EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of May 17, 2000
among
THE AES CORPORATION
AES TRUST VII
and
MORGAN STANLEY & CO. INCORPORATED,
GOLDMAN, SACHS & CO.,
J.P. MORGAN SECURITIES INC.,
BANC OF AMERICA SECURITIES LLC,
CREDIT SUISSE FIRST BOSTON CORPORATION,
LEHMAN BROTHERS INC.
and
SALOMON SMITH BARNEY INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of May
17, 2000, by and among THE AES CORPORATION, a Delaware corporation (the
"Company"), AES TRUST VII, a statutory business trust organized under the
Business Trust Act of the State of Delaware (the "Trust") and MORGAN STANLEY &
CO. INCORPORATED, GOLDMAN, SACHS & CO., J.P. MORGAN SECURITIES INC., BANC OF
AMERICA SECURITIES LLC, CREDIT SUISSE FIRST BOSTON CORPORATION, LEHMAN BROTHERS
INC. and SALOMON SMITH BARNEY INC. (collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated as of May 11, 2000, among the Company, the Trust and the Initial
Purchasers (the "Purchase Agreement") relating to the sale by the Trust to the
Initial Purchasers, severally, of up to 8,000,000 shares of its $3.00 Trust
Convertible Preferred Securities (the "Firm Preferred Securities") and up to
1,200,000 additional shares of its $3.00 Trust Convertible Preferred Securities
(the "Additional Preferred Securities", and, together with the Firm Preferred
Securities (the "Preferred Securities") pursuant to and in accordance with the
Purchase Agreement. The proceeds of the sale by the Trust of the Preferred
Securities and the Common Securities, liquidation amount $50 per common
security (the "Common Securities), are to be invested by the Trust in 6% junior
subordinated debentures due 2008 of the Company (the "Junior Subordinated
Debentures") issued pursuant to the Indenture (as defined herein). The
Preferred Securities are guaranteed by the Company to the extent set forth in
the Guarantee Agreement dated the date hereof (the "Guarantee") and are
convertible into shares of common stock, par value $.01 per share, of the
Company (such shares, the "Common Stock"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, each of the Company and the
Trust has agreed to provide the registration rights set forth in this Agreement
for the equal benefit of the Initial Purchasers and the registered holders from
time to time of the Preferred Securities and the Junior Subordinated Debentures
and the holders of the Common Stock issuable upon conversion of the Preferred
Securities or Debentures (collectively, together with the Guarantee, the
"Securities"). The execution and delivery of this Agreement is a condition to
the Initial Purchasers' obligation to purchase the Preferred Securities under
the Purchase Agreement.
The parties hereby agree as follows:
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1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Advice: See Section 4.
Black Out Period: See Section 3.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Common Stock: See the introductory paragraph to this Agreement.
Company: See the introductory paragraph to this Agreement.
Declaration: The Amended and Restated Declaration of Trust among the
Trustees and the Trust.
DTC: See Section 4(a).
Effectiveness Date: The 180th day after the Closing Date.
Effectiveness Period: See Section 2(a).
Event Date: See Section 3(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Filing Date: The 90th day after the Closing Date.
Guarantee: See the introductory paragraph to the Agreement.
Guarantee Agreement: The Guarantee Agreement, dated May 17, 2000, executed
and delivered by the Company for the benefit of the Holders as amended or
supplemented from time to time in accordance with the terms thereof.
Holder: Any record holder of Registrable Securities.
Indemnified Person: See Section 6.
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Indemnifying Person: See Section 6.
Indenture: The Indenture, dated as of March 1, 1997, between the Company
and Bank One, National Association (formerly known as The First National Bank
of Chicago), as trustee, as Supplemented by the seventh Supplemental Indenture
dated as of May 17, 2000 between the Company and Bank One, National
Association, as trustee, pursuant to which the Junior Subordinated Debentures
are being issued, as amended or supplemented from time to time in accordance
with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 2(a).
Issue Date: The Closing Date;
Junior Subordinated Debentures: See the introductory paragraph to this
Agreement.
Liquidated Damages: See Section 3.
NASD: See Section 4(p).
Participant: See Section 6.
Person: An individual, a corporation, a partnership, an association, a
trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
Preferred Securities: See the introductory paragraph to this Agreement.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
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Registrable Securities: The Securities upon original issuance of the
Securities and at all times subsequent thereto until (i) a Registration
Statement covering such Securities has been declared effective by the SEC and
such Securities have been disposed of in accordance with such effective
Registration Statement, (ii) such Securities are sold in compliance with Rule
144, or (iii) Securities cease to be outstanding.
Registrants: The Company and the Trust, collectively.
Registration Statement: Any registration statement of the Registrants that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the introductory paragraph to this Agreement.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shelf Registration: See Section 2(b).
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Subsequent Shelf Registration: See Section 2(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustees: The trustees under the Declaration.
Underwritten registration or underwritten offering: A registration in
which securities of the Registrants are sold to an underwriter for reoffering
to the public.
2. Shelf Registration
(a) The Registrants shall as promptly as reasonably practicable
prepare and file with the SEC a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Securities (the "Initial Shelf Registration"). The Registrants
shall use their reasonable best efforts to file with the SEC the Initial
Shelf Registration on or prior to the Filing Date. The Initial Shelf
Registration shall be on Form S-3 or another appropriate form permitting
registration of such Registrable Securities for resale by such holders in
the manner or manners designated by them (including, without limitation,
one or more underwritten offerings). The Registrants shall not permit any
securities other than the Registrable Securities to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration (as
defined below). The Registrants shall use their reasonable best efforts to
cause the Initial Shelf Registration to be declared effective under the
Securities Act on or prior to the 180th day after the filing thereof with
the SEC and to keep the Initial Shelf Registration continuously effective
under the Securities Act until the date which is 24 months from the Issue
Date (subject to extension pursuant to the last paragraph of Section 4
hereof) (the "Effectiveness Period"), or such shorter period ending when
(i) none of the Securities constitute Registrable Securities or (ii) a
Subsequent Shelf Registration covering all of the Registrable Securities
has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the Effectiveness Period, the Registrants shall use
their reasonable best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 45
days of such effectiveness amend
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the Shelf Registration in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering
all of the Registrable Securities (a "Subsequent Shelf Registration"). If
a Subsequent Shelf Registration is filed, the Registrants shall use their
reasonable best efforts to cause the Subsequent Shelf Registration to be
declared effective after such filing within 30 days of such cessation of
effectiveness and to keep such Registration Statement continuously
effective for a period equal to the number of days in the Effectiveness
Period less the aggregate number of days during which the Initial Shelf
Registration or any Subsequent Shelf Registration was previously
continuously effective. As used herein the term "Shelf Registration" means
the Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Registrants shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act, or if
reasonably requested by the Holders of a majority of the shares of the
Registrable Securities covered by such Registration Statement or by any
underwriter of such Registrable Securities.
3. Liquidated Damages
(a) The Registrants and the Initial Purchasers agree that the Holders
of Registrable Securities will suffer damages if the Registrants fail to
fulfill their obligations under Section 2 hereof and that it would not be
feasible to ascertain the extent of such damages with precision.
Accordingly, the Registrants agree to pay, as liquidated damages,
additional cumulative cash distributions on the Registrable Securities
("Liquidated Damages") (i) if the Initial Shelf Registration Statement is
not declared effective by the Commission on or prior to the Effectiveness
Date and (ii) if the effectiveness of the Initial Shelf Registration
Statement or Subsequent Shelf Registration Statement for resales
thereunder is suspended at any time during the Effectiveness Period in
excess of 30 days in any consecutive three-month period or 60 days in any
consecutive 12-month period (the "Black Out Period"), then, in each case,
Liquidated Damages shall accrue on the Registrable Securities included or
that should have been
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included in such Registration Statement over and above any stated
distributions or interest payments at a rate of .50% per annum, commencing
on (x) the 181st day after the Issue Date in the case of clause (i) above
and (y) the day such Initial Shelf Registration Statement or subsequent
Shelf Registration Statement ceases to be effective in excess of the Black
Out Period in the case of clause (ii) above;
provided, however, that (1) upon the effectiveness of the Shelf Registration as
required hereunder (in the case of clause (a)(i) of this Section 3) or (2) upon
the effectiveness of the Shelf Registration which had ceased to remain
effective or the effectiveness of a Subsequent Shelf Registration Statement (in
the case of (a)(ii) of this Section 3), Liquidated Damages on the Registrable
Securities as a result of such clause, shall cease to accrue.
(b) The Registrants shall notify the Trustees within one business day
after each and every date on which an event occurs in respect of which
Liquidated Damages is required to be paid (an "Event Date"). The
Registrants shall pay the Liquidated Damages due on the Registrable
Securities by paying an increased cash distribution or interest on the
applicable quarterly distribution or interest payment date, or, if cash
distributions or interest are not being paid on the Securities in
accordance with the Declaration or the Indenture, as applicable, by
accumulating dividends at the higher rate. The Liquidated Damages due
shall be payable on each distribution or interest payment date to the
record Holder of Registrable Securities entitled to receive the
distribution or interest payment to be made on such date as set forth in
the Declaration or the Indenture, as applicable. The amount of Liquidated
Damages will be determined by multiplying the applicable Liquidated
Damages by the number of Securities of the affected Registrable Securities
of such Holders, multiplied by a fraction, the numerator of which is the
number of days such Liquidated Damages were applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days
elapsed), and the denominator of which is 360. Each obligation to pay
Liquidated Damages shall be deemed to accrue immediately following the
occurrence of the applicable Event Date.
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4. Registration Procedures
In connection with the registration of any Registrable Securities pursuant
to Section 2 hereof, the Registrants shall effect such registrations to permit
the sale of such Registrable Securities in accordance with the intended method
or methods of disposition thereof, and pursuant thereto the Registrants shall:
(a) Use their reasonable best efforts to prepare and file with the
SEC, as soon as practicable after the date hereof but in any event prior
to the Filing Date, a Registration Statement as prescribed by Section 2,
and to use their reasonable best efforts to cause such Registration
Statement to become effective and remain effective as provided herein,
provided that, before filing any Registration Statement or Prospectus or
any amendments or supplements thereto, the Registrants shall upon written
request furnish to and afford the Holders of the Registrable Securities
(which in the case of Registrable Securities in the form of global
certificates shall be The Depository Trust Company ("DTC")) covered by
such Registration Statement, a reasonable opportunity to review copies of
all such documents (including copies of any documents to be incorporated
by reference therein and all exhibits thereto) proposed to be filed.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement, as the case may be, as
may be necessary to keep such Registration Statement continuously
effective for the Effectiveness Period; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the Securities
Act, the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the selling Holders of Registrable Securities who have
provided the Registrants with their names and addresses promptly (but in
any event within two business days), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration
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Statement or any post-effective amendment, when the same has become
effective under the Securities Act (including in such notice a written
statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or
deemed to be incorporated by reference and exhibits), (ii) of the issuance
by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) of the receipt by the Registrants of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Securities for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (iv) of the happening of
any event or any information becoming known that makes any statement made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
(v) of the Registrants' reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
(d) Use their reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, and, if any such order is issued,
to use their reasonable best efforts to obtain the withdrawal of any such
order at the earliest possible moment.
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(e) If requested by the Holders of a majority of the shares of the
Registrable Securities being sold in connection with an underwritten
offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as such Holders reasonably
request to be included therein, or (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after the Registrants have received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment.
(f) Furnish to each selling Holder of Registrable Securities, if any,
without charge, one conformed copy of the Registration Statement or
Statements and each post-effective amendment thereto, including financial
statements and schedules, and if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
(g) Deliver to each selling Holder of Registrable Securities, without
charge, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto
and any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section 4,
the Registrants hereby consent to the use of such Prospectus and each
amendment or supplement thereto by each of the selling holders of
Registrable Securities and the underwriters or agents, if any, and dealers
(if any), in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Securities, to use
their reasonable best efforts to register or qualify, and to cooperate
with the selling Holders of Registrable Securities in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States
as any selling Holder reasonably requests in writing, provided that where
Registrable Securities are offered other than through an underwritten
offering, the Registrants agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 4(h); keep each such registration or
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qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other reasonable acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the applicable Registration Statement, provided that neither the Company
nor the Trust shall be required to (A) qualify generally to do business in
any jurisdiction where it is then so qualified, (B) take any action that
would subject it to general service of process in any such jurisdiction
where it is not then so subject or (C) subject itself to taxation in
excess of a nominal dollar amount in any such jurisdiction.
(i) Reasonably cooperate with the selling Holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with DTC; and enable
such Registrable Securities to be registered in such names as the managing
underwriter or underwriters, if any, or Holders may request.
(j) Use their reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other United States governmental agencies or authorities
of the United States as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities, except as may be required solely as a consequence
of the nature of such selling Holder's business, in which case the
Registrants will cooperate in all reasonable respects with the filing of
such Registration Statement and the granting of such approvals.
(k) Upon the occurrence of any event contemplated by paragraph
4(c)(iv) or 4(c)(v) above, as promptly as practicable prepare and (subject
to Section 4(a) above) file with the SEC, solely at the expense of the
Registrants, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, any such
Prospectus will not contain an untrue statement of a material fact or
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omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(l) Use their reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be rated with the
appropriate rating agencies, if so requested by the Holders of a majority
of the shares of Registrable Securities covered by such Registration
Statement or the managing underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustees with
printed certificates for the Registrable Securities in a form eligible for
deposit with DTC and (ii) provide a CUSIP number for the Registrable
Securities.
(n) Provide an indenture trustee for the Junior Subordinated
Debentures and cause the Indenture, the Guarantee Agreement and the
Declaration to be qualified under the TIA not later than the effective
date of the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the trustee under
the Indenture and the holders of the Registrable Securities, to effect
such changes to the Indenture, the Declaration and the Guarantee Agreement
as may be required for the Indenture, the Declaration and the Guarantee
Agreement to be so qualified in accordance with the terms of the TIA; and
execute, and use its reasonable best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all
other forms and documents required to be filed with the SEC to enable the
Indenture, the Declaration and the Guarantee Agreement to be so qualified
in a timely manner.
(o) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) no later than 90 days after the end of any
12-month period (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment or
best efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day
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of the first fiscal quarter of the Company after the effective date of a
Shelf Registration Statement, which statements shall cover said 12-month
periods.
(p) Reasonably cooperate with each seller of Registrable Securities
covered by any Registration Statement participating in the disposition of
such Registrable Securities and their respective counsel in connection
with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
(q) Use their reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities covered
by a Registration Statement contemplated hereby.
The Registrants may require each seller of Registrable Securities to
furnish to the Registrants such information regarding such seller and the
distribution of such Registrable Securities as the Registrants may, from time
to time, reasonably request. The Registrants may exclude from such registration
the Registrable Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration is being effected is deemed to agree to
furnish promptly to the Registrants all information required to be disclosed in
order to make the information previously furnished to the Registrants by such
seller not materially misleading.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Registrants of
the happening of any event of the kind described in Section 4(c)(ii),
4(c)(iii), 4(c)(iv), or 4(c)(v), such Holder will forthwith discontinue
disposition of such Registrable Securities covered by such Registration
Statement or Prospectus until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 4(k), or until it is
advised in writing (the "Advice") by the Registrants that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event the Registrants shall give any such
notice, the Effectiveness Period shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received (x) the copies of the supplemented
or amended Prospectus contemplated by Section 4(k) or (y) the Advice.
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5. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Registrants shall be borne by the Registrants whether or
not a Shelf Registration is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions in the United States as provided in Section 4(h)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Securities, by the Holders
of a majority of shares of the Registrable Securities included in any
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Registrants, (v) fees and
disbursements of all independent certified public accountants for the
Registrants, (vi) rating agency fees, (vii) Securities Act liability insurance,
if the Registrants desire such insurance, (viii) fees and expenses of all other
Persons retained by the Registrants, (ix) internal expenses of the Registrants
(including, without limitation, all salaries and expenses of officers and
employees of the Registrants performing legal or accounting duties), (x) the
expense of any annual audit, (xi) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
if applicable, (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement and (xiii) fees and expenses of the Trustees and the
trustee under the Indenture (including reasonable fees and expenses of counsel
to such trustees).
6. Indemnification
The Registrants agree, jointly and severally, to indemnify and hold
harmless each Holder of Registrable Securities, the officers and directors of
each such person, and each person, if any, who controls any such person within
the meaning
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of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Registrants shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any Participant
furnished in writing to the Registrants by or on behalf of such Participant
expressly for use therein; provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Participant (or to the benefit of any person controlling such
Participant) from whom the person asserting any such losses, claims, damages,
liabilities or judgments purchased Registrable Securities if a copy of the
Prospectus (as then amended or supplemented if the Registrants shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Participant to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of such
Registrable Securities to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages, liabilities or judgments.
Each Participant will be required to agree, severally and not jointly, to
indemnify and hold harmless each of the Company and the Trust, its respective
directors, officers and each person, if any, who controls the Company or the
Trust within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the
Registrants to each Participant, but only with reference to information
relating to such Participant furnished in writing to the Registrants by or on
behalf of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
The liability of any Participant under this paragraph shall in no event exceed
the proceeds received by such Participant from sales of Registrable Securities
giving rise to such obligations.
In case any action shall be brought against any person in respect of which
indemnity may be sought pursuant to either
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of the two preceding paragraphs, such person (the "Indemnified Person") shall
promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing and the Indemnifying Person shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Person and payment of all fees and expenses. Any Indemnified
Person shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the employment of
such counsel has been specifically authorized in writing by the Indemnifying
Person, (ii) the Indemnifying Person has failed to assume the defense and
employ counsel or (iii) the named parties to any such action (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and such Indemnified Party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Person (in which case
the Indemnifying Person shall not have the right to assume the defense of such
action on behalf of such Indemnified Person, it being understood, however, that
the Indemnifying Person shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all Indemnified Persons, and that all such
fees and expenses shall be reimbursed as they are incurred). Any such separate
firm for the Participants and such control persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Securities sold by all such Participants and any such separate firm
for the Registrants, their respective directors, officers and such control
persons of the Registrants shall be designated in writing by the Registrants.
The Indemnifying Person shall not be liable for any settlement of any such
action effected without its written consent, but if settled with the written
consent, the Indemnifying Person agrees to indemnify and hold harmless any
Indemnified Person from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested an Indemnifying Person to reimburse the
Indemnified Person for fees and expenses of counsel as contemplated by the
third sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 10 business days after
receipt
- 17 -
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
If the Indemnification provided for in the first and second paragraphs of
this Section 6 is unavailable to an Indemnified Person in respect of any
losses, claims, damages, liabilities or judgments referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages,
liabilities or judgments in such proportion as is appropriate to reflect the
relative fault of the Registrants on the one hand and the Participants on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities, or judgments as well as any other
relevant equitable considerations. The relative fault of the Registrants on the
one hand and the Participants on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Registrants or by the
Participants and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The parties shall agree that it would not be just and equitable if
contribution pursuant to the prior paragraph were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6, no
Participant shall be required to
- 18 -
contribute any amount in excess of the amount by which proceeds received by
such Participant from sales of Registrable Securities exceeds the amount of any
damages that such Participant has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6 will
be in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
7. Rule 144 and Rule 144A
The Registrants covenant that they will file the reports required to be
filed by them under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any
time the Registrants are not required to file such reports, they will, upon the
request of any Holder of Registrable Securities, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and Rule
144A under the Securities Act. The Registrants further covenant that they will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 and Rule 144A
under the Securities Act, as such rules may be amended from time to time, or
(b) any similar rule or regulation hereafter adopted by the SEC.
8. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority of the shares of such Registrable Securities
included in such offering and be reasonably acceptable to the Registrants.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the
- 19 -
basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting arrangements.
9. Miscellaneous
(a) Remedies. In the event of a breach by the Registrants of any of
their respective obligations under this Agreement, each Holder of
Registrable Securities, in addition to being entitled to exercise all
rights provided herein, in the Declaration, the Indenture, the Guarantee
Agreement or, in the case of the Initial Purchasers, in the Purchase
Agreement or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Registrants agree that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the provisions
of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, the Registrants
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Registrants have not, as of the
date hereof, entered and shall not, after the date of this Agreement,
enter into any agreement with respect to any of its respective securities
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions
hereof. The Registrants have not entered and will not enter into any
agreement with respect to any of its respective securities which will
grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Registrable Securities. The Registrants
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability
of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not
- 20 -
be given, unless the Registrants have obtained the written consent of
Holders of at least a majority of the Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders
of Registrable Securities may be given by Holders of at least a majority
of the Registrable Securities being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence may
not be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustees) provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most
current address given by the Trustees to the Registrants; and
(ii) if to the Registrants, at 1001 North 19th Street,
Arlington, Virginia 22209, Attention: General Counsel; with a copy to
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017, Attention: Richard D. Truesdell, Jr.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under the
Indenture at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of
the parties, including without
- 21 -
limitation and without the need for an express assignment, subsequent
Holders of Registrable Securities; provided, that, with respect to
the indemnity and contribution agreements in Section 6, each Holder
of Registrable Securities subsequent to the Initial Purchasers shall
be bound by the terms thereof if such Holder elects to include
Registrable Securities in a Shelf Registration; provided, however,
that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Securities.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and the parties hereto
shall use their best efforts to find and employ an alternative means
to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
- 22 -
(k) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement
of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein.
(l) Securities Held by the Registrants or Their Affiliates.
Whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable
Securities held by the Registrants or any of their affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not
be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AES TRUST VII,
a Delaware statutory business trust
By: THE AES CORPORATION,
as Sponsor
By: /s/ Barry J. Sharp
--------------------------------------
Name: Barry J. Sharp
Title: Senior Vice President and
Chief Financial Officer
THE AES CORPORATION
By: /s/ William R. Luraschi
--------------------------------------
Name: William R. Luraschi
Title: Vice President and Secretary
MORGAN STANLEY & CO. INCORPORATED,
GOLDMAN, SACHS & CO.,
J.P. MORGAN SECURITIES INC.,
BANC OF AMERICA SECURITIES LLC,
CREDIT SUISSE FIRST BOSTON CORPORATION,
LEHMAN BROTHERS INC.,
SALOMON SMITH BARNEY INC.
By: Morgan Stanley & Co. Incorporated
By: /s/ Kenneth G. Pott
--------------------------------------
Name: Kenneth G. Pott
Title: Principal
By: Goldman, Sachs & Co.
By: /s/ Goldman, Sachs & Co.
--------------------------------------
Name: Goldman, Sachs & Co.
Title: