant to the Existing 8 3/8%
Subordinated Note Indenture.
"EXISTING 8 3/8% SUBORDINATED NOTE INDENTURE" means the Indenture
dated as of July 17, 1997 between AES and The Bank of New York, as Trustee,
relating to the Existing 8 3/8% Subordinated Notes, as such Indenture may,
subject to Section 5.10, be amended, modified or supplemented and in effect
from time to time.
"EXISTING 8.50% SUBORDINATED NOTES" means AES's 8.50% Senior
Subordinated Notes due 2007 issued pursuant to the Existing October 1997
Subordinated Note Indenture.
"EXISTING 8.875% SUBORDINATED DEBENTURES" means AES's 8.875% Senior
Subordinated Debentures due 2027 issued pursuant to the Existing October 1997
Subordinated Note Indenture.
"EXISTING LETTER OF CREDIT" means a Letter of Credit (as defined in
the Existing Credit Facility) issued by Barclays Bank PLC, Union Bank of
California, N.A., NationsBank, N.A., Australia and New Zealand Banking Group
Limited, BankBoston, N.A. or Morgan Guaranty Trust Company of New York under
the Existing Credit Facility that is outstanding on the Effective Date.
"EXISTING OCTOBER 1997 SUBORDINATED NOTE INDENTURE" means the
Indenture dated as of October 29, 1997 between AES and The First National
Bank of Chicago, as Trustee, relating to the Existing 8.50% Subordinated
Notes and the Existing 8.875% Subordinated Debentures, as such Indenture may,
subject to Section 5.10, be amended, modified or supplemented and in effect
from time to time.
"EXISTING SUBORDINATED NOTES" means (i) the Existing 8 3/8%
Subordinated Notes, (ii) the Existing 10 1/4% Subordinated Notes, (iii) the
Existing 8.50% Subordinated Notes and (iv) the Existing 8.875% Subordinated
Debentures.
"EXISTING SUBORDINATED NOTE INDENTURES" means (i) the Existing
8 3/8% Subordinated Note Indenture, (ii) the Existing 10 1/4% Subordinated Note
Indenture and (iii) the Existing October 1997 Subordinated Note Indenture.
9
"EXISTING 10 1/4% SUBORDINATED NOTES" means AES's 10 1/4% Senior
Subordinated Notes due 2006 issued pursuant to the Existing 10 1/4%
Subordinated Note Indenture.
"EXISTING 10 1/4% SUBORDINATED NOTE INDENTURE" means the Indenture
dated as of July 1, 1996 between AES and First National Bank of Chicago, as
Trustee, relating to the Existing 10 1/4% Subordinated Notes, as such
Indenture may, subject to Section 5.10, be amended, modified or supplemented
and in effect from time to time.
"EXTENSION OF CREDIT" means (i) a Borrowing pursuant to Section 2.01
or (ii) the issuance of a Letter of Credit pursuant to Section 2.03.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business
Day next succeeding such day; PROVIDED that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds
Rate for such day shall be the average rate quoted to Morgan Guaranty Trust
Company of New York on such day on such transactions as determined by the
Agent.
"FEE LETTER" has the meaning specified in Section 3.01.
"FINANCING DOCUMENTS" means this Agreement, the Notes and each
Subsidiary Guaranty.
"FIRST AMENDMENT AND RESTATEMENT" means the First Amendment and
Restatement of Credit Agreement dated as of March 31, 1999 among AES, the
Banks, the Fronting Banks and the Agent.
"FRONTING BANK" means (i) with respect to the Letters of Credit
deemed to have been issued pursuant to the second sentence of Section
2.03(a), Barclays Bank PLC, Union Bank of California, N.A., NationsBank,
N.A., Australia and New Zealand Banking Group Limited, BankBoston, N.A. or
Morgan Guaranty Trust Company of New York, as the case may be, and (ii) with
respect to all other Letters of Credit, Morgan Guaranty Trust Company of New
York, any other Bank, any affiliate of any Bank (A) a majority of whose
common equity is owned, directly or indirectly, by such Bank, (B) that owns,
directly or indirectly, a
10
majority of the common equity of such Bank or (C) a majority of whose common
equity is owned, directly or indirectly, by a Person that owns, directly or
indirectly, a majority of the common equity of such Bank and any Subsidiary
of any Bank a majority of whose common equity is owned directly or
indirectly, by such Bank, that shall, in the case of any such Bank, affiliate
or Subsidiary agree to issue letters of credit hereunder with the consent of
the Agent (which consent will be deemed to have been given unless the Agent
shall have notified AES to the contrary within one day of the Agent's receipt
of notice that such Bank, affiliate or Subsidiary is to be a Fronting Bank).
"GROUP OF LOANS" means, at any time, a group of Loans consisting of
(i) all Loans which are Base Rate Loans at such time or (ii) all Euro-Dollar
Loans having the same Interest Period at such time, PROVIDED that, if a Loan
of any particular Bank is converted to or made as a Base Rate Loan pursuant
to Article VIII, such Loan shall be included in the same Group or Groups of
Loans from time to time as it would have been in if it had not been so
converted or made.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such 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 (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose 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.
"GUARANTOR" means, with respect to any Borrower, all other Borrowers.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 10.03(b).
"INTEREST PERIOD" means, with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice
of
11
Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the
applicable Borrower may elect in such notice; PROVIDED that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, Guarantee, time deposit or
otherwise (but not including any demand deposit).
"INVESTMENT AND GUARANTEE COMMITMENTS" means, without duplication,
(i) all commitments (contingent or otherwise) by a Borrower to make
Investments and (ii) all obligations (contingent or otherwise but excluding
obligations hereunder, whether under Article IX or otherwise) of a Borrower
to make payments under Guarantees; PROVIDED that the obligations of AES or
any of its Subsidiaries to acquire the Kintegh, Milliken, Goudey, Greenidge,
Hickling and Jennison coal-fired electric generating plants from NGE
Generation, Inc., an affiliate of New York State Electric & Gas Corporation,
shall be deemed not to be "Investment and Guarantee Commitments."
"LETTER OF CREDIT" means a letter of credit issued by a Fronting
Bank pursuant to Section 2.03(a).
"LETTER OF CREDIT COMMISSION RATE" means a rate per annum determined
in accordance with the annexed Pricing Schedule.
12
"LETTER OF CREDIT LIABILITIES" means, at any time and in respect of
any Letter of Credit, the sum, without duplication, of (i) the amount
available for drawing under such Letter of Credit (without regard to whether
any conditions to drawing thereunder can then be met) plus (ii) the aggregate
unpaid amount of all Reimbursement Obligations in respect of previous
drawings made under such Letter of Credit.
"LEVEL I STATUS" has the meaning set forth in the annexed Pricing
Schedule.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, AES
or any of its Subsidiaries shall be deemed to own subject to a Lien any asset
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 asset.
"LOAN" means a Base Rate Loan or a Euro-Dollar Loan and "Loans"
means Base Rate Loans or Euro-Dollar Loans or any combination of the
foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.06(b).
"MATERIAL AES ENTITY" means (i) any Subsidiary Guarantor, (ii) any
Specified Subsidiary and (iii) any other Person in which AES has a direct or
indirect equity Investment if such Person's contribution to Parent Operating
Cash Flow for the four most recently completed fiscal quarters of AES
constitutes 15% or more of Parent Operating Cash Flow for such period.
"MATERIAL DEBT" means, with respect to any Person, Debt (other than
the Loans and the Reimbursement Obligations) of such Person arising in one or
more related or unrelated transactions, in an aggregate principal amount
exceeding $15,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $15,000,000.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
13
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group
during such five year period.
"NET CASH PROCEEDS" has the meaning set forth in the Existing
Subordinated Note Indentures.
"1998 SENIOR NOTE INDENTURE" means the Senior Indenture dated as of
December 8, 1998 between AES and The First National Bank of Chicago, as
Trustee, relating to the 8% Senior Notes, as such Indenture may, subject to
Section 5.10, be amended, modified or supplemented and in effect from time to
time.
"NOTES" means promissory notes of each Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of such Borrower to
repay the Loans made to it, and "Note" means any one of such promissory notes
issued hereunder.
"NOTICE OF BORROWING" has the meaning set forth in Section 2.02.
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in
Section 2.07(a).
"NOTICE OF ISSUANCE" has the meaning set forth in Section 2.03(d).
"OBLIGORS" means the Borrowers and the Subsidiary Guarantors.
"PARENT" means, with respect to any Bank or Fronting Bank, any
Person controlling such Bank or Fronting Bank, as the case may be.
"PARENT OPERATING CASH FLOW" means, for any period, the sum of the
following amounts (determined without duplication), but only to the extent
received in cash by a Borrower from a Person other than a Borrower during
such period:
(A) dividends paid to a Borrower by its Subsidiaries during such
period;
(B) consulting and management fees paid to a Borrower for such
period;
(C) tax sharing payments made to a Borrower during such period;
14
(D) interest and other distributions paid during such period with
respect to cash and other Temporary Cash Investments of a Borrower (other
than with respect to amounts on deposit in the Cash Collateral Account); and
(E) other cash payments made to a Borrower by its Subsidiaries
other than (i) returns of invested capital, (ii) payments of the principal of
Debt of any such Subsidiary to such Borrower, (iii) payments in an amount
equal to the aggregate amount released from debt service reserve accounts
upon the issuance of Letters of Credit for the benefit of the beneficiaries
of such accounts.
For purposes of determining Parent Operating Cash Flow:
(1) net cash payments received by a Qualified Holding Company
during any period which could have been (without regard for any cash held by
such Qualified Holding Company at the beginning of such period), but were
not, paid as a dividend to AES during such period due to tax or other cash
management considerations may be included in Parent Operating Cash Flow for
such period; PROVIDED that any amounts so included will not be included in
Parent Operating Cash Flow if and when paid to a Borrower in any subsequent
period;
(2) if at any time there shall exist an event or condition which
permits any holder to accelerate the maturity date of any Debt of, or
terminate its commitment to extend credit to, any Subsidiary, then the
contributions of such Subsidiary to Parent Operating Cash Flow for any period
ending at or prior to such time shall be eliminated and Parent Operating Cash
Flow shall be calculated after giving effect to such elimination;
(3) if any Subsidiary of a Borrower is sold or otherwise disposed
of (by way of merger, sale of capital stock, sale of assets or otherwise),
(x) the net cash proceeds from such sale or other disposition shall not be
included in Parent Operating Cash Flow for any period and (y) the
contributions of such Subsidiary to Parent Operating Cash Flow for any period
shall be eliminated and Parent Operating Cash Flow shall be calculated after
giving effect to such elimination.; and
(4) no dividends, fees or payments made to the Borrowers with the
proceeds of any amounts paid to AES or any of its Subsidiaries in connection
with the $525,000,000 additional prepayment made by Connecticut Light & Power
("CL&P") pursuant to the First Amendment to the Electricity Purchase
Agreement between CL&P and AES Thames, Inc., or any amounts paid to AES or
any of its Subsidiaries in connection with any monetization, sale or
securitization of any right to receive any such prepayment, shall be included
in Parent Operating Cash Flow, except to the extent that such proceeds (x)
have been
15
received by AES in cash in such period or an earlier period and (y) are
included in Consolidated Net Income for such period.
"PARTICIPANT" has the meaning set forth in Section 10.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED SENIOR UNSECURED DEBT" means unsecured Debt of AES that
(i) is not guaranteed by any Subsidiary or Affiliate of AES, (ii) that does
not limit (A) the ability of Subsidiaries and Affiliates of AES to guarantee
other senior Debt of AES, (B) the ability of AES to grant Liens on stock of
Subsidiaries or intercompany advances to secure other senior Debt of AES or
(C) the ability of Subsidiaries or Affiliates of AES to grant Liens on their
assets (including stock of Subsidiaries and intercompany advances) to secure
guarantees of other senior Debt (provided that (x) a Permitted Negative
Pledge shall not cause any Debt of AES to fail to be Permitted Senior
Unsecured Debt under this clause (ii) and (y) this clause (ii) shall not
apply if AES shall have received at least $300,000,000 of gross cash proceeds
from the issuance of its common stock after March 1, 1999 and on or prior to
June 30, 1999) and (iii) that is in an aggregate principal amount not
exceeding the lesser of (x) $300,000,000 and (y) $600,000,000 less the
aggregate amount of the Commitments.
"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.
"PLAN" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees
of any Person which was at such time a member of the ERISA Group.
"POWER PROJECT" means an electric power or thermal energy generation
or cogeneration facility or related facilities, and its or their related
electric power transmission, distribution, fuel supply and fuel
transportation facilities, together with its or their related power supply,
thermal energy and fuel contracts as well as other contractual arrangements
with customers, suppliers and contractors.
16
"POWER PROJECT DEBT" means Debt of a Subsidiary of AES permitted by
Section 5.07(a)(ii).
"POWER PROJECT DEFAULT" means any event or condition which results
in the acceleration of the maturity of any Power Project Debt or enables the
holder of such Power Project Debt or any Person acting on such holder's
behalf to then accelerate the maturity thereof, or failure to pay any Power
Project Debt at the final maturity thereof.
"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"QUALIFIED HOLDING COMPANY" means any Wholly-Owned Consolidated
Subsidiary of AES that satisfies, and all of whose direct or indirect holding
companies (other than AES) are Wholly-Owned Consolidated Subsidiaries of AES
that satisfy, the following conditions:
(i) its direct and indirect interest in any Power Project 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 Project or unrelated business;
(ii) no consensual encumbrance or restriction of any kind shall
exist on its ability to make payments, distributions, loans, advances
or transfers to AES;
(iii) it shall not have outstanding any Debt other than Guarantees
of Debt under the Financing Documents and Debt to other Qualified
Holding Companies; and
(iv) it shall engage in no business or other activity, shall enter
into no binding agreements and shall incur no obligations other than
(A) the holding of the capital stock and Debt obligations permitted
under clause (i) above, (B) the holding of cash received from its
Subsidiaries and the investment thereof in Temporary Cash Investments,
(C) the payment of dividends to AES, (D) ordinary business development
activities, (E) the making (but not the entering into binding
obligations to make) of Investments in Power Projects owned by its
Subsidiaries and (F) in the case of AES Electric, the making of
Investments in Power Projects owned by NIGEN Limited and Medway Power
Limited as of the date of this Agreement under any agreement by which
it is bound as of the date of this Agreement.
17
"QUALIFIED PREFERRED EQUITY" means, at any date, equity interests in
a Consolidated Subsidiary of AES (i) that are not (A) required to be redeemed
or redeemable at the option of the holder thereof prior to the fifth
anniversary of the Termination Date or (B) convertible into or exchangeable
for (unless solely at the option of AES) equity interests referred to in
clause (A) above or Debt having a scheduled maturity, or requiring any
repayments or prepayments of principal or any sinking fund or similar
payments in respect of principal or providing for any such repayment,
prepayment, sinking fund or other payment at the option of the holder thereof
prior to the fifth anniversary of the Termination Date and (ii) as to which,
at such date, AES has the right to defer the payment of all dividends and
other distributions in respect thereof for the period of at least 19
consecutive quarters beginning at such date.
"QUARTERLY PAYMENT DATE" means each January 31, April 30, July 31
and October 31.
"REFERENCE BANKS" means the respective principal London offices of
Morgan Guaranty Trust Company of New York, NationsBank, N.A. and Barclays
Bank PLC, and "REFERENCE BANK" means any one of such Reference Banks.
"REFUNDING BORROWING" means a Borrowing which, after application of
the proceeds thereof, results in no net increase in the Total Outstandings of
any Bank.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT OBLIGATIONS" means at any date the obligations then
outstanding of the Borrowers under Section 2.03(f) to reimburse the Fronting
Banks for amounts drawn under Letters of Credit.
"REQUIRED BANKS" means at any time Banks having at least a majority
of the aggregate Total Exposures at such time.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on
any shares of AES's common stock (except dividends payable solely in shares
of its common stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of AES's capital
stock or (b) any option, warrant or other right to acquire shares of AES's
capital stock.
18
"REVOLVING CREDIT PERIOD" means the period from and including the
Effective Date to but excluding the Termination Date.
"SIGNIFICANT AES ENTITY" means (i) any Material AES Entity and (ii)
any other Person in which AES has a direct or indirect equity Investment if
(A) such Person's contribution to Parent Operating Cash Flow for the four
most recently completed fiscal quarters of AES constitutes 10% or more of
Parent Operating Cash Flow for such period, or (B) AES's direct or indirect
interest in the total assets of such Person if such Person is a Consolidated
Subsidiary or in the net assets of such Person in all other cases is at least
equal to 10% of the consolidated assets of AES and its Consolidated
Subsidiaries, taken as a whole, or AES's direct or indirect interest in the
total net income of such Person (for the preceding fiscal quarter) is at
least equal to 10% of the net income of AES and its Consolidated Subsidiaries
(for the preceding fiscal quarter) taken as a whole.
"SOUTHLAND" means AES Southland Holdings, LLC.
"SPECIFIED EQUITY-RELATED DEBT" means, at any date, (i) Debt of AES
(A) that is owed to a Consolidated Subsidiary of AES, (B) that is issued in
connection with the issuance by such Consolidated Subsidiary of Qualified
Preferred Equity, (C) that is subordinated to other Debt of AES of at least
the types and to at least the extent as was, on the date of issuance thereof,
the Junior Subordinated Debentures issued by AES in connection with the
issuance by AES Trust II of its $2.75 Term Convertible Securities, Series B,
on October 29, 1996, (D) as to which, at such date, AES has the right to
defer the payment of all interest for the period of at least 19 consecutive
quarters beginning at such date and (E) that does not mature, in whole or in
part, and is not subject to any required repayment or prepayment, any
required sinking fund or similar payment or any repayment or prepayment or
sinking fund or similar payment at the option of the holder thereof, prior to
the fifth anniversary of the Termination Date and (ii) Guarantees by AES of
the obligations of the issuer of any Qualified Preferred Equity in respect of
such Qualified Preferred Equity.
"SPECIFIED SUBSIDIARY" means each Designated Subsidiary and each
other Subsidiary of AES that holds, directly or indirectly, any interest in
any Designated Subsidiary.
"SUBORDINATED DEBT" means Debt in respect of the Existing
Subordinated Notes, the Existing Convertible Subordinated Debentures and the
Additional Permitted Subordinated Debt.
19
"SUBORDINATED NOTE INDENTURES" means the Existing Subordinated Note
Indentures, the Existing Convertible Subordinated Debenture Indenture and the
Additional Permitted Subordinated Debt Agreements.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities 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 AES Oklahoma, AES Hawaii Management
and, from and after the earlier of (i) the date of the consummation of the
Cilcorp Acquisition and (ii) the date that is six months after the date upon
which the First Amendment and Restatement is effective, the Additional
Guarantors.
"SUBSIDIARY GUARANTY" means a Subsidiary Guaranty, substantially in
the form of Exhibit B hereto, given by one or more Subsidiary Guarantors for
the benefit of the Banks, the Fronting Banks and the Agent, as the same may
be amended from time to time.
"TEMPORARY CASH INVESTMENT" means any Investment in (A)(i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Ratings Services and P-1 by Moody's
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or
trust company which is organized or licensed under the laws of the United
States or any state thereof and has capital, surplus and undivided profits
aggregating at least $500,000,000, (iv) medium term notes, asset backed
securities, bonds, notes and letter of credit supported instruments, issued
by any entity organized under the laws of the United States, or any state or
municipality of the United States and rated in any of the three highest rated
categories by Standard & Poor's Ratings Services or Moody's Investors
Service, Inc., (v) repurchase agreements with respect to securities described
in clause (i) above entered into with an office of a bank or trust company
meeting the criteria specified in clause (iii) above, (vi) Euro-Dollar
certificates of deposit issued by any bank or trust company which has capital
and unimpaired surplus of not less than $500,000,000 or (vii) with respect to
a Subsidiary, any category of investment designated as permissible
investments under such Subsidiary's project loan documentation, PROVIDED in
each case (except clause (vii)) that such Investment matures within fifteen
months from the date of acquisition thereof by AES or a Subsidiary and (B)
registered investment companies that are "money market funds" within the
meaning of Rule 2a-7 under the Investment Company Act of 1940.
20
"TERMINATION DATE" means December 19, 2000, or such later date to
which the Termination Date shall have been extended pursuant to Section
2.01(b), or, if such day is not a Euro-Dollar Business Day, the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the Termination Date shall be
the next preceding Euro-Dollar Business Day.
"TOTAL EXPOSURE" means at any time with respect to each Bank, its
Commitment or, if the Commitments shall have terminated, its Total
Outstandings.
"TOTAL OUTSTANDINGS" means at any time, as to any Bank, the sum of
the aggregate outstanding principal amount of such Bank's Loans and its
participation in the aggregate outstanding Letter of Credit Liabilities.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under
such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
the fair market value of all Plan assets allocable to such liabilities under
Title IV of ERISA (excluding any accrued but unpaid contributions), all
determined as of the then most recent valuation date for such Plan, but only
to the extent that such excess represents a potential liability of a member
of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.
"UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by AES.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by AES's
independent public accountants) with the most recent audited consolidated
financial statements of AES and its Consolidated Subsidiaries delivered to
the Banks; PROVIDED that, if AES notifies the Agent that AES wishes to amend
any covenant in Article V to eliminate the effect of any change in generally
accepted accounting principles on
21
the operation of such covenant (or if the Agent notifies AES that the
Required Banks wish to amend Article V for such purpose), then AES's
compliance with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the relevant
change in generally accepted accounting principles became effective, until
either such notice is withdrawn or such covenant is amended in a manner
satisfactory to AES and the Required Banks.
SECTION 1.03. TYPES OF BORROWING. The term "BORROWING" denotes (i) the
aggregation of Loans made or to be made to a Borrower by one or more Banks
pursuant to Article II on the same day, all of which Loans are of the same type
(subject to Article VIII) and, except in the case of Base Rate Loans, have the
same initial Interest Period or (ii) if the context so requires, the borrowing
of such Loans. Borrowings are classified for purposes hereof by reference to the
pricing of Loans comprising such Borrowing (E.G., a "Euro-Dollar Borrowing" is a
Borrowing comprised of Euro-Dollar Loans).
ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND.
(a) Each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make loans to the Borrowers pursuant to this
Section 2.01(a) from time to time during the Revolving Credit Period in
amounts such that the Total Outstandings of such Bank at any time shall not
exceed the amount of its Commitment at such time. Each Borrowing under this
subsection (a) shall be in an aggregate principal amount of $5,000,000 or any
larger multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.03(c)) and shall be
made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, a Borrower may borrow under this
Section 2.01(a), repay, or, to the extent permitted by Section 2.11, prepay
Loans and reborrow at any time during the Revolving Credit Period.
(b) EXTENSION OF TERMINATION DATE. The Termination Date may be
extended, in the manner set forth in this subsection (b), on December 19,
1999 and on December 19, 2000 (each, an "Extension Date"), in each case for a
period of one year after the Termination Date theretofore in effect. If AES
wishes to request an extension of the Termination Date on any Extension Date,
it shall give written notice to that effect to the Agent not less than 45 nor
more than 90 days prior to such Extension Date, whereupon the Agent shall
notify each of the Banks of such notice. Each Bank will use its best efforts
to respond to such request,
22
whether affirmatively or negatively, within 30 days. If all Banks respond
affirmatively (any Bank which does not respond being deemed to have responded
negatively), then, subject to receipt by the Agent prior to such Extension
Date of counterparts of an Extension Agreement in substantially the form of
Exhibit H duly completed and signed by all of the parties hereto, the
Termination Date shall be extended, effective on such Extension Date, for a
period of one year to the date stated in such Extension Agreement.
SECTION 2.02. NOTICE OF BORROWING. (a) The relevant Borrower shall
give the Agent notice (a "Notice of Borrowing") not later than 11:00 A.M.
(New York City time) on (x) the date of each Base Rate Borrowing and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or a Euro-Dollar Rate, and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions
of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's ratable share of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable
by any Borrower.
(c) Not later than 2:00 P.M. (New York City time) on the date of
each Borrowing, each Bank shall (except as provided in subsection (d) of this
Section) make available its ratable share of such Borrowing, in Federal or
other funds immediately available in New York City, to the Agent at its
address referred to in Section 10.01. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the
Agent will make the funds so received from the Banks available to the
Borrower requesting such Borrowing at the Agent's aforesaid address.
(d) If any Bank makes a new Loan hereunder to any Borrower on a day
on which such Borrower is to repay all or any part of an outstanding Loan from
such Bank, such Bank shall apply the proceeds of its new Loan to make such
23
repayment and only an amount equal to the difference (if any) between the
amount being borrowed and the amount being repaid shall be made available by
such Bank to the Agent as provided in subsection (c), or remitted by such
Borrower to the Agent as provided in Section 2.12, as the case may be.
(e) Unless the Agent shall have received notice from a Bank prior
to the date of any Borrowing that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such
Bank has made such share available to the Agent on the date of such Borrowing
in accordance with subsections (c) and (d) of this Section 2.02 and the Agent
may, in reliance upon such assumption, make available to the Borrower
requesting such Borrowing on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such share available to the
Agent, such Bank and such Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to such Borrower
until the date such amount is repaid to the Agent, at (i) in the case of such
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and
the interest rate applicable thereto pursuant to Section 2.06 and (ii) in the
case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan included in such Borrowing for purposes of this Agreement.
SECTION 2.03. LETTERS OF CREDIT. (a) ISSUANCE OF LETTERS OF CREDIT.
Subject to the terms and conditions hereof, each Fronting Bank referred to in
clause (ii) of the definition of "FRONTING BANK" in Section 1.01 agrees to
issue letters of credit under this Section 2.03(a), upon any Borrower's
request and for such requesting Borrower's account or the account of any of
AES's other Subsidiaries, from time to time during the Revolving Credit
Period. In addition, and notwithstanding any reference in any Existing Letter
of Credit to the Existing Credit Facility, on and as of the Effective Date,
each Existing Letter of Credit shall be deemed to be a Letter of Credit and
to have been issued on the Effective Date (by the Fronting Bank that issued
or was deemed to have issued such Existing Letter of Credit under the
Existing Credit Facility) pursuant to this Section 2.03(a); PROVIDED HOWEVER,
that nothing in this Section 2.03(a) shall extend, modify or otherwise affect
the existing expiry date under any such Existing Letter of Credit.
(b) PARTICIPATIONS IN LETTERS OF CREDIT. Upon the issuance (or
deemed issuance) of each Letter of Credit by a Fronting Bank under Section
2.03(a), such Fronting Bank shall be deemed, without further action by any
party hereto, to have sold to each Bank (other than such Fronting Bank) and
each such Bank shall be deemed, without further action by any party hereto,
to have purchased from such Fronting Bank, a participation in such Letter of
Credit and the related Letter of
24
Credit Liabilities, in the amount required so that the participations of the
Banks (including such Fronting Bank's retained participation) therein shall
be in proportion to their respective Commitments.
(c) REQUIRED TERMS. Each Letter of Credit (other than the Letter of
Credit identified on Schedule III) issued hereunder shall:
(i) by its terms expire (x) no earlier than 30 days after its
date of issue and (y) no later than the earlier of (1) five Domestic
Business Days prior to the Termination Date and (2) eighteen months
after its date of issue;
(ii) be in a face amount of (x) not less than $300,000 and (y) not
more than the amount that would, after giving effect to the issuance
thereof (and the related purchase and sale of participations therein
pursuant to Section 2.03(b)) cause the Total Outstandings of any Bank
to equal its Commitment; and
(iii) be in a form acceptable to the Fronting Bank.
(d) NOTICE OF ISSUANCE. Except in the case of Letters of Credit
deemed, pursuant to the second sentence of subsection (a) above, to be issued
on the Effective Date, a Borrower may request that a Letter of Credit be
issued by giving the Agent and the Fronting Bank for such Letter of Credit a
notice (a "Notice of Issuance") at least two Domestic Business Days before
such Letter of Credit is to be issued, specifying:
(i) the date of issuance of such Letter of Credit;
(ii) the expiry date of such Letter of Credit (which shall
comply with the requirements of Section 2.03(c)(i));
(iii) the proposed terms of such Letter of Credit, including the
face amount thereof (which shall comply with the requirements of
Section 2.03(c)(ii));
(iv) the transaction that is to be supported or financed with
such Letter of Credit, including identification of the Power Project,
if any, to which such transaction relates; and
(v) the identity of the Fronting Bank for such Letter of Credit,
which shall comply with the definition of Fronting Bank.
25
Upon the receipt of a Notice of Issuance, the Agent shall promptly
notify each Bank of the contents thereof and of the amount of such Bank's
participation in such Letter of Credit and such Notice of Issuance shall not
thereafter be revocable by the Borrower giving such Notice.
(e) DRAWINGS UNDER LETTERS OF CREDIT.
(i) Upon receipt from the beneficiary of any Letter of Credit of
demand for payment under such Letter of Credit, the Fronting Bank shall
determine in accordance with the terms of such Letter of Credit whether
such request for payment should be honored.
(ii) If the Fronting Bank determines that a demand for payment by
the beneficiary of a Letter of Credit should be honored, the Fronting
Bank shall make available to the beneficiary in accordance with the
terms of such Letter of Credit the amount of the drawing under such
Letter of Credit. The Fronting Bank shall thereupon promptly notify the
relevant Borrower and each Bank of the amount of such drawing paid by
it and the amount of each Bank's participation therein.
(f) REIMBURSEMENT AND OTHER PAYMENTS BY THE BORROWERS.
(i) If any amount is drawn under any Letter of Credit issued at
the request of or for the account of a Borrower, such Borrower
irrevocably and unconditionally agrees to reimburse the applicable
Fronting Bank for all amounts paid by such Fronting Bank upon such
drawing, together with any and all reasonable charges and expenses
which any Bank or Fronting Bank may pay or incur relative to such
drawing, and all such amounts due from such Borrower shall bear
interest, payable on the date upon which such amounts shall be due and
payable, on the amount drawn for each day from and including the date
such amount is drawn to but excluding the date such reimbursement
payment is due and payable at a rate per annum equal to the rate
applicable to Base Rate Loans for such day. Such reimbursement payment
shall be due and payable not later than 10:00 A.M. (New York City time)
on the second Domestic Business Day succeeding the date the applicable
Fronting Bank notifies the relevant Borrower of such drawing, together
with interest thereon for each day until the date of payment at a rate
per annum equal to the rate applicable to Base Rate Loans for each such
day. Any overdue reimbursement payment, or overdue interest thereon,
shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of the rate applicable to Base Rate
Loans for such day plus 2%.
26
(ii) Each payment to be made by a Borrower pursuant to this
Section shall be made, in Federal or other funds immediately available,
to the applicable Fronting Bank at its address referred to in Section
10.01.
(iii) The obligations of each Borrower to reimburse the Fronting
Banks under this Section 2.03(f) shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including
without limitation the following circumstances:
(1) any lack of validity or enforceability of any
Financing Document;
(2) any amendment or waiver of or any consent to
departure from any Financing Document (except, in the case of
an effective amendment to, waiver of or consent to a departure
from any provision of this Agreement, to the extent specified
herein);
(3) the existence of any claim, set-off, defense or other
right which any Borrower may have at any time against the
beneficiary of any Letter of Credit (or any Person or entity
for whom such beneficiary may be acting), the Agent, any
Fronting Bank or any Bank or any other Person or entity,
whether in connection with this Agreement, any other Financing
Document or any unrelated transaction;
(4) any statement or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever;
(5) payment by a Fronting Bank under any Letter of Credit
against presentation of a draft or document which does not
comply with the terms of such Letter of Credit; or
(6) to the extent permitted under applicable law, any
other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
(g) PAYMENTS BY BANKS WITH RESPECT TO LETTERS OF CREDIT.
(i) Each Bank shall make available an amount equal to its ratable
share of any drawing under a Letter of Credit, in Federal or other
27
funds immediately available in New York City, to the applicable
Fronting Bank by 3:00 P.M. (New York City time) on the second Domestic
Business Day following such drawing, together with interest on such
amount for the period from and including the date of such drawing to
but excluding the date upon which such amount is to be made available
at the Federal Funds Rate on the date of such drawing, at such Fronting
Bank's address referred to in Section 10.01; provided that each Bank's
obligation shall be reduced by its pro rata share of any reimbursement
theretofore paid by the relevant Borrower in respect of such drawing
pursuant to Section 2.03(f)(i). The applicable Fronting Bank shall
notify each Bank of the amount of such Bank's obligation in respect of
any drawing under a Letter of Credit not later than 1:30 P.M. (New York
City time) on the day such payment by such Bank is due. Each Bank shall
be subrogated to the rights of the applicable Fronting Bank against the
applicable Borrower to the extent such payment due from such Bank to
such Fronting Bank is paid, plus interest thereon, from and including
the day such amount is due from such Bank to such Fronting Bank to but
excluding the day such Borrower makes payment to such Fronting Bank
pursuant to Section 2.03(f)(i), whether before or after judgment, at a
rate per annum equal to the sum of 2% plus the rate applicable to Base
Rate Loans for such day.
(ii) If any Bank fails to pay any amount required pursuant to
subsection (i) of this Section 2.03(g) on the date on which such
payment is due, interest, payable on demand, shall accrue on such
Bank's obligation to make such payment, for each day from and including
the date such payment becomes due to but excluding the date such Bank
makes such payment at a rate per annum equal to the Federal Funds Rate.
Any payment made by any Bank after 3:00 P.M. (New York City time) on
any Domestic Business Day shall be deemed for purposes of the preceding
sentence to have been made on the next succeeding Domestic Business
Day.
(iii) If the relevant Borrower shall reimburse a Fronting Bank
for any drawing under a Letter of Credit after the Banks shall have
made funds available to such Fronting Bank with respect to such drawing
in accordance with subsection (i) of this Section 2.03(g), such
Fronting Bank shall promptly upon receipt of such reimbursement
distribute to each Bank its pro rata share thereof, including interest,
to the extent received by such Fronting Bank.
(iv) The several obligations of the Banks to the Fronting Banks
hereunder shall be absolute, irrevocable and unconditional under any
and all circumstances whatsoever and shall not be affected by any
circum-
28
stance, including, without limitation, (1) any set-off, counterclaim,
recoupment, defense or other right which any such Bank or any other
Person may have against the Agent, any Fronting Bank or any other
Person for any reason whatsoever; (2) the occurrence or continuance of
a Default or an Event of Default or the termination of the Commitments
or any Letter of Credit; (3) any adverse change in the condition
(financial or otherwise) of any Obligor or any other Person; (4) any
breach of any Financing Document by any party thereto; (5) the fact
that any condition precedent to the issuance of, or the making of any
payment under, any Letter of Credit was not in fact met; (6) any
violation or asserted violation of law by any Bank or any affiliate
thereof; or (7) to the extent permitted under applicable law, any other
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. Each payment by each Bank to a Fronting Bank for
its own account shall be made without any offset, abatement,
withholding or reduction whatsoever. If a Fronting Bank is required at
any time (whether before or after the Termination Date) to return to a
Borrower or to a trustee, receiver, liquidator, custodian or other
similar official any portion of the payments made by such Borrower to
such Fronting Bank in payment of any Reimbursement Obligation or
interest thereon upon the insolvency of such Borrower, or the
commencement of any case or proceeding under any bankruptcy, insolvency
or other similar law with respect to such Borrower, each Bank shall, on
demand of such Fronting Bank, forthwith return to such Fronting Bank
any amounts transferred to such Bank by such Fronting Bank in respect
thereof pursuant to this subsection plus such Bank's pro rata share of
any interest on such payments required to be paid to the Person
recovering such payments plus interest on the amount so demanded from
the day such demand is made, if such demand is made by 2:00 p.m. (New
York City time), or from the next following Domestic Business Day, if
such demand is made after 2:00 p.m., to but not including the day such
amounts are returned by such Bank to such Fronting Bank at a rate per
annum for each day equal to (A) the Federal Funds Rate for the day of
such demand and (B) the Base Rate plus 1% for each day thereafter.
(h) LETTER OF CREDIT COMMISSION; ISSUANCE FEE
(i) LETTER OF CREDIT COMMISSION. Each Borrower agrees to pay to
the Agent a letter of credit commission with respect to each Letter of
Credit issued at its request or for its account, computed for each day
from and including the date of issuance of such Letter of Credit to but
excluding the last day a drawing is available under such Letter of
Credit (the "Letter of Credit Termination Date"), at the Letter of
Credit Commission Rate on the aggregate amount available for drawing
under such Letter of Credit
29
from time to time (whether or not any conditions to drawing can then be
met), such fee to be for the account of the Banks ratably in proportion
to their Total Exposures. Such fee shall be payable quarterly in
arrears on the last Domestic Business Day of each January, April, July
and October and upon the Termination Date.
(ii) ISSUANCE FEE. Each Borrower shall pay to each Fronting Bank
for its own account such fees with respect to each Letter of Credit
issued by such Fronting Bank for the account of such Borrower as shall
have been agreed between such Borrower and such Fronting Bank.
(iii) LIMITED LIABILITY OF THE FRONTING BANK. As between a
Fronting Bank, on the one hand, and a Borrower, on the other, such
Borrower assumes all risks of any acts or omissions of the beneficiary
and any transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither Fronting Bank nor any of their
respective employees, officers or directors shall be liable or
responsible for: (a) the use which may be made of any Letter of Credit
or for any acts or omissions of any beneficiary or transferee in
connection therewith, (b) the validity, sufficiency or genuineness of
documents, or of any endorsement(s) thereon, even if such documents
should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged, (c) payment by the Fronting Bank
against presentation of documents which do not comply with the terms of
any Letter of Credit, including failure of any documents to bear any
reference or adequate reference to such Letter of Credit, or (d) any
other circumstance whatsoever in making or failing to make payment
under any Letter of Credit; provided that such Borrower shall have a
claim against the applicable Fronting Bank, and such Fronting Bank
shall be liable to such Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or special, damages
suffered by such Borrower which are found in a final, unappealable
judgment of a court of competent jurisdiction to have been caused by
(i) such Fronting Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of Credit
comply with the terms thereof or (ii) such Fronting Bank's willful
failure to pay, or gross negligence resulting in a failure to pay, any
drawing after the presentation to it by the beneficiary (or any
transferee of the Letter of Credit) of a draft and other required
documentation strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the
foregoing, a Fronting Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation.
30
(iv) FRONTING BANKS AND AFFILIATES. Each Fronting Bank shall have
the same rights and powers under the Financing Documents as any other
Bank and may exercise or refrain from exercising the same as though
they were not Fronting Banks (in each case to the extent such Fronting
Bank is also a Bank), and the Fronting Banks and their respective
affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with AES or any Subsidiary or affiliate
of AES as if they were not Fronting Banks hereunder.
SECTION 2.04. NOTES. (a) The Loans of each Bank to each Borrower shall
be evidenced by a single Note payable to the order of such Bank for the account
of its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans to such Borrower.
(b) Each Bank may, by notice to a Borrower and the Agent, request that
its Loans to such Borrower of a particular type be evidenced by a separate Note
of such Borrower in an amount equal to the aggregate unpaid principal amount of
such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each reference in this Agreement to a "Note"
or the "Notes" of such Bank shall be deemed to refer to and include any or all
of such Notes, as the context may require.
(c) Upon receipt of each Bank's Notes pursuant to Section 3.01(b) and
3.02(a), the Agent shall forward such Notes to such Bank. Each Bank shall record
the date, amount, type and maturity of each Loan made by it to each Borrower and
the date and amount of each payment of principal made with respect thereto, and
may, if such Bank so elects in connection with any transfer or enforcement of
its Note of any Borrower, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
such Loan to such Borrower then outstanding; provided that the failure of any
Bank to make any such recordation or endorsement shall not affect the
obligations of any Obligor under the Financing Documents. Each Bank is hereby
irrevocably authorized by each Borrower so to endorse its Notes and to attach to
and make a part of any Note a continuation of any such schedule as and when
required.
SECTION 2.05. MATURITY OF LOANS. Each Loan shall mature, and the
principal amount thereof shall be due and payable (together with interest
accrued thereon), on the Termination Date.
SECTION 2.06. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such
31
day. Such interest shall be payable quarterly in arrears on each Quarterly
Payment Date. Any overdue principal of or interest on any Base Rate Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for
such day.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof.
"EURO-DOLLAR MARGIN" means a rate per annum determined in accordance
with the annexed Pricing Schedule.
The "ADJUSTED LONDON INTERBANK OFFERED RATE" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16th of
1%) of the respective rates per annum at which deposits in dollars are offered
to each of the Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
32
(c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin
for such day plus the Adjusted London Interbank Offered Rate applicable to such
Loan and (ii) the sum of 2% plus the Euro-Dollar Margin for such day plus the
quotient obtained (rounded upward, if necessary, to the next higher 1/100th of
1%) by dividing (x) the average (rounded upward, if necessary, to the next
higher 1/16th of 1%) of the respective rates per annum at which one day (or, if
such amount due remains unpaid more than three Euro-Dollar Business Days, then
for such other period of time not longer than three months as the Agent may
select) deposits in dollars in an amount approximately equal to such overdue
payment due to each of the Reference Banks are offered to such Reference Bank in
the London interbank market for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a
rate per annum equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day).
(d) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the applicable Borrower
and the participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(e) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
SECTION 2.07. METHOD OF ELECTING INTEREST RATES. (a) The Loans included
in each Borrowing shall bear interest initially at the type of rate specified by
the applicable Borrower in the applicable Notice of Borrowing. Thereafter, the
applicable Borrower may from time to time elect to change or continue the type
of interest rate borne by each Group of Loans (subject to Section 2.07(d) and
the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the applicable Borrower
may elect to convert such Loans to Euro-Dollar Loans as of any
Euro-Dollar Business Day;
(ii) if such Loans are Euro-Dollar Loans, the applicable Borrower
may elect to convert such Loans to Base Rate Loans as of any Domestic
Business Day or elect to continue such Loans as Euro-Dollar Loans for
an
33
additional Interest Period, subject to Section 2.13 if any such
conversion is effective on any day other than the last day of an
Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent not later than 11:00 A.M. (New York City
time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective (unless the relevant
Loans are to be converted from Euro-Dollar Loans to Base Rate Loans, in which
case such notice shall be delivered to the Agent not later than 11:00 A.M. (New
York City time) on the date such conversion is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant Group of Loans; provided that (i)
such portion is allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining portion to which it
does not apply, are each at least $5,000,000 (unless such portion is comprised
of Base Rate Loans). If no such notice is timely received before the end of an
Interest Period for any Group of Euro-Dollar Loans, the applicable Borrower
shall be deemed to have elected that such Group of Loans be converted to Base
Rate Loans at the end of such Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of Section 2.07(a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if the Loans resulting from such conversion are
to be Euro-Dollar Loans, the duration of the next succeeding Interest
Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election from a
Borrower pursuant to Section 2.07(a) above, the Agent shall notify each Bank of
34
the contents thereof and such notice shall not thereafter be revocable by any
Borrower.
(d) A Borrower shall not be entitled to elect to convert any Loans to,
or continue any Loans for an additional Interest Period as, Euro-Dollar Loans if
(i) the aggregate principal amount of any Group of Euro-Dollar Loans created or
continued as a result of such election would be less than $5,000,000 or (ii) a
Default shall have occurred and be continuing when the Borrower delivers notice
of such election to the Agent.
(e) If any Loan is converted to a different type of Loan, the
applicable Borrower shall pay, on the date of such conversion, the interest
accrued to such date on the principal amount being converted.
SECTION 2.08. COMMITMENT FEES. AES shall pay to the Agent, for the
account of the Banks ratably in proportion to their Commitments, a commitment
fee at the Commitment Fee Rate on the daily amount by which the aggregate amount
of the Commitments exceeds the aggregate Total Outstandings. Such commitment fee
shall accrue from and including the Effective Date to but excluding the
Termination Date (or earlier date of termination of the Commitments in their
entirety). Accrued commitment fees under this Section 2.08 shall be payable
quarterly on each January 31, April 30, July 31 and October 31 and upon the date
of termination of the Commitments in their entirety. For this purpose,
"Commitment Fee Rate" means a rate per annum determined in accordance with the
annexed Pricing Schedule.
SECTION 2.09. TERMINATION OR REDUCTION OF COMMITMENTS.
(a) OPTIONAL. AES may, upon at least three Domestic Business Days'
notice to the Agent, (i) terminate the Commitments in their entirety at any
time, if no Loans or Letters of Credit are outstanding at such time or (ii)
ratably reduce from time to time by an aggregate amount of $5,000,000 or any
larger multiple thereof, the aggregate amount of the Commitments in excess of
the aggregate Total Outstandings.
(b) MANDATORY. (i) Scheduled Termination. The Commitments shall
terminate on the Termination Date, and any Loans and Reimbursement Obligations
then outstanding (together with accrued interest thereon) shall be due and
payable on such date.
(ii) NET CASH PROCEEDS OF ASSET DISPOSITIONS. In the event that
AES or any of its Subsidiaries shall at any time, or from time to time, receive
any Net Cash Proceeds of any Asset Disposition, the Commitments of the Banks
shall, unless the Required Banks otherwise agree, be ratably reduced by such
amounts
35
and at such times as may be required to avoid any requirement that all or any
portion of such Net Cash Proceeds be applied to repay, prepay, repurchase or
defease any Subordinated Debt.
(c) REDUCTIONS PERMANENT. All reductions of the Commitments pursuant to
this Section 2.09 shall be permanent.
SECTION 2.10. MANDATORY REPAYMENTS OF THE LOANS AND CASH
COLLATERALIZATION OF LETTERS OF CREDIT. If on any date, after giving effect to
the reductions in the Commitments pursuant to Section 2.09, the aggregate Total
Outstandings exceed the aggregate Commitments, the Borrowers shall be jointly
and severally obligated to apply an amount equal to such excess to prepay the
Loans or cash collateralize Letters of Credit, or both. Amounts to be applied
pursuant to the preceding sentence shall be applied first to repay the principal
amount of the Borrowings then outstanding until all such Borrowings shall have
been repaid in full, and if any excess then remains such excess shall be
deposited with the Agent in the Cash Collateral Account to be held, applied or
released for application as provided in Section 2.15. The particular Borrowings
to be repaid shall be as designated by AES (or, failing such designation, as the
Agent may determine). Each repayment shall be applied to repay ratably the Loans
of the several Banks included in such Borrowings. Each payment of principal
shall be made together with interest accrued on the amount repaid to the date of
payment.
SECTION 2.11. OPTIONAL PREPAYMENT OF THE LOANS. (a) Subject in the case
of any Euro-Dollar Borrowing to Section 2.13, the Borrowers may, upon at least
one Domestic Business Day's notice to the Agent, prepay any Group of Base Rate
Loans or upon at least three Euro-Dollar Business Days' notice to the Agent,
prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or
from time to time in part in amounts aggregating $5,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group of Loans.
(b) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment and such notice shall not thereafter be
revocable by any Borrower.
SECTION 2.12. General Provisions as to Payments. (a) The Borrowers
shall make each payment of principal of, and interest on, the Loans and
Reimbursement Obligations and of fees hereunder, not later than 12:00 Noon (New
York City time) on the date when due, in Federal or other funds
36
immediately available in New York City, without set-off, counterclaim or other
deduction, to the Agent at its address referred to in Section 10.01. The Agent
will promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Base Rate Loans or Reimbursement Obligations
or of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from a Borrower prior
to the date on which any payment is due from such Borrower to the Banks
hereunder that such Borrower will not make such payment in full, the Agent may
assume that such Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that such Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate.
SECTION 2.13. FUNDING LOSSES. If a Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the last day of an applicable period fixed pursuant to Section 2.06(c), or if a
Borrower fails to borrow, prepay, convert or continue any Euro-Dollar Loans
after notice has been given to any Bank in accordance with Section 2.02(b),
2.07(c) or 2.11(b), such Borrower shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after such payment or
conversion or failure to borrow, prepay, convert or continue; provided that such
Bank shall have delivered to such Borrower a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in the absence of
manifest error.
37
SECTION 2.14. COMPUTATION OF INTEREST AND FEES. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. CASH COLLATERAL ACCOUNT. (a) All amounts required to be
deposited as cash collateral with the Agent pursuant to Section 2.10 or Section
6.03 shall be deposited in a cash collateral account (the "Cash Collateral
Account") established by the Borrowers with the Agent, to be held, applied or
released for application as provided in this Section 2.15.
(b) If and when any portion of the Letter of Credit Liabilities on
which any deposit of cash collateral was based (the "Relevant Contingent
Exposure") shall become fixed (a "Direct Exposure") as a result of the payment
by a Fronting Bank of a draft presented under any relevant Letter of Credit, the
amount of such Direct Exposure (but not more than the amount in the Cash
Collateral Account at the time) shall be withdrawn by the Agent from the Cash
Collateral Account and shall be paid to the relevant Fronting Bank to be applied
against such Direct Exposure and the Relevant Contingent Exposure shall
thereupon be reduced by such amount. If at any time the amount in the Cash
Collateral Account exceeds the Relevant Contingent Exposure, the excess amount
shall, so long as no Default shall have occurred and be continuing, be withdrawn
by the Agent and paid to such Borrower as AES may direct. If a Default shall
have occurred and be continuing, such excess amount shall be retained in the
Cash Collateral Account and, if and when requested by the Required Banks, shall
be withdrawn by the Agent and applied first to repay the Loans, Reimbursement
Obligations and other due and unpaid amounts required to be paid by the
Borrowers hereunder and second any remaining excess shall be paid to such
Borrower as AES may direct. If at any time the amount in the Cash Collateral
Account is less than the Relevant Contingent Exposure, AES shall promptly
deposit in the Cash Collateral Account additional cash collateral in the amount
of such shortfall.
(c) Interest and other payments and distributions made on or with
respect to the cash collateral held by the Agent shall be for the account of the
Borrowers and shall constitute cash collateral to be held by the Agent or
returned to the Borrowers in accordance with subsection (b) of this Section
2.15; provided that the Agent shall have no obligation to invest any cash
collateral on behalf of the Borrowers or any other Person. Beyond the exercise
of reasonable care in the custody thereof, the Agent shall have no duty as to
any cash collateral in its possession or control or in the possession or control
of any agent or bailee or any income thereon or as to the preservation of rights
against prior parties or any other
38
rights pertaining thereto. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the cash collateral in its
possession if the cash collateral is accorded treatment substantially equal
to that which it accords its own property, and shall not be liable or
responsible for any loss or damage to any of the cash collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
agent or bailee selected by the Agent in good faith. All expenses and
liabilities incurred by the Agent in connection with taking, holding and
disposing of any cash collateral (including customary custody and similar
fees with respect to any cash collateral held directly by the Agent) shall be
paid by AES from time to time upon demand. Upon a Default, the Agent shall be
entitled to apply (and, at the request of the Required Banks but subject to
applicable law, shall apply) cash collateral or the proceeds thereof to
payment of any such expenses, liabilities and fees.
ARTICLE 3
Conditions
SECTION 3.01. Closing. The closing hereunder shall occur when all the
following conditions have been satisfied:
(a) The Agent shall have received the fees for the account of each
Bank in the amounts previously agreed to by AES and as set forth in the letter
agreement (the "FEE LETTER") between AES and Morgan Guaranty Trust Company of
New York dated October 21, 1997;
(b) The Agent shall have received duly executed Notes of AES for the
account of each Bank dated on or before the Closing Date complying with the
provisions of Section 2.04;
(c) The Agent shall have received the Subsidiary Guaranty dated the
Closing Date, duly executed by AES Oklahoma and AES Hawaii Management;
(d) The Agent shall have received an opinion of the General Counsel of
AES, substantially in the form of Exhibit C hereto, dated the Closing Date and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(e) The Agent shall have received an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit D hereto,
dated the Closing Date and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably request;
39
(f) The Agent shall have received evidence satisfactory to it that (i)
all amounts outstanding under the Existing Credit Facility have been paid in
full, (ii) all commitments thereunder have been terminated and (iii) all
principal, interest, fees, reimbursement obligations and other amounts owing
thereunder shall have been paid in full;
(g) The Agent shall have received evidence, satisfactory to it, in the
form of pro forma calculations, that the making of Borrowings and the issuance
of, and drawings under, Letters of Credit under this Agreement are permitted
under the terms of the Subordinated Note Indentures;
(h) The Agent shall have received copies of the resolutions of the
Board of Directors of each Obligor authorizing the execution, delivery and
performance by such Obligor of the Financing Documents to which it is a party,
certified by a duly authorized officer of such Obligor (which certificate shall
state that such resolutions are in full force and effect on the Closing Date);
(i) The Agent shall have received certified copies of all approvals,
authorizations or consents of, or notices to or registrations with, any
governmental body or agency required for each Obligor, if necessary, to enter
into the Financing Documents to which it is a party;
(j) The Agent shall have received a certificate of a duly authorized
officer of each Obligor certifying the names and true signatures of the officers
of such Obligor authorized to sign the Financing Documents to which it is a
party and the other documents to be delivered by such Obligor hereunder;
(k) The Agent shall have received payment of all reasonable fees and
other amounts then payable (including, without limitation, all fees and expenses
of counsel to the Agent payable pursuant to Section 10.03);
(l) The Agent shall have received a certificate signed by a duly
authorized officer of AES dated the Closing Date, to the effect that: (i) the
representations and warranties contained in Article IV hereof are true and
correct on and as of the Closing Date as though made on and as of such date; and
(ii) no Default has occurred and is continuing or would result from the issuance
of the Letters of Credit requested by AES to be issued on such date (including,
without limitation, the deemed issuance of the initial Letters of Credit
pursuant to the second sentence of Section 2.03(a)) and the Borrowings requested
by AES to be made on such date; and
40
(m) The Agent shall have received all documents it may reasonably
request relating to the existence of the Obligors, the corporate authority for
and the validity of this Agreement and the other Financing Documents, and any
other matters relevant hereto, all in form and substance satisfactory to the
Agent.
The Agent shall promptly notify the Borrowers and the Banks of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto.
SECTION 3.02. AES FINANCE SUBSIDIARY ADDITION DATE. An AES Finance
Subsidiary Addition Date shall occur with respect to any AES Finance Subsidiary
on the date upon which the Agent shall have received:
(a) duly executed Notes of such AES Finance Subsidiary for the account
of each Bank dated on or before such AES Finance Subsidiary Addition Date
complying with the provisions of Section 2.04;
(b) a counterpart hereof signed by such AES Finance Subsidiary;
(c) an opinion of the General Counsel of AES substantially in the form
of Exhibit E hereto with respect to such AES Finance Subsidiary and covering
such additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(d) an opinion of counsel to such AES Finance Subsidiary from the
jurisdiction of incorporation of such AES Finance Subsidiary, substantially in
the form of Exhibit F hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required Banks may reasonably
request; and
(e) all documents that the Agent may reasonably request relating to
the existence of such AES Finance Subsidiary, the corporate authority for and
the validity of this Agreement and its Notes as agreements and obligations of
such AES Finance Subsidiary, and any other matters relevant hereto, all in
form and substance reasonably satisfactory to the Agent.
The Agent shall promptly notify the Borrowers and the Banks of any AES
Finance Subsidiary Addition Date, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 3.03. EXTENSION OF CREDIT. The obligation of each Bank to make
a Loan on the occasion of each Borrowing and the obligation of a Fronting Bank
to issue a Letter of Credit (including the deemed issuance of the initial
Letters of
41
Credit pursuant to the second sentence of Section 2.03(a)) on the occasion of
each request therefor by a Borrower shall in each case be subject to the
satisfaction of the following conditions:
(a) the fact that the Closing Date shall have occurred on or prior to
December 31, 1997;
(b) receipt by the Agent of a Notice of Borrowing or (except in the
case of the deemed issuance of the initial Letters of Credit pursuant to the
second sentence of Section 2.03(a)) a Notice of Issuance as required by Section
2.02 or 2.03, as the case may be;
(c) the fact that, immediately after such Extension of Credit, after
giving effect to all direct and indirect applications of the proceeds of such
Extension of Credit made substantially simultaneously with the extension
thereof, the aggre gate Total Outstandings of any Bank will not exceed its
Commitment;
(d) the fact that, immediately before and after such Extension of
Credit, no Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the Obligors
contained in the Financing Documents (except, in the case of a Refunding
Borrowing, the representations and warranties set forth in Sections 4.04(c) and
4.05 as to any matter which has theretofore been disclosed in writing by AES to
the Banks) shall be true on and as of the date of such Extension of Credit.
Each Extension of Credit hereunder shall be deemed to be a
representation and warranty by the Borrowers on the date of such Extension of
Credit as to the facts specified in clauses (c), (d) and (e) of this Section.
ARTICLE 4
Representations and Warranties
AES represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER. Each Obligor is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware (or, in the case of any AES Finance Subsidiary,
its jurisdiction of incorporation), and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
42
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by each Obligor of the
Financing Documents to which it is a party are within such Obligor's corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of such Obligor or of any agreement, judgment, injunction, order, decree or
other instrument binding upon AES or any of its Subsidiaries or result in the
creation or imposition of any Lien on any asset of AES or of any Material AES
Entity.
SECTION 4.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of each Borrower and each other Financing Document, when
executed and delivered in accordance with this Agreement, will constitute a
valid and binding obligation of each Obligor that is a party thereto, in each
case enforceable in accordance with its terms.
SECTION 4.04. FINANCIAL INFORMATION.
(a) The consolidated balance sheet of AES and its Consolidated
Subsidiaries as of December 31, 1996 and the related consolidated statements of
operations and cash flows for the fiscal year then ended, reported on by
Deloitte & Touche and set forth in the AES 1996 Form 10-K, a copy of which has
been delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
AES and its Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of AES and its
Consolidated Subsidiaries as of September 30, 1997 and the related unaudited
consolidated statements of operations and cash flows for the fiscal quarter and
the portion of AES's fiscal year then ended, set forth in the AES September 1997
Form 10-Q, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in subsection (a)
of this Section, the consolidated financial position of AES and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such fiscal quarter and portion of such fiscal year (subject to
normal year-end adjustments).
(c) Since September 30, 1997 there has been no material adverse change
in the business, financial position, results of operations or prospects of AES
and its Consolidated Subsidiaries, considered as a whole.
43
SECTION 4.05. LITIGATION. Except as disclosed in the AES September 1997
Form 10-Q, there is no action, suit or proceeding pending against, or to the
knowledge of AES threatened against or affecting, AES or any of its Subsidiaries
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated financial position or
consolidated results of operations of AES and its Consolidated Subsidiaries or
which in any manner draws into question the validity of any Financing Document.
SECTION 4.06. COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability in excess of $100,000 under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. ENVIRONMENTAL MATTERS. In the ordinary course of its
business, each of AES and its Subsidiaries conducts an ongoing review of the
effect of Environmental Laws on the business, operations and properties of AES
or such Subsidiary, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances by AES or its Subsidiaries, and any actual or
potential liabilities to third parties, including employees, and any related
costs and expenses). On the basis of this review, AES has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of AES and its
Consolidated Subsidiaries, considered as a whole.
44
SECTION 4.08. TAXES. United States Federal income tax returns of AES
and its Subsidiaries have been examined and closed through the fiscal year ended
December 31, 1986. AES and its Subsidiaries have filed all United States Federal
income tax returns and AES and all Material AES Entities have filed all other
material tax returns which are required to be filed by them and have paid all
taxes due as indicated on such returns or pursuant to any assessment received by
AES or any Subsidiary or any Material AES Entity other than any such taxes that
are being diligently contested in good faith through appropriate proceedings and
for which adequate reserves have been established in accordance with generally
accepted accounting principals. The charges, accruals and reserves on the books
of AES, its Subsidiaries and all Material AES Entities in respect of taxes or
other governmental charges are, in the opinion of AES, adequate.
SECTION 4.09. MATERIAL AES ENTITIES. Each Material AES Entity is a
corporation duly incorporated, validly existing and (other than any Material AES
Entity that is not incorporated under the laws of the United States or any
political subdivision thereof) in good standing under the laws of its
jurisdiction of incorporation. Each Material AES Entity has all corporate powers
and all material governmental licenses, authorization, consents and approvals
required to carry on its business as proposed to be conducted and has all
governmental licenses, authorizations, consents and approvals required to have
been obtained prior to the date hereof and which are material to the operation
of its business as proposed to be conducted, except to the extent that the
failure to obtain any such license, authorization, consent or approval,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect upon the business, financial condition, operations,
property and prospects of AES and its Consolidated Subsidiaries, taken as a
whole.
SECTION 4.10. NOT AN INVESTMENT COMPANY. None of the Obligors is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
SECTION 4.11. PUBLIC UTILITY HOLDING COMPANY ACT. Neither AES nor any
of its Subsidiaries is subject to regulation as a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" of a subsidiary or
holding company or a "public utility company" under Section 2(a) of the Public
Utility Holding Company Act of 1935, as amended ("PUHCA"), except that AES and
its subsidiary in the United Kingdom, Applied Energy Services Electric Limited,
are exempt holding companies under Section 3(a)(5) of PUHCA by order of the
Securities and Exchange Commission.
SECTION 4.12. REPRESENTATIONS IN SUBSIDIARY GUARANTY TRUE AND CORRECT.
Unless the Subsidiary Guaranty shall have ceased to be a Financing Document,
45
each of the representations and warranties of any Obligor contained in the
Subsidiary Guaranty is true and correct.
SECTION 4.13. FULL DISCLOSURE. All information heretofore furnished by
any Borrower to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by any Borrower to the Agent or any Bank will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. AES has disclosed to the Banks in writing any and all facts
which materially and adversely affect or may affect (to the extent any Borrower
can now reasonably foresee), the business, operations or financial condition of
AES and its Consolidated Subsidiaries, taken as a whole, or the ability of any
Obligor to perform its obligations under the Financing Documents.
SECTION 4.14. EXISTING LETTERS OF CREDIT. Schedule II hereto
identifies each Existing Letter of Credit outstanding as of the date hereof
and as of the Effective Date.
SECTION 4.15. YEAR 2000 COMPLIANCE. AES has (i) initiated a review and
assessment of all areas within the business and operations of AES and its
Subsidiaries (including those areas affected by suppliers and vendors) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by them (or their respective suppliers and vendors)
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (ii)
developed a plan and timeline for addressing the Year 2000 Problem on a timely
basis and (iii) to date, implemented such plan in accordance with such
timetable, except to the extent that the failure to do so could not reasonably
be expected to have a material adverse effect upon the business, financial
position or results of operations of AES and its Consolidated Subsidiaries,
taken as a whole. AES reasonably believes that all computer applications
(including those of suppliers and vendors) that are material to the business or
operations of AES and its Subsidiaries will on a timely basis be able to perform
properly date-sensitive functions for all dates before and from and after
January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent that
the failure to do so could not reasonably be expected to have a material adverse
effect upon the business, financial position or results of operations of AES and
its Consolidated Subsidiaries, taken as a whole.
46
ARTICLE 5
Covenants
AES agrees that, so long as any Bank has any Commitment hereunder or
any amount payable under any Note remains unpaid or any Letter of Credit or
Reimbursement Obligation remains outstanding:
SECTION 5.01. INFORMATION. AES will deliver to each of the Banks:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of AES, a consolidated and consolidating balance sheet
of each Obligor as of the end of such fiscal year, an unconsolidated balance
sheet of AES as of the end of such fiscal year, the related consolidated,
consolidating and unconsolidated (as applicable) statements of operations for
such fiscal year, the related consolidated and unconsolidated statements of cash
flows for such fiscal year and a statement of the cash flow to AES of each
Subsidiary of AES for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, said consolidated
financial statements to be reported on, in a manner acceptable to the Securities
and Exchange Commission, by Deloitte & Touche or other independent public
accountants of nationally recognized standing and such consolidating and
unconsolidated financial statements to be certified as to fairness of
presentation, generally accepted accounting principles (other than failure to
consolidate) and consistency by the chief executive officer, president, chief
financial officer or chief accounting officer of AES;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of AES, a consolidated
balance sheet of each Obligor as of the end of such quarter and an
unconsolidated balance sheet of AES as of the end of such fiscal quarter and the
related consolidated and unconsolidated statements of operations for such
quarter and for the portion of such Obligor's fiscal year ended at the end of
such quarter and the related consolidated and unconsolidated statements of cash
flows for the portion of such Obligor's fiscal year ended at the end of such
quarter, and a statement of the cash flow to AES of each Subsidiary of AES for
such quarter and for the portion of AES's fiscal year ended at the end of such
quarter, setting forth in the case of such consolidated statements of operations
and cash flows, in comparative form the figures for the corresponding quarter
and the corresponding portion of such Obligor's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief executive officer, president, chief financial officer or chief accounting
officer of AES;
47
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
executive officer, president, chief financial officer or chief accounting
officer of AES (i) setting forth in reasonable detail the calculations required
to establish whether AES was in compliance with the requirements of Sections
5.07, 5.08, 5.09, 5.11, 5.13, 5.15, 5.16 and 5.18 on the date of such financial
statements, (ii) stating to the knowledge of AES whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which AES is taking or proposes to take with
respect thereto and (iii) accompanied by a schedule setting forth in reasonable
detail a description, including, where applicable, the expected and maximum
dollar amounts thereof, of all material contingent liabilities not disclosed in
such financial statements;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i) whether
anything has come to their attention as a result of their audit (which was not
directed primarily toward obtaining knowledge of noncompliance) to cause them to
believe that AES has failed to comply with the terms, covenants, provisions or
conditions as they relate to accounting of financial matters addressed in
Sections 5.07 to 5.17, inclusive, and (ii) confirming the calculations set forth
in the officer's certificate delivered simultaneously therewith pursuant to
clause (c) above;
(e) within five days after any officer of AES obtains knowledge of any
Default, if such Default is then continuing, a certificate of the chief
executive officer, president, executive vice-president or chief financial
officer of AES setting forth the details thereof and the action which AES is
taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of AES
generally, copies of all financial statements, reports and proxy statements so
mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which AES shall have filed with the Securities and Exchange
Commission;
(h) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
48
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief executive officer, president, chief financial officer
or chief accounting officer of AES setting forth details as to such occurrence
and the action, if any, which AES or the applicable member of the ERISA Group is
required or proposes to take;
(i) not less than 10 days prior to the anticipated receipt by AES or
any Subsidiary of AES of Net Cash Proceeds from any Asset Disposition, a
certificate of the chief executive officer, president, chief financial officer
or chief accounting officer of AES setting forth a description of the
transaction giving rise to such Net Cash Proceeds, the date or dates upon which
such Net Cash Proceeds are anticipated to be received by AES or such Subsidiary
and the amount of Net Cash Proceeds anticipated to be received on such date or
each of such dates;
(j) promptly after receipt by AES or any Subsidiary of AES or any
Material AES Entity, a copy of each complaint, order, citation, notice or other
written communication from any Person with respect to the existence or alleged
existence of a material violation of any applicable Environmental Law or the
incurrence of any liability, obligation, loss, damage, cost, expense, fine,
penalty or sanction or the requirement to commence any remedial action resulting
from or in connection with any air emission, water discharge, noise emission,
Hazardous Substance or any other environmental, health or safety matter at,
upon, under or within any of the properties now or previously owned, leased or
operated by AES, any of its Subsidiaries or any Material AES Entity, or due to
the operations or activities of AES, any Subsidiary of AES, any Material AES
Entity or any other Person on or in connection with any such property or any
part thereof; and
49
(k) from time to time such additional information regarding the
financial position or business of AES and its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.
SECTION 5.02. Payment of Obligations. Each Borrower will pay and
discharge all its material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested in good
faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary of AES to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance of Property; Insurance. (a) AES will keep,
and will cause each Subsidiary of AES to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
(b) AES will, and will cause each of its Subsidiaries to, maintain
(either in the name of AES or in such Subsidiary's own name) with financially
sound and responsible insurance companies, insurance of such types, in at least
such amounts and against at least such risks (and with such risk retention) as
are usually insured against in similar circumstances in the same general area by
companies of established repute engaged in the same or a similar business; and
will furnish to each Bank upon request information presented in reasonable
detail as to the insurance so carried.
SECTION 5.04. Conduct of Business and Maintenance of Existence. AES (a)
will continue, and will cause each Material AES Entity and each other Borrower,
if any, to continue, to engage in business of the same general type as now
conducted by AES and its Subsidiaries, (b) will continue, and will cause each
Material AES Entity and each other Borrower, if any, to continue, to operate
their respective businesses on a basis substantially consistent with the
policies and standards of AES, such Material AES Entity or such Borrower, if
any, as in effect on the date hereof and (c) will preserve, renew and keep in
full force and effect, and will cause each Material AES Entity and each other
Borrower, if any, to preserve, renew and keep in full force and effect their
respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; provided
that nothing in this Section 5.04 shall prohibit (i) the merger of a Subsidiary
into AES or the merger or consolidation of a Subsidiary (other than a Borrower)
with or into another Person if the corporation surviving such consolidation or
merger is a Subsidiary and if, in each case, after giving effect thereto, (x) no
Default shall have occurred and be continuing and (y) no Borrower or Subsidiary
Guarantor shall be liable for any Debt of such Subsidiary except to the extent
that it was liable for such Debt prior
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to giving effect to such merger or (ii) the termination of the corporate
existence of any Subsidiary (other than a Borrower or a Subsidiary Guarantor) if
AES in good faith determines that such termination is in the best interest of
AES and is not materially disadvantageous to the Banks.
SECTION 5.05. COMPLIANCE WITH LAWS. AES will comply, and cause each
Subsidiary of AES to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) (a) except for such non-compliance as would result
solely in the payment of monetary compensation by AES or such Subsidiary in an
amount not to exceed $200,000 for each such non-compliance and (b) except where
the necessity of compliance therewith is contested in good faith by appropriate
proceedings.
SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. AES will keep,
and will cause each Subsidiary of AES to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Significant AES Entity and each other Borrower, if any, to
permit, representatives of any Bank at such Bank's expense to visit and inspect
any of their respective properties, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants, all at such reasonable times and as often as may reasonably
be desired.
SECTION 5.07. DEBT. (a) AES shall not, and shall not permit any
Subsidiary of AES to, incur, assume, create or suffer to exist any Debt
(including any Guarantees of Debt, surety bonds and obligations in respect of
letters of credit), except for:
(i) Debt under the Financing Documents (subject to Section 5.14);
(ii) Debt incurred by a Subsidiary (A) (1) to finance the
development, acquisition, construction, operation, maintenance or
working capital requirements of a Power Project or any unrelated
business operated or managed (including on a joint basis with others),
directly or indirectly, by AES and in which such Subsidiary has a
direct or indirect interest or (2) in respect of any letter of credit
issued in replacement of funds on deposit in any debt service reserve
or other similar account of a Power Project in which such Subsidiary
has a direct or indirect interest (up to a maximum
51
aggregate stated amount of all such letters of credit of all
Subsidiaries equal to $100,000,000) to the extent that such funds so
replaced are received by AES as a result of such funds being used to
pay dividends or make distributions on the capital stock of such
Subsidiary and any other Subsidiary in the chain of ownership between
AES and such Subsidiary and (B) that is not also the Debt of, or
Guaranteed by, any other Subsidiary with an interest in any other Power
Project or unrelated business (except for Debt incurred or assumed by
Subsidiaries of AES (other than Specified Subsidiaries) which, at the
time such Debt was incurred or assumed, in the aggregate, represent
less than 50% of the Parent Operating Cash Flow (other than Parent
Operating Cash Flow attributable to Specified Subsidiaries) for the
immediately preceding four fiscal quarters);
(iii) Debt existing on the date hereof;
(iv) Debt owing to AES or a Consolidated Subsidiary of AES;
(v) Debt of AES or its Subsidiaries representing a refinancing,
replacement or refunding of Debt permitted by clauses (ii) and (iii)
above; provided that (A) the aggregate principal amount of such Debt
outstanding or available will not be increased at the time of such
refinancing, replacement or refunding (other than (1) in the case of
Debt ("Hawaii Refinancing Debt") refinancing, replacing or refunding
Debt of AES Hawaii, Inc. outstanding on May 15, 1997 ("Replaced Hawaii
Debt") (so long as such Hawaii Refinancing Debt has no scheduled
principal repayments, or principal payments at the option of the holder
thereof in the absence of the occurrence of specified events, in any
such case in excess of those required under the Required Hawaii Debt,
prior to June 1, 2004) an increase of up to $300,000,000 in excess of
the aggregate principal amount of Debt that is being refinanced,
replaced or refunded to the extent that proceeds in at least the amount
of such increase are received by AES as a result of such proceeds being
used to pay dividends or make distributions on the capital stock of
such Subsidiary and any other Subsidiary in the chain of ownership
between AES and such Subsidiary, (2) in the case of Debt refinancing,
replacing or refunding Debt of the corporations or other entities that
hold AES's interest in the Tiszai II and Tiszaipalkonya Power Projects
(including, without limitation, Debt of a Subsidiary of AES that does
not have a direct or indirect interest in any other Power Project, the
proceeds of which are used to refinance such Debt of such corporations
or other entities and to pay dividends to AES) outstanding on October
21, 1997, an increase of up to $85,000,000 in excess of the aggregate
principal amount of Debt that is being refinanced, replaced or refunded
to the extent that proceeds of at least $45,000,000 are received by AES
as a result of
52
such proceeds being used to pay dividends or make distributions on the
capital stock of such Subsidiary and any other Subsidiary in the chain
of ownership between AES and such Subsidiary and (3) in the case of
Debt refinancing, replacing or refunding Debt of Dominican Power
Partners, LDC ("DPP") outstanding on October 21, 1997 (including,
without limitation, Debt of AES Los Mina Finance Company the proceeds
of which are used to refinance such Debt of DPP and to pay dividends to
AES), an increase of up to $100,000,000 in excess of the aggregate
principal amount of Debt that is being refinanced, replaced or refunded
to the extent that proceeds of at least $80,000,000 are received by AES
as a result of such proceeds being used to pay dividends or make
distributions on the capital stock of such Subsidiary and any other
Subsidiary in the chain of ownership between AES and such Subsidiary),
(B) no obligor shall be liable for any such Debt except to the extent
that it was liable for the Debt so refinanced, replaced or refunded
(except that (I) AES Los Mina Finance Company may incur Debt the
proceeds of which are used to refinance Debt of DPP and pay dividends
to AES, (II) a Subsidiary of AES that does not have a direct or
indirect interest in any other Power Project may incur Debt the
proceeds of which are used to refinance Debt of the corporations or
other entities that hold AES's interest in the Tiszai II and
Tiszaipalkonya Power Projects and pay dividends to AES, (III) a
Subsidiary of AES that does not have a direct or indirect interest in
any Power Project other than AES Sul Distribudora Gaucha de Energia
S.A. ("AES Sul") may incur Debt the proceeds of which are used to
refinance Debt of AES Sul and (IV) a Subsidiary of AES (the
"Refinancing Subsidiary") that has a direct or indirect interest in a
Power Project may incur Debt the proceeds of which are used to
refinance Debt of another Subsidiary of AES (the "Refinanced
Subsidiary") that has a direct or indirect interest in such Power
Project, provided that the Refinancing Subsidiary has no direct or
indirect interest in any Power Project other than Power Projects in
which the Refinanced Subsidiary has a direct or indirect interest.) and
(C) if any Debt being refinanced, replaced or refunded is subordinated
to the Debt of any Borrower hereunder or of any Subsidiary under any
Guarantee thereof, such Debt shall be subordinated at least to the same
extent;
(vi) Guarantees by AES of (x) Debt permitted by clause (ii)(A)(1)
above, (y) Debt permitted by clause (ii)(A)(2) above in respect of
letters of credit issued in replacement of debt service reserve or
other similar accounts related to the AES Hawaii (formerly known as
Barbers Point), Shady Point or Thames Power Projects and (z) to the
extent that the same constitutes a refinancing of Debt referred to in
subclause (x) or (y) above, Debt permitted under clause (v) above;
53
(vii) Additional Permitted Subordinated Debt;
(viii) Permitted Senior Unsecured Debt;
(ix) surety bonds in respect of performance obligations of AES
and letters of credit, in an aggregate principal amount at any time
outstanding not to exceed $400,000,000;
(x) 8% Senior Notes in an aggregate principal amount not
exceeding $200,000,000; and
(xi) other Debt not described in clauses (i) through (x) above in
an aggregate principal amount at any time outstanding not to exceed
$10,000,000.
(b) AES shall not issue any Additional Permitted Subordinated Debt or
Permitted Senior Unsecured Debt unless (i) both before and after giving effect
to such issuance no Default shall have occurred and be continuing and (ii) on a
pro forma basis after giving effect to such issuance and the application of the
proceeds thereof (but without increasing or decreasing Parent Operating Cash
Flow on account of acquisitions for periods prior to such acquisitions), AES
would have been in compliance with Section 5.16 and (unless AES shall have
received net cash proceeds of not less than $500,000,000 from the issuance,
after September 1, 1999 and on or before the earlier of the date upon which such
Additional Permitted Subordinated Debt or Permitted Senior Unsecured Debt, as
applicable, is issued and December 31, 1999, of its common stock to Persons
other than Subsidiaries or affiliates of AES) 5.15 as of the last day of the
fiscal quarter ended on, or most recently ended prior to, the date of such
issuance (assuming for this purpose that (x) such Additional Permitted
Subordinated Debt or Permitted Senior Unsecured Debt, as applicable, (and any
other Debt or preferred stock of AES outstanding on the date of issuance of such
Additional Permitted Subordinated Debt or Permitted Senior Unsecured Debt, as
applicable, and issued after the first day of the period of four consecutive
fiscal quarters ended on such last day) was issued and the proceeds applied on
the first day of the period of four consecutive fiscal quarters ended on such
last day and (y) all Debt and preferred stock of AES repaid or redeemed prior to
or simultaneously with the issuance of such Additional Permitted Subordinated
Debt or Permitted Senior Unsecured Debt, as applicable, was repaid or redeemed
on the day prior to the first day of such period).
(c) In addition to the Debt permitted by subsections (a) and (b)
above, AES shall be permitted to incur, assume, create and suffer to exist up to
an aggregate principal amount, not to exceed the sum of (1) $600,000,000 PLUS
(2) an
54
amount equal to 50% of the aggregate net proceeds received by AES from
issuances and sales (other than sales to AES or any of its Subsidiaries or
Affiliates) of its common stock after September 1, 1999, of unsecured senior
and/or subordinated Debt issued and sold by way of (i) a registered public
offering, (ii) an offering made to qualified institutional buyers pursuant to
Rule 144A under the Securities Act and/or (iii) in the form of term loans from
banks or other institutional lenders or investors, in each case having terms and
provisions applicable to AES and its Subsidiaries that are no more restrictive
in any material respect (including, without limitation, covenants and events of
default) than those included in existing outstanding public Debt of AES or
otherwise acceptable to the Required Banks (except that limitations on (I) the
ability of Subsidiaries and Affiliates of AES to guarantee other senior Debt of
AES, (II) the ability of AES to grant Liens on stock of Subsidiaries or
intercompany advances to secure other senior Debt of AES or (III) the ability of
Subsidiaries or Affiliates of AES to grant Liens on their assets (including
stock of Subsidiaries and intercompany advances) to secure guarantees of other
senior Debt of AES shall be permitted); provided that (A) both before and after
giving effect to such issuance no Default shall have occurred and be continuing,
(B) on a pro forma basis after giving effect to such issuance and the
application of the proceeds thereof (but without increasing or decreasing Parent
Operating Cash Flow on account of acquisitions for periods prior to such
acquisitions) AES would have been in compliance with Section 5.16 and (unless
AES shall have received net cash proceeds of not less than $500,000,000 from the
issuance, after September 1, 1999 and on or before the earlier of the date upon
which such Debt is issued and December 31, 1999 of its common stock to Persons
other than Subsidiaries or affiliates of AES) 5.15 as of the last day of the
fiscal quarter ended on, or most recently ended prior to, the date of such
issuance (assuming for this purpose that (x) such Debt (and any other
Debt or preferred stock of AES outstanding on the date of issuance of such Debt
and issued after the first day of the period of four consecutive fiscal quarters
ended on such last day) was issued and the proceeds applied on the first day of
the period of four consecutive fiscal quarters ended on such last day and (y)
all Debt and preferred stock of AES repaid or redeemed prior to or
simultaneously with the issuance of such Debt was repaid or redeemed on the day
prior to the first day of such period) and (C) such Debt (x) is not guaranteed
by any Subsidiary or Affiliate of AES and (y) does not require any scheduled
payment of principal prior to July 14, 2003.
SECTION 5.08. MINIMUM CONSOLIDATED NET WORTH. Consolidated Net Worth
will at no time be less than the sum of (i) $1,160,000,000 plus (ii) for each
fiscal quarter of AES ended after the Closing Date and at or prior to such time
for which Consolidated Net Income is a positive number, an amount equal to 50%
of Consolidated Net Income for such fiscal quarter plus (iii) an amount equal to
75% of the cumulative net proceeds to AES from issuances of equity securities
made by AES from and after the Closing Date.
55
SECTION 5.09. RESTRICTED PAYMENTS. Neither AES nor any Subsidiary will
declare or make any Restricted Payment unless, after giving effect thereto, the
aggregate of all Restricted Payments declared or made subsequent to June 30,
1995 does not exceed the sum of $5 million plus 5% (or, if such amount is a
loss, minus 100%) of Consolidated Net Income of AES and its Consolidated
Subsidiaries for the period from June 30, 1995 through the last day of the
fiscal quarter of AES then most recently ended (treated for this purpose as a
single accounting period). Nothing in this Section shall prohibit the payment of
any dividend or distribution within 45 days after the declaration thereof if
such declaration was not prohibited by this Section.
SECTION 5.10. SUBORDINATED DEBT AND 8% SENIOR NOTES. (a) AES will not,
and will not permit any of its Subsidiaries to, consent to or solicit any
amendment, supplement, waiver or other modification of any Subordinated Note
Indenture or any other agreement or instrument evidencing or governing any
Subordinated Debt that would (i) increase the interest rate applicable thereto,
(ii) shorten the time or increase the amount of any principal payment
thereunder, (iii) change, in any manner, the subordination provisions thereof or
(iv) change any of the covenants, events of default or other provisions thereof
in any manner that could make any such covenant, event of default or other
provision more restrictive or that could otherwise be disadvantageous to AES or
the Banks, without the express prior written consent of the Required Banks.
(b) AES will not, and will not permit any of its Subsidiaries to,
consent to or solicit any amendment, supplement, waiver or other modification of
the 1998 Senior Note Indenture or any other agreement or instrument evidencing
or governing any 8% Senior Notes that (i) would increase the interest rate
applicable thereto, (ii) shorten the time or increase the amount of any
principal payment thereunder or (iii) change any of the covenants, events of
default or other provisions thereof in any manner that could make any such
covenant, event of default or other provision more limiting or that could
otherwise be disadvantageous to AES or the Banks, without the express prior
written consent of the Required Banks.
SECTION 5.11. LIMITATIONS ON GUARANTEES AND COMMITMENTS. (i) The
aggregate amount of Investment and Guarantee Commitments shall not at any
time exceed an amount equal to the sum of:
(x) the product of (A) Parent Operating Cash Flow for the period of
four consecutive fiscal quarters then most recently ended multiplied by (B) four
(4), PLUS
56
(y) the excess, if any, of (A) the aggregate amount of net cash
proceeds received by AES from the issuance of equity securities and from the
disposition of Material AES Entities during the period from the Closing Date to
such time (to the extent not used to prepay Subordinated Debt or to permanently
retire any other Debt) over (B) the aggregate amount of cash Investments (other
than Temporary Cash Investments) and cash payments made by AES under Guarantees
during such period PLUS $430,000,000;
provided, that for purposes of determining compliance with this clause
(i), the aggregate amount of Investment and Guarantee Commitments at any time
shall be reduced to the extent collateralized with cash and cash equivalents and
any deposit or other posting by AES of cash or cash equivalents as collateral
for any Investment and Guarantee Commitment shall be treated as a cash
Investment for purposes of subclause (y)(B) of this clause (i).
(ii) AES shall not make or enter into any Investment and Guarantee
Commitments at any time that AES's senior unsecured Debt is rated less than BB-
by Standard & Poor's Ratings Services or less than Ba3 by Moody's Investors
Service, Inc.
SECTION 5.12. NEGATIVE PLEDGE. Neither AES nor any Subsidiary of AES
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement;
(b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Subsidiary of AES and not created in contemplation of such
event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 90
days after the acquisition thereof;
(d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into AES or a Subsidiary of AES
and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof by
AES or a Subsidiary of AES and not created in contemplation of such acquisition;
57
(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses or clause (l) of this Section; PROVIDED that such Debt is not increased
and is not secured by any additional assets (other than, in the case of Debt
permitted under Section 5.07(a)(v), Liens on assets of any Subsidiary permitted
under such Section 5.07(a)(v) to be obligated on such Debt);
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in any amount exceeding
$25,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business;
(h) Liens in connection with worker's compensation, social security
obligations, taxes, assessments, statutory obligations or other similar charges,
good faith deposits in connection with tenders, contracts or leases to which AES
or any of its Subsidiaries is a party or other deposits required to be made in
the ordinary course of business and not in connection with borrowing money or
obtaining advances or credit, PROVIDED in each case that the obligation or
liability arises in the ordinary course of business and if overdue is being
contested in good faith by appropriate proceedings;
(i) inchoate materialmen's, mechanics', workmen's, repairmen's,
employees', carriers', warehousemen's, or other like Liens arising in the
ordinary course of business of AES or its Subsidiaries;
(j) with respect to real property, easements, rights of way,
reservations and other minor defects or irregularities in title which do not
materially impair the use thereof for the purposes for which it is held by AES
or its Subsidiaries;
(k) Liens on cash collateral securing Investment and Guarantee
Commitments; and
(l) Liens securing Power Project Debt or utility obligations or other
customer, supplier or contractor obligations associated with a Power Project
that are limited to the assets and revenues of the related Power Project and the
capital stock or other assets (including contract rights) of Subsidiaries of AES
having a direct or indirect interest in such Power Project.
SECTION 5.13. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. (a) No
Borrower will consolidate or merge with or into any other Person; provided that
a Borrower may merge with another Person if (i) such Borrower is the corporation
surviving such merger or the corporation surviving such merger assumes all
obligations of such Borrower under the Financing Documents and
58
(ii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing.
(b) AES will not sell, lease or otherwise transfer, directly or
indirectly, all or any substantial part of the assets of AES and its
Subsidiaries, taken as a whole, to any other Person.
(c) AES will not sell or otherwise transfer, or permit to be sold or
otherwise transferred, directly or indirectly, any shares of capital stock of
any AES Finance Subsidiary or any Material AES Entity which are owned, directly
or indirectly, by AES; provided that AES may transfer, or permit the transfer
of, shares of capital stock of a Material AES Entity owned, directly or
indirectly, by AES if:
(i) after giving effect to such transfer, AES will continue to
own, directly or indirectly, at least 80% of the outstanding capital
stock of each Material AES Entity;
(ii) the consideration received by AES or a Subsidiary of AES for
such transfer (A) has a value, as determined by AES, at least equal to
the fair market value of the shares of capital stock transferred and
(B) is in the form of cash or capital stock or partnership or other
similar equity interests of a Person the principal assets of which
consist of direct or indirect interests in one or more Power Projects,
or a combination of the foregoing;
(iii) after giving effect to such transfer, no Default shall have
occurred and be continuing;
(iv) on a pro forma basis after giving effect to such transfer,
the Cash Flow Coverage Ratio for the four consecutive fiscal quarters
then most recently ended is at least 1.75 to 1.00 (assuming for this
purpose that such transfer occurred on the first day of such period of
four consecutive fiscal quarters);
(v) AES Hawaii, Inc. shall at all times remain a direct
Subsidiary of AES Hawaii Management and AES Shady Point, Inc. shall at
all times remain a direct Subsidiary of AES Oklahoma;
(vi) if AES Cilcorp shall be a Subsidiary Guarantor, Cilcorp and
Subsidiaries of Cilcorp holding substantially all of the assets of
Cilcorp and its Subsidiaries as of March 4, 1999 shall at all times
remain Subsidiaries of AES Cilcorp;
59
(vii) if AES Warrior Run shall be a Subsidiary Guarantor, AES
Western Maryland Management, Inc., AES Mexico Farms Inc. and AES
Warrior Run Limited Partnership shall at all times remain Subsidiaries
of AES Warrior Run and shall hold, directly or indirectly,
substantially all of the assets held by them on March 4, 1999; and
(viii) if AES Southland shall be a Subsidiary Guarantor, Southland
and Subsidiaries of Southland holding substantially all of the assets
of Southland and its Subsidiaries as of March 4, 1999 shall at all
times remain Subsidiaries of AES Southland.
SECTION 5.14. USE OF PROCEEDS; CLEAN-UP PERIODS. (a) The proceeds of
the Loans made and Letters of Credit issued under this Agreement will be used
by the Borrowers for working capital and other general corporate purposes.
None of such proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any "margin
stock" within the meaning of Regulation U or Regulation G.
(b) For at least one period of 30 consecutive days in each twelve
month period, the sum of (i) the aggregate stated amount of all Letters of
Credit used to support debt service reserves then outstanding and (ii) the
aggregate principal amount of all Loans then outstanding shall not exceed
$225,000,000.
SECTION 5.15. CASH FLOW COVERAGE. The Cash Flow Coverage Ratio for
any period of four consecutive fiscal quarters of AES ending after the date
hereof (including any pro forma calculation under subsection (b) or (c) of
Section 5.07 made by reference to such period) shall not be less than (i) in
the case of any period ending after December 31, 1998 and on or prior to
March 31, 1999, 1.30 to 1.00, (ii) in the case of any period ending after
March 31, 1999 and on or prior to September 30, 1999, 1.40 to 1.00, (iii) in
the case of any period ending after September 30, 1999 and on or prior to
September 30, 2000, 1.50 to 1.00 and (iv) in all other cases, 1.75 to 1.00.
SECTION 5.16. CASH FLOW TO TOTAL DEBT RATIO. The Cash Flow to Total
Debt Ratio for any period ending on or after March 31, 1998 shall not be less
than (i) 0.10 to 1.00 at any time on or prior to December 31, 1999, (ii)
0.105 to 1.00 at any time after December 31, 1999 and on or prior to March
31, 2000, (iii) 0.125 to 1.00 at any time after March 31, 2000 and on or
prior to September 30, 2000 and (iv) 0.15 to 1.00 at any time thereafter.
SECTION 5.17. TRANSACTION WITH AFFILIATES. Except pursuant to
agreements existing on the date hereof and listed on Schedule I attached
hereto, AES will not, and will not permit any Subsidiary of AES to, directly
or indirectly, in any transaction involving aggregate consideration in excess
of $1,000,000, pay any
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funds to or for the account of, make any investment (whether by acquisition
of stock or indebtedness, by loan, advance, transfer of property, guarantee
or other agreement to pay, purchase or service, directly or indirectly, any
Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any
assets, tangible or intangible, to, or participate in, or effect any
transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate; PROVIDED, HOWEVER, that the foregoing
provisions of this Section shall not prohibit (a) AES from declaring or
paying any lawful dividend so long as, after giving effect thereto, no
Default shall have occurred and be continuing, (b) AES or any Subsidiary of
AES from making sales to or purchases from any Affiliate and, in connection
therewith, extending credit or making payments, or from making payments for
services rendered by any Affiliate, if such sales or purchases are made or
such services are rendered in the ordinary course of business and on terms
and conditions at least as favorable to AES or such Subsidiary as the terms
and condi tions which would apply in a similar transaction with a Person not
an Affiliate, (c) AES or any Subsidiary of AES from making payments of
principal, interest and premium on any Debt of AES or such Subsidiary held by
an Affiliate if the terms of such Debt are substantially as favorable to AES
or such Subsidiary as the terms which could have been obtained at the time of
the creation of such Debt from a lender which was not an Affiliate and (d)
AES or any Subsidiary of AES from participating in, or effecting any
transaction in connection with, any joint enterprise or other joint
arrangement with any Affiliate if AES or such Subsidiary participates in the
ordinary course of its business and on a basis no less advantageous than the
basis on which such Affiliate participates. The provisions of this Section
5.17 shall not apply to (i) transactions between AES or any of its
Subsidiaries, on the one hand, and any employee of AES or any of its
Subsidiaries, on the other hand, that are approved by the Board of Directors
of AES or any committee of the Board of Directors consisting of AES's
independent directors and (ii) the payment of reasonable and customary
regular fees to directors of AES or a Subsidiary of AES.
SECTION 5.18. LIMITATION ON INVESTMENTS. (a) AES will not permit any
Specified Subsidiary to make any Investment in, or to consolidate or merge
with, any other Person with a direct or indirect interest in any Power
Project or unrelated business other than the Power Project or unrelated
business in which such Specified Subsidiary has a direct or indirect interest
prior to the making of such Investment or the consummation of such
consolidation or merger.
(b) AES will not permit any Subsidiary of AES with any direct or
indirect interest in (i) a Power Project to make any Investment in, or
consolidate or merge with, any other Person with a direct or indirect
interest in any other Power Project or any unrelated business or (ii) any
unrelated business to make any Investment in, or to consolidate or merge
with, any other Person with a direct or
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indirect interest in any Power Project; PROVIDED that (A) one or more
Subsidiaries of AES (each, an "INTERMEDIATE HOLDING COMPANY") may serve as
holding companies for any or all of AES's direct and indirect interests in
Power Projects and unrelated businesses, so long as:
(I) each such Intermediate Holding Company's direct and indirect
interest in any Power Project 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 Project or unrelated business;
(II) no Lien shall exist upon any asset of any Intermediate Holding
Company (other than Liens on the capital stock of AES or a Subsidiary of an
Intermediate Holding Company securing Debt of such Intermediate Holding
Company or such Subsidiary and Liens securing Debt permitted under clause
(ii) of Section 5.07(a)); and
(III) no Intermediate Holding Company shall incur, assume, create or
suffer to exist any Debt (including any Guarantee of Debt) other than Debt
owing to AES or any Intermediate Holding Company and Debt permitted by
clauses (i) and (ii) of Section 5.07(a) or (to the extent that such Debt
represents a refinancing or replacement of Debt permitted by clause (ii) of
Section 5.07(a)) clause (v) of Section 5.07(a) (without giving effect to
subsubclauses (I) through (IV) of subclause (B) thereof); and
(B) AES Electric may make Investments in Power Projects owned by
NIGEN Limited and Medway Power Limited as of the date of this
Agreement under any agreement by which it is bound as of the date of
this Agreement.
SECTION 5.19. ADDITIONAL GUARANTORS. On or prior to the earlier of
(x) the date of the consummation of the Cilcorp Acquisition and (y) the date
that is six months after the date upon which the First Amendment and
Restatement is effective, (i) each Additional Guarantor shall execute and
deliver to the Agent a Subsidiary Guaranty, (ii) each Additional Guarantor
shall provide to the Agent (A) copies of the bylaws of such Additional
Guarantor and of resolutions of the Board of Directors or equivalent
governing body of such Additional Guarantor authorizing the execution,
delivery and performance by such Additional Guarantor of such Subsidiary
Guaranty, certified by a duly authorized officer of such Additional Guarantor
(which certificate shall state that such bylaws and resolutions are in full
force and effect on the date of such Additional Guarantor's execution and
delivery of such Subsidiary Guaranty), (B) copies of all approvals,
authorizations or consents of, or notices to or registrations with, any
governmental body or agency, if any, required for such Additional Guarantor
to enter into such
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Subsidiary Guaranty, (C) a certificate of a duly authorized officer of such
Additional Guarantor certifying the names and true signatures of the officers
of such Additional Guarantor authorized to sign such Subsidiary Guaranty and
(D) a copy of the certificate or articles of incorporation of such Additional
Guarantor, and all amendments thereto, certified by the Secretary of State of
the state of incorporation or other constitutive documents of such Additional
Guarantor and (iii) the General Counsel of AES shall have provided to the
Agent a legal opinion, dated the date on which each Additional Guarantor
shall have executed and delivered a Subsidiary Guaranty, covering such
matters relating to its existence and good standing and its entry into and
performance of such Subsidiary Guaranty and such other matters relating
thereto as the Agent shall reasonably request.
ARTICLE 6
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT.
If one or more of the following events ("EVENTS OF DEFAULT") shall
have occurred and be continuing:
(a) any Obligor shall fail to pay when due any principal of any Loan
or any Reimbursement Obligation, or shall fail to pay within three days of
the date when due any interest, fees or other amounts payable under any
Financing Document;
(b) AES shall fail to observe or perform any covenant contained in
Sections 5.07 to 5.19, inclusive, or except in accordance with the terms
hereof and thereof, the Subsidiary Guaranty or the guarantees in Article IX
shall cease to be in full force and effect;
(c) any Obligor shall fail to observe or perform any covenant or
agreement contained in any Financing Document (other than those covered by
clause (a) or (b) above) for 20 days after written notice thereof has been
given to AES by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
any Obligor in any Financing Document or in any certificate, financial
statement or other document delivered pursuant to any Financing Document
shall prove to have been incorrect in any material respect when made (or
deemed made);
(e) any Borrower shall fail to make any payment in respect of any
Material Debt when due or within any applicable grace period;
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(f) any event or condition shall occur which (i) prior to May 28,
1999, results in the acceleration of the maturity of any Material Debt of AES
or any Subsidiary of AES (except AES Placerrita and Central Termica San
Nicholas S.A.), (ii) on or after May 28, 1999, results in the acceleration of
the maturity of any Material Debt of AES or of any Material Debt of any
Subsidiary or Subsidiaries of AES (except AES Placerita and Central Termica
San Nicolas S.A.) that, individually or in the aggregate (in each case
together with any Person in which such Subsidiary has a direct or indirect
equity Investment), contributed 15% or more to Parent Operating Cash Flow for
the four most recently completed fiscal quarters of AES, (iii) results in the
termination of any commitment to provide financing in an amount in excess of
$15,000,000 to AES or any Material AES Entity or (iv) in the case of any
Borrower, enables (or, with the giving of notice or lapse of time or both,
would enable) the holder of any Material Debt of such Borrower or any Person
acting on such holder's behalf to accelerate the maturity thereof;
(g) a Borrower or any Significant AES Entity shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against a Borrower or any Significant AES Entity seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against a Borrower or any Significant AES Entity under the federal bankruptcy
laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $15,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose
64
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer any Material Plan; or
a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group
to incur a current payment obligation in excess of $15,000,000;
(j) a judgment or order for the payment of money in excess of
$15,000,000 shall be rendered against AES or any Subsidiary of AES, and such
judgment or order shall continue unsatisfied and unstayed for a period of 10
days; or
(k) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) other than a member
of the AES Management Group shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 20% or more of the outstanding shares of common
stock of AES; during any period of twelve consecutive calendar months,
individuals who were directors of AES on the first day of such period (or who
were appointed or nominated for election as directors of AES by at least a
majority of the individuals who were directors on the first day of such
period) shall cease to constitute a majority of the board of directors of
AES; or any AES Finance Subsidiary shall fail, at any time, to be a
Wholly-Owned Consolidated Subsidiary of AES;
then, and in every such event, the Agent shall (i) if requested by
Banks having more than 50% in aggregate amount of the Total Exposures, by
notice to the Borrowers terminate the Commitments and they shall thereupon
terminate, and (ii) if requested by Banks having more than 50% of the Total
Exposures, by notice to the Borrowers declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrowers; PROVIDED
that in the case of any Automatic Acceleration Event, without any notice to
the Borrowers or any other act by the Agent or the Banks, the Commitments
shall thereupon terminate and the Notes (together with accrued interest
thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived
by the Borrowers.
SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice to AES
under Section 6.01(c) promptly upon being requested to do so by any Bank and
shall thereupon notify all the Banks thereof.
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SECTION 6.03. CASH COLLATERAL. If any Automatic Acceleration Event
shall occur or the Loans of the Banks shall have otherwise been accelerated
or the Commitments terminated pursuant to Section 6.01, then without any
request or the taking of any other action by the Agent or any of the Banks,
the Borrowers shall be jointly and severally obligated forthwith to pay to
the Agent an amount in immediately available funds equal to the then
aggregate amount available for drawings (regardless of whether any conditions
to any such drawing can then be met) under all Letters of Credit at the time
outstanding, to be held by the Agent as cash collateral as provided in
Section 2.15.
ARTICLE 7
THE AGENT
SECTION 7.01. APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Financing Documents as are delegated to
the Agent by the terms thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. AGENT AND AFFILIATES. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under the Financing Documents
as any other Bank and may exercise or refrain from exercising the same as
though it were not the Agent, and Morgan Guaranty Trust Company of New York
and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with AES or any Subsidiary or affiliate of AES
as if it were not the Agent under the Financing Documents.
SECTION 7.03. ACTION BY AGENT. The obligations of the Agent under
the Financing Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. CONSULTATION WITH EXPERTS. The Agent may consult with
legal counsel (who may be counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 7.05. LIABILITY OF AGENT. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its affiliates
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nor any of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with the Financing
Documents or any Extension of Credit hereunder; (ii) the performance or
observance of any of the covenants or agreements of any Obligor; (iii) the
satisfaction of any condition specified in Article III, except receipt of
items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of the Financing Documents or any other
instrument or writing furnished in connection therewith. The Agent shall not
incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) believed by it to be genuine or to
be signed by the proper party or parties.
SECTION 7.06. INDEMNIFICATION. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, and each Fronting Bank,
each of their respective affiliates and the respective directors, officers,
agents and employees of any of them (to the extent not reimbursed by the
Obligors) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that
such indemnitees may suffer or incur in connection with the Financing
Documents or any action taken or omitted by such indemnitees thereunder.
SECTION 7.07. CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent, any Fronting Bank or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent, any Fronting Bank or any other Bank, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under this Agreement.
SECTION 7.08. SUCCESSOR AGENT. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrowers. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall
67
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. AGENT'S FEE. AES shall pay to the Agent for its own
account fees in the amounts and at the times previously agreed upon between
AES and the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR. If on or prior to the first day of any Interest Period for any
Euro-Dollar Borrowing:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted London Interbank Offered Rate
as determined by the Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrowers and
the Banks, whereupon until the Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended and (ii)
each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on
the last day of the then current Interest Period applicable thereto. Unless a
Borrower notifies the Agent at least two Domestic Business Days before the
date of any Euro-Dollar Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date such
Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.02. ILLEGALITY. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or
68
not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans
to any Borrower and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and AES, whereupon until
such Bank notifies AES and the Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans to such Borrower, or to convert outstanding Loans into
Euro-Dollar Loans or continue outstanding Loans as Euro-Dollar Loans, shall
be suspended. Before giving any notice to the Agent pursuant to this Section,
such Bank shall designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such
notice is given, each Euro-Dollar Loan of such Bank then outstanding shall be
converted to a Base Rate Loan either (i) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully
continue to maintain and fund such Loan as a Euro-Dollar Loan to such day or
(ii) immediately if such Bank shall determine that it may not lawfully
continue to maintain and fund such Loan as a Euro-Dollar Loan to such day.
Interest and principal on any such Base Rate Loan shall be payable on the
same dates as, and on a pro rata basis with, the interest and principal
payable on the related Euro-Dollar Loans of the other Banks.
SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If on or after
the date hereof, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) or any Fronting Bank (any Bank (or its Applicable Lending Office) and
any Fronting Bank being referred to in this Section 8.03 as a "Credit Party")
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage), special deposit,
insurance assessment or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Credit Party or shall
impose on any Credit Party or on the London interbank market any other
condition affecting its Euro-Dollar Loans, its Note or Notes, the Letters of
Credit or its participation therein or its obligation to make Euro-Dollar
Loans or to issue Letters of Credit or to participate therein and the result
of any of the foregoing is to increase the cost to such Credit Party of
making or maintaining any Euro- Dollar Loan or issuing any Letter of Credit
or participating therein, or to reduce the amount of any sum received or
receivable by such Credit Party under this
69
Agreement or under its Note or Notes with respect thereto, by an amount
deemed by such Credit Party to be material, then, within 15 days after demand
by such Credit Party (with a copy to the Agent), AES shall pay to such Credit
Party such additional amount or amounts as will compensate such Credit Party
for such increased cost or reduction.
(b) If any Credit Party shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Credit Party (or its Parent) as a
consequence of such Credit Party's obligations hereunder to a level below
that which such Credit Party (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such Credit
Party to be material, then from time to time, within 15 days after demand by
such Credit Party (with a copy to the Agent), AES shall pay to such Credit
Party such additional amount or amounts as will compensate such Credit Party
(or its Parent) for such reduction.
(c) Each Credit Party will promptly notify AES and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Credit Party to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not,
in the judgment of such Credit Party, be otherwise disadvantageous to such
Credit Party. A certificate of any Credit Party claiming compensation under
this Section and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Credit Party may use any reasonable averaging
and attribution methods.
SECTION 8.04. TAXES. (a) Any and all payments by any Borrower to or
for the account of any Bank, any Fronting Bank or the Agent hereunder or
under any other Financing Document shall be made free and clear of and
without deduction for any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, EXCLUDING, in the case of each Bank, each Fronting Bank and
the Agent, taxes imposed on its income (including branch profit taxes),
franchise and similar taxes and other taxes imposed on it that, in any such
case, would not have been imposed but for a material connection between such
Bank, such Fronting Bank or the Agent (as the
70
case may be) and the jurisdiction imposing such taxes (other than a material
connection arising by reason of this Agreement or any other Financing
Document or the receipt of payments made hereunder or thereunder) (all such
non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If
any Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any other Financing Document to any
Bank, any Fronting Bank or the Agent, (i) the sum payable shall be increased
as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 8.04)
such Bank, such Fronting Bank or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions, (iii) such Borrower
shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) such Borrower
shall furnish to the Agent, at its address referred to in Section 10.01, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, each Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges
or similar levies which arise from any payment made by it hereunder or under
any Note or from the execution or delivery of, or otherwise with respect to,
this Agreement or any other Financing Document (hereinafter referred to as
"Other Taxes").
(c) Each Borrower agrees to indemnify each Bank, each Fronting Bank
and the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction
on amounts payable under this Section 8.04) paid by such Bank, such Fronting
Bank or the Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 15 days from the date such Bank,
such Fronting Bank or the Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each
other Bank, and from time to time thereafter if requested in writing by AES
(but only so long as such Bank remains lawfully able to do so), shall provide
AES with two duly completed and accurate copies of Internal Revenue Service
form 1001 or 4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Bank is entitled to benefits
under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying
that the income receivable pursuant to this
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Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 8.04(a).
(e) For any period with respect to which a Bank has failed to
provide AES with the appropriate form pursuant to Section 8.04(d) (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(a) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Bank, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrowers shall take such
steps as such Bank shall reasonably request to assist such Bank to recover
such Taxes.
(f) If any Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of its Applicable Lending Office so as to eliminate
or reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.
(g) Each Bank, each Fronting Bank and the Agent agrees that it will
promptly (within 30 days) after receiving notice thereof from any taxing
authority, notify AES of the assertion of any liability by such taxing
authority with respect to Taxes or Other Taxes; PROVIDED, that the failure to
give such notice shall not relieve AES of its obligations under this Section
8.04 except to the extent that AES has been prejudiced by such failure and
except that AES shall not be liable for penalties, interest or expenses
accruing after such 30 day period until such time as it receives the notice
contemplated above, after which time it shall be liable for interest,
penalties and expenses accruing after such receipt.
(h) If any Bank, a Fronting Bank or the Agent shall receive a
credit or refund from a taxing authority (as a result of any error in the
imposition of Tax or Other Tax by such taxing authority) with respect to and
actually resulting from an amount of such Taxes or Other Taxes paid by a
Borrower pursuant to subsection (a) or (c) above, such Bank, such Fronting
Bank or the Agent shall promptly pay to AES the amount so received (without
interest thereon, whether or not received).
SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURO-DOLLAR
LOANS. If (i) the obligation of any Bank to make, or to continue or to
convert outstanding Loans as or to, Euro-Dollar Loans to any Borrower has
been
72
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03 or 8.04 with respect to its Euro-Dollar Loans to any
Borrower and such Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Agent, have elected that the provisions
of this Section shall apply to such Bank, then, unless and until such Bank
notifies AES that the circumstances giving rise to such suspension or demand
for compensation no longer exist, all Loans to such Borrower which would
otherwise be made by such Bank as (or continued or converted to) Euro-Dollar
Loans shall be made instead as Base Rate Loans (on which interest and
principal shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks). If such Bank notifies such Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist, the principal amount of each such Base Rate Loan shall be
converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other
Banks.
ARTICLE 9
GUARANTY
SECTION 9.01. THE GUARANTY. Subject, in the case of any AES Finance
Subsidiary, to the provisions of Section 9.07, each Guarantor hereby
unconditionally guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Note issued by the applicable Borrower pursuant to this Agreement, and
the full and punctual payment of all other amounts payable by such Borrower
under this Agreement. Upon failure by a Borrower to pay punctually any such
amount, the applicable Guarantor shall, subject, in the case of any AES
Finance Subsidiary, to the provisions of Section 9.07, forthwith on demand
pay the amount not so paid at the place and in the manner specified in this
Agreement. Without limiting the generality of the foregoing, each Guarantor's
liability hereunder shall extend to all amounts which constitute part of the
obligations guaranteed by it hereunder and would be owed by a Borrower
hereunder but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding
involving such Borrower.
SECTION 9.02. GUARANTY UNCONDITIONAL. The obligations of each
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any other Obligor under any
Financing Document, by operation of law or otherwise;
73
(ii) any modification or amendment of or supplement to any
Financing Document;
(iii) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of any other Obligor
under any Financing Document;
(iv) any change in the corporate existence, structure or ownership
of any Obligor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any other Obligor or its assets or any
resulting release or discharge of any obligation of any other Obligor
contained in any Financing Document;
(v) the existence of any claim, set-off or other rights which such
Guarantor may have at any time against any other Obligor, the Agent,
any Fronting Bank, any Bank or any other Person, whether in connection
herewith or with any unrelated transactions, provided that nothing
herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against any
other Obligor for any reason of any Financing Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by any other Obligor of the principal of or interest on any
Note or any other amount payable by it under any Financing Document;
or
(vii) any other act or omission to act or delay of any kind by any
Obligor, the Agent, any Fronting Bank, any Bank or any other Person or
any other circumstance whatsoever which might, but for the provisions
of this paragraph, constitute a legal or equitable discharge of or
defense to a Guarantor's obligations hereunder.
SECTION 9.03. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. Each Guarantor's obligations hereunder shall remain in
full force and effect until the Commitments shall have terminated, the
principal of and interest on the Notes and all other amounts payable by any
Obligor under any Financing Document shall have been paid in full and all
Letters of Credit shall have expired or been terminated. If at any time any
payment of principal of or interest on any Note or any other amount payable
by any Borrower under any Financing Document is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of such Borrower or otherwise, the applicable Guarantor's
obligations hereunder with respect to such payment shall
74
be reinstated at such time as though such payment had been due but not made
at such time.
SECTION 9.04. WAIVER BY THE GUARANTORS. Each Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action
be taken by any Person against the applicable Borrower or any other Person.
SECTION 9.05. SUBROGATION. Upon making any payment with respect to
a Borrower under this Article IX, the applicable Guarantor shall be
subrogated to the rights of the payee against such Borrower with respect to
such payment; PROVIDED that neither Guarantor shall enforce any payment by
way of subrogation until all amounts of principal of and interest on the
Notes and all other amounts payable by any Borrower under any Financing
Document shall have been paid in full.
SECTION 9.06. STAY OF ACCELERATION. In the event that acceleration
of the time for payment of any amount payable by a Borrower under any
Financing Document is stayed upon insolvency, bankruptcy or reorganization of
such Borrower, all such amounts otherwise subject to acceleration under the
terms of this Agreement shall nonetheless be payable by the applicable
Guarantor hereunder forthwith on demand by the Agent made at the request of
the requisite proportion of the Banks specified in Article VI of this
Agreement.
SECTION 9.07. LIMITATION OF LIABILITY. The obligations of any AES
Finance Subsidiary under this Article IX shall be limited to an aggregate
amount equal to the largest amount that would not render its obligations
under this Article IX subject to avoidance under Section 548 of the
Bankruptcy Code or any comparable provisions of any applicable state law.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, facsimile transmission or similar writing) and shall be given to
such party: (w) in the case of AES, any Fronting Bank or the Agent, at its
address or telex or facsimile transmission number set forth on the signature
pages hereof, (x) in the case of any AES Finance Subsidiary, in care of AES
at the address or telex or facsimile transmission number of AES set forth on
the signature pages hereof, (y) in the case of any Bank, at its address or
telex or facsimile transmission number set forth in its Administrative
Questionnaire or (z) in the case of any party, at such other address or telex
or facsimile transmission number as such party may hereafter
75
specify for the purpose by notice to the Agent, the Fronting Banks and AES.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified
in or pursuant to this Section and the appropriate answerback is received,
(ii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iii) if
given by any other means, when delivered at the address specified in or
pursuant to this Section; PROVIDED that notices to the Agent or a Fronting
Bank under Article II or Article VIII shall not be effective until received.
SECTION 10.02. NO WAIVERS. No failure or delay by the Agent, any
Fronting Bank or any Bank in exercising any right, power or privilege
hereunder or under any other Financing Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
SECTION 10.03. EXPENSES; INDEMNIFICATION. (a) AES shall pay (i) all
out-of-pocket expenses of the Agent, including reasonable fees and
disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement and the other Financing
Documents, any waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (ii) if an Event of Default occurs,
all out-of-pocket expenses incurred by the Agent, each Fronting Bank and each
Bank, including (without duplication) the fees and disbursements of outside
counsel and the allocated cost of inside counsel, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) AES agrees to indemnify the Agent, each Fronting Bank and each
Bank, their respective affiliates and the respective directors, officers,
agents and employees of the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connec tion with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party
thereto) brought or threatened relating to or arising out of this Agreement
or any actual or proposed use of proceeds of Loans or Letters of Credit
hereunder or the issuance or deemed issuance of any Letter of Credit
hereunder; PROVIDED that no Indemnitee shall have the right to be indemnified
hereunder for such Indemnitee's own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.
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SECTION 10.04. SHARING OF SET-OFFS. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount due with respect to
the Total Outstandings of such Bank which is greater than the proportion
received by any other Bank in respect of the aggregate amount due with
respect to the Total Outstandings of such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Total Outstandings of the other Banks, and such other adjustments shall be
made, as may be required so that all such payments with respect to the Total
Outstandings of the Banks shall be shared by the Banks pro rata; PROVIDED
that nothing in this Section shall impair the right of any Bank to exercise
any right of set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of a Borrower other
than its indebtedness in respect of the Total Outstandings of any Bank. Each
Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note or in any Letter
of Credit Liability, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a
participation were a direct creditor of such Borrower in the amount of such
participation.
SECTION 10.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or any other Financing Document may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by each
Borrower, each Fronting Bank and the Required Banks (and, if the rights or
duties of the Agent are affected thereby, by the Agent); PROVIDED that no
such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable decrease in
Commitments of all Banks) or subject any Bank to any additional obligation,
(ii) reduce the principal of or rate of interest on any Loan or Reimbursement
Obligation or any fees hereunder, (iii) postpone the date fixed for any
payment of principal of or interest on any Loan or Reimbursement Obligation
or any fees hereunder or for any reduction or termination of any Commitment,
(iv) change the percentage of the Commitments or of the Total Exposures, or
the number of Banks, which shall be required for the Banks or any of them to
take any action under this Section or any other provision of this Agreement
or any other Financing Document, or (v) release either Subsidiary Guarantor
from its obligations under Section 2 of the Subsidiary Guaranty or any
Guarantor from its obligations under Article IX hereof.
SECTION 10.06. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that no Borrower
may assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
77
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment
or any or all of its Loans or participating interests in Letter of Credit
Liabilities. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Borrowers, the
Fronting Banks and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrowers, the Fronting
Bank and the Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrowers hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement or any other
Financing Document; PROVIDED that such participation agreement may provide
that such Bank will not agree to any modification, amendment or waiver of
this Agreement described in clause (i), (ii), (iii) or (v) of Section 10.05
without the consent of the Participant. The Borrowers agree that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article VIII with respect to its participating
interest. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (equivalent to
an initial Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and the other Financing Documents, and such
Assignee shall assume such rights and obligations, pursuant to an Assignment
and Assumption Agreement in substantially the form of Exhibit G hereto
executed by such Assignee and such transferor Bank, with (and subject to) the
subscribed consent of AES (which shall not be unreasonably withheld), the
Fronting Banks and the Agent; PROVIDED that if an Assignee is an affiliate of
such transferor Bank, no such consent shall be required. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a Commitment as
set forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Agent and the Borrowers shall make appropriate
arrangements so that, if required, new Notes are issued to the Assignee. In
connection with any such assignment, the transferor Bank shall
78
pay to the Agent an administrative fee for processing such assignment in the
amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to AES and the
Agent certification as to exemption from deduction or withholding of any
United States federal income taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and the other Financing Documents to a Federal
Reserve Bank. No such assignment shall release the transferor Bank from its
obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with AES's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 10.07. COLLATERAL. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U or Regulation G) as collateral
in the extension or maintenance of the credit provided for in this Agreement.
SECTION 10.08. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement and the other Financing Documents shall be governed by and
construed in accordance with the laws of the State of New York. Each Borrower
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York State court
sitting in New York City for purposes of all legal proceedings arising out of
or relating to this Agreement and the other Financing Documents or the
transactions contemplated hereby. Each Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
SECTION 10.09. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement and the other Financing
Documents constitute the entire agreement and understanding among the parties
hereto and supersede any and all prior agreements and understandings, oral or
written,
79
relating to the subject matter hereof. This Agreement shall become effective
upon receipt by the Agent of counterparts hereof signed by each of the
parties hereto, other than any AES Finance Subsidiary (or, in the case of any
such party as to which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic, telex,
facsimile transmission or other written confirmation from such party of
execution of a counterpart hereof by such party).
SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE
FRONTING BANKS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 10.11. SEVERABILITY; MODIFICATION TO CONFORM TO LAW. It is
the intention of the parties that this Agreement be enforceable to the
fullest extent permissible under applicable law, but that the
unenforceability (or modification to conform to such law) of any provision or
provisions hereof shall not render unenforceable, or impair, the remainder
hereof. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, this Agreement shall,
as to such jurisdiction, be deemed amended to modify or delete, as necessary,
the offending provision or provisions and to alter the bounds thereof in
order to render it or them valid and enforceable to the maximum extent
permitted by applicable law, without in any manner affecting the validity or
enforceability of such provision or provisions in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.
SECTION 10.12. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. (a) Each
AES Finance Subsidiary hereby irrevocably designates, appoints, authorizes
and empowers as its agent for service of process CT Corporation System, at
its offices currently located at 1633 Broadway, New York, New York 10019, to
accept and acknowledge for and on behalf of such AES Finance Subsidiary
service of any and all process, notices or other documents that may be served
in any suit, action or proceeding relating to any Financing Document in any
New York State or Federal court sitting in The State of New York.
SECTION 10.13. JUDGMENT CURRENCY. If for the purposes of enforcing
the obligations of any Borrower hereunder it is necessary to convert a sum
due from such Person in U.S. dollars ("dollars") into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with
normal banking procedures the Agent, the Fronting Banks and the Banks could
purchase dollars
80
with such currency at or about 11:00 A.M. (New York City time) on the
Domestic Business Day preceding that on which final judgment is given. The
obligations in respect of any sum due to the Agent, the Fronting Banks and
the Banks hereunder shall, notwithstanding any adjudication expressed in a
currency other than dollars, be discharged only to the extent that on the
Domestic Business Day following receipt by the Agent, the Fronting Banks and
the Banks of any sum adjudged to be so due in such other currency the Agent,
the Fronting Banks and the Banks may in accordance with normal banking
procedures purchase dollars with such other currency; if the amount of
dollars so purchased is less than the sum originally due to the Agent, the
Fronting Banks and the Banks in dollars, each Borrower agrees, to the fullest
extent that it may effectively do so, as a separate obligation and
notwithstanding any such adjudication, to indemnify the Agent, the Fronting
Banks and the Banks against such loss, and if the amount of dollars so
purchased exceeds the sum originally due to the Agent, the Fronting Banks and
the Banks, it shall remit such excess to the applicable Borrower.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
THE AES CORPORATION
By____________________________________
Title:
1001 North 19th Street
Arlington, VA 22209
Telecopy no.: (703) 528-4510
BANKS
- -----
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By____________________________________
Title:
NATIONSBANK, N.A.
By____________________________________
Title:
82
UNION BANK OF CALIFORNIA, N.A.
By____________________________________
Title:
By____________________________________
Title:
BARCLAYS BANK PLC
By____________________________________
Title:
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
By____________________________________
Title:
THE BANK OF NOVA SCOTIA
By____________________________________
Title:
83
BANKBOSTON, N.A.
By____________________________________
Title:
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By____________________________________
Title:
By____________________________________
Title:
THE FIRST NATIONAL BANK OF
CHICAGO
By____________________________________
Title:
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By____________________________________
Title:
84
TORONTO DOMINION (TEXAS), INC.
By____________________________________
Title:
SOCIETE GENERALE
By____________________________________
Title:
CREDIT LYONNAIS NEW YORK
BRANCH
By____________________________________
Title:
BAYERISCHE HYPO- UND
VEREINSBANK AG,
NEW YORK BRANCH
By____________________________________
Title:
By____________________________________
Title:
85
BANQUE NATIONALE DE PARIS
By____________________________________
Title:
By____________________________________
Title:
CIBC INC.
By____________________________________
Title:
COMMERZBANK AG, NEW YORK
BRANCH
By____________________________________
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By____________________________________
Title:
By____________________________________
Title:
86
CREDIT LOCAL DE FRANCE, NEW
YORK AGENCY
By____________________________________
Title:
By____________________________________
Title:
FIRST HAWAIIAN BANK
By____________________________________
Title:
RIGGS BANK N.A.
By____________________________________
Title:
THE SANWA BANK, LIMITED
NEW YORK BRANCH
By____________________________________
Title:
87
SUNTRUST BANK, CENTRAL
FLORIDA, N.A.
By____________________________________
Title:
ARAB BANK PLC
By____________________________________
Title:
FRONTING BANKS
- --------------
BARCLAYS BANK PLC, as Fronting Bank
By____________________________________
Title:
Address: 222 Broadway
New York, NY 10038
Attention: Sydney G. Dennis
UNION BANK OF CALIFORNIA, N.A.,
as Fronting Bank
By____________________________________
Title:
Address:
Attention:
88
NATIONSBANK, N.A., as Fronting Bank
By___________________________________
Title:
Address: 6610 Rockedge Dr. 6th Floor
Bethesda, MD 20817
Attention: Paula Z. Kramp
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED, as Fronting
Bank
By____________________________________
Title:
Address: 1177 Avenue of the Americas
New York, New York 10036-2798
Attention: Beth Waters
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Fronting
Bank
By____________________________________
Title:
60 Wall Street
New York, New York 10260
Attention:
89
AGENT
- -----
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent
By____________________________________
Title:
60 Wall Street
New York, New York 10260
Attention:
90