AGREEMENT AND PLAN OF AMALGAMATION
THIS AGREEMENT AND PLAN OF AMALGAMATION, dated as of November
12, 1996, between THE AES CORPORATION, a Delaware corporation ("AES"), and
AES CHINA GENERATING CO. LTD., a Bermuda company ("Chigen"),
W I T N E S S E T H :
WHEREAS, AES, upon the terms and subject to the conditions of
this Agreement and in accordance with the Bermuda Companies Act 1981, as
amended (the "Companies Act"), intends to cause a Bermuda company to be
formed as a wholly-owned subsidiary of AES ("Sub") to amalgamate with and
into Chigen (the "Amalgamation");
WHEREAS, a Special Committee of the Board of Directors of Chigen
(the "Special Committee") comprised of the directors elected by the holders
of the Class A Common Stock, par value $0.01 per share, of Chigen (the
"Class A Common Stock") (a) has determined that the Amalgamation is in the
best interests of Chigen and the holders of the Class A Common Stock and
has approved and adopted this Agreement and the transactions contemplated
hereby and (b) has recommended the approval and adoption of this Agreement
and the approval of the Amalgamation by, and directed that this Agreement
and the Amalgamation be submitted to a vote of, the shareholders of Chigen;
WHEREAS, the Board of Directors of AES has determined that the
Amalgamation is in the best interests of AES and its stockholders and has
approved and adopted this Agreement and approved the transactions
contemplated hereby;
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, each issued and outstanding share of Class A Common
Stock, other than shares owned directly or indirectly by AES and Dissenting
Shares (as defined in Section 2.01(d) below), will be canceled in
consideration of the right to receive a fraction of a share of AES Common
Stock, determined pursuant to the formula set forth in Section 2.01(c)
below;
WHEREAS, in order for AES to be able to effectuate the
Amalgamation, the shareholders of Chigen must approve the Amalgamation, and
the Special Committee and the Board of Directors of Chigen have agreed to
call the Chigen Special Meeting (as defined in Section 4.02 below) for that
purpose;
WHEREAS, for U.S. federal income tax purposes, it is intended
that the Amalgamation shall qualify as a reorganization under Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, AES and Chigen desire to make certain representations,
warranties, covenants and agreements in connection with the Amalgamation
and also to prescribe various conditions to the Amalgamation;
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement the
parties agree as follows:
ARTICLE I
The Amalgamation
SECTION 1.1. The Amalgamation. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Companies Act, Sub shall be amalgamated with Chigen at the Effective Time
(as defined in Section 1.03 below). Following the Amalgamation, Sub and
Chigen shall continue in the form of the amalgamated company (the
"Amalgamated Company") and shall operate under the name AES China
Generating Co. Ltd. under the laws of Bermuda.
SECTION 1.2. Closing. The closing of the Amalgamation will take
place at 10:00 a.m. on a date to be specified by AES, which may be on, but
shall be no later than the third business day after, the day on which there
shall have been satisfaction or waiver of the conditions set forth in
Article V (the "Closing Date"), at the offices of Chadbourne & Parke LLP,
30 Rockefeller Plaza, New York, New York 10112, unless another date or
place is agreed to in writing by the parties hereto.
SECTION 1.3. Effective Time. On the date hereof, or as soon as
practicable thereafter, the parties shall file an application for the
consent of the Bermuda Minister of Finance, and on the Closing Date, or as
soon as practicable thereafter, the parties shall file an application for
registration of the Amalgamation with the Bermuda Registrar of Companies
and any other appropriate documents (together, in any such case, the
"Bermuda Applications") executed in accordance with the relevant provisions
of the Companies Act and shall make all other filings or recordings
required under the Companies Act. The Amalgamation shall become effective
at such time as a certificate of amalgamation (the "Certificate of
Amalgamation") is duly issued by the Bermuda Registrar of Companies (the
time the Amalgamation becomes effective being the "Effective Time").
SECTION 1.4. Effects of the Amalgamation. The effect of the
Amalgamation shall be as provided in the applicable provisions of the
Companies Act.
SECTION 1.5. Memorandum of Association and Byelaws. (a) The
memorandum of association of Chigen as in effect immediately prior to the
Effective Time shall be the memorandum of association of the Amalgamated
Company until thereafter changed or amended as provided therein or by
applicable law.
(b) The Bye-laws of Sub as in effect at the Effective Time shall
be the bye-laws of the Amalgamated Company, until thereafter changed or
amended as provided therein or by applicable law. The registration number
of the Amalgamated Company in Bermuda after the Effective Time shall be the
same registration number as that of Chigen immediately prior to the
Effective Time.
SECTION 1.6. Directors. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Amalgamated Company,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.7. Officers. The officers of Chigen immediately prior
to the Effective Time shall become the officers of the Amalgamated Company,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Amalgamation on the Capital Stock of the
Constituent Companies; Exchange of Certificates
SECTION 2.1. Effect on Capital Stock. As of the Effective Time,
by virtue of the Amalgamation and without any action on the part of the
holder of any shares of Class A Common Stock, or Class B Common Stock, par
value $0.01 per share, of Chigen (the "Class B Common Stock" and together
with the Class A Common Stock, the "Chigen Common Stock") or the holder of
any shares of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock of the Amalgamated Company.
(b) Cancellation of Treasury Stock and AES Owned Stock. Each
share of Chigen Common Stock that is owned by any subsidiary of Chigen and
each share of Chigen Common Stock that is owned by AES, Sub or any other
subsidiary of AES shall automatically be canceled and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) Cancellation of Class A Common Stock. Subject to Section
2.01(d), each issued and outstanding share of Class A Common Stock (other
than shares to be canceled in accordance with Section 2.01(b)) shall be
canceled in consideration of the right to receive AES Common Stock in the
ratio of (i) 0.29 of a share of AES Common Stock or (ii) should the average
closing price of AES Common Stock on the New York Stock Exchange (the
"NYSE") over the 15 consecutive trading day period ending at the close of
trading on the third trading day immediately prior to the date of the
Chigen Special Meeting (the "Average Closing Price") be less than $45.00 or
exceed $50.00, such fraction of a share of AES Common Stock (expressed as a
decimal rounded to the nearest one one-thousandth) as is determined by
dividing $13.05 (if the Average Closing Price is less than $45.00) or
$14.50 (if the Average Closing Price is greater than $50.00) by the Average
Closing Price (the "Exchange Ratio" or the "Amalgamation Consideration").
As of the Effective Time, all such shares of Class A Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any
such shares of Class A Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Amalgamation
Consideration, without interest.
(d) Shares of Dissenting Shareholders. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding shares of
Class A Common Stock held by a person who did not vote in favor of the
Amalgamation (a "Dissenting Shareholder") and complies with all the
provisions of Bermuda law concerning the right of holders of Class A Common
Stock to dissent from the Amalgamation and require appraisal of their
shares of Class A Common Stock ("Dissenting Shares") shall be canceled in
consideration for the right to receive such consideration as may be payable
to such Dissenting Shareholder pursuant to the laws of Bermuda. Chigen
shall give AES (i) prompt notice of any demands for appraisal of shares of
Class A Common Stock received by Chigen and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to
any such demands. Chigen shall not, without the prior written consent of
AES, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
SECTION 2.2. Payment for Cancellation of Class A Common Stock in
the Amalgamation. The manner of making payment for the cancellation of
Class A Common Stock in the Amalgamation shall be as follows:
(a) At the Effective Time, AES shall make available to an
exchange agent selected by AES and reasonably acceptable to Chigen (the
"Exchange Agent"), for the benefit of those persons who immediately prior
to the Effective Time were the holders of Class A Common Stock, a
sufficient number of certificates representing shares of AES Common Stock
required to effect the delivery of the aggregate Amalgamation Consideration
required to be issued pursuant to Section 2.01 (the certificates
representing shares of AES Common Stock comprising such aggregate
Amalgamation Consideration being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions,
deliver the shares of AES Common Stock contemplated to be issued pursuant
to Section 2.01. The Exchange Fund shall not be used for any other purpose.
(b) Promptly after the Effective Time, the Exchange Agent shall
mail to each registered holder (other than Dissenting Shareholders) of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Class A Common Stock (the "Certificates") (i) a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender of Certificates for cancellation to the
Exchange Agent, together with such letter of transmittal duly executed and
any other required documents, the holder of such Certificates shall be
entitled to receive for each of the shares of Class A Common Stock
represented by such Certificates the Amalgamation Consideration and the
Certificates so surrendered shall forthwith be canceled. Until so
surrendered, Certificates shall represent solely the right to receive the
Amalgamation Consideration and any cash in lieu of fractional shares of AES
Common Stock as contemplated by Section 2.03 with respect to each of the
shares of Class A Common Stock represented thereby. No dividends or other
distributions that are declared after the Effective Time on shares of AES
Common Stock and payable to the holders of record thereof after the
Effective Time will be paid to persons entitled by reason of the
Amalgamation to receive shares of AES Common Stock until such persons
surrender their Certificates. Upon such surrender, there shall be paid to
the person in whose name shares of AES Common Stock are issued any
dividends or other distributions having a record date after the Effective
Time and payable with respect to such shares of AES Common Stock between
the Effective Time and the time of such surrender. After such surrender
there shall be paid to the person in whose name shares of AES Common Stock
are issued any dividends or other distributions on such shares of AES
Common Stock which shall have a record date after the Effective Time and
prior to such surrender and a payment date after such surrender and such
payment shall be made on such payment date. In no event shall the persons
entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions. If any cash or
any certificate representing shares of AES Common Stock is to be paid to or
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange
that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of certificates of such shares of AES
Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Class A Common Stock for any shares
of AES Common Stock or dividends thereon or, in accordance with Section
2.03, proceeds of the sale of fractional interests, delivered to a public
official pursuant to applicable escheat law. The Exchange Agent shall not
be entitled to vote or exercise any rights of ownership with respect to
shares of AES Common Stock held by it from time to time hereunder, except
that it shall receive and hold all dividends or other distributions paid or
distributed with respect to such shares of AES Common Stock for the account
of the persons entitled thereto.
(c) Subject to the requirements of applicable law, certificates
surrendered for exchange by any person constituting an "affiliate" of
Chigen for purposes of Rule 145 of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the
"Securities Act") shall not be exchanged for certificates representing
shares of AES Common Stock until AES has received from such person a
written "affiliate" agreement in a form reasonably acceptable to AES and
Chigen. Chigen shall use reasonable efforts to cause each such person to
deliver such written agreement to AES on or prior to the Closing Date.
(d) Any portion of the Exchange Fund which remains unclaimed by
the former shareholders of Chigen for one year after the Effective Time
shall be delivered to AES, upon demand of AES, and any former shareholders
of Chigen shall thereafter look only to AES for payment of their claim for
the Amalgamation Consideration for the shares or for any cash in lieu of
fractional shares of AES Common Stock.
(e) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by the Amalgamated Company, the execution of an indemnity agreement by such
person and/or the posting by such person of a bond in such reasonable
amount as the Amalgamated Company may reasonably direct, as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of AES Common Stock, cash in
lieu of fractional shares of AES Common Stock and unpaid dividends and
distributions on shares of AES Common Stock deliverable in respect thereof
pursuant to this Agreement.
SECTION 2.3. No Fractional Shares. No fractional shares of AES
Common Stock shall be issued in the Amalgamation and no fractional share
interests will entitle the owner thereof to vote or to any rights of a
stockholder of AES. In lieu of any such fractional securities, each holder
of shares of Class A Common Stock who would otherwise have been entitled to
a fraction of a share of AES Common Stock upon surrender of Certificates
for cancellation pursuant to this Article II, after aggregating all shares
of AES Common Stock which such holder would be entitled to receive under
Section 2.01(c), will be paid an amount in cash (without interest) equal to
the closing price per share of AES Common Stock on the trading day prior to
the day on which the Effective Time occurs multiplied by the fraction of a
share of AES Common Stock to which such holder would otherwise be entitled.
As soon as practicable after the determination of the amount of cash to be
paid to former shareholders of Chigen in lieu of any fractional interests,
the Exchange Agent shall make available in accordance with this Agreement
such amounts to such former shareholders.
SECTION 2.4. Transfer of Shares after the Effective Time. No
transfers of shares of Class A Common Stock shall be made on the share
transfer books of Chigen after the close of business on the day prior to
the date of the Effective Time.
SECTION 2.5. Stock Options. Pursuant to the AES China Generating
Ltd. Incentive Stock Option Plan (the "Chigen Option Plan"), all
outstanding options issued thereunder (the "Chigen Options") shall, as of
the Effective Time, automatically and without any action on the part of the
holder thereof, shall become options for AES Common Stock in accordance
with the formulae set forth in this Section. AES shall assume the Chigen
Option Plan as of the Effective Time. The holders of such Options shall
continue to have, and be subject to, the same terms and conditions set
forth in the Chigen Option Plan and agreements pursuant to which such
Chigen Options were issued as in effect immediately prior to the Effective
Time, except that, in accordance with Section 7.01 of the Chigen Option
Plan, (i) such Chigen Options shall be exercisable for that number of whole
shares of AES Common Stock equal to the product of the number of shares of
Class B Common Stock covered by the Chigen Option immediately prior to the
Effective Time multiplied by the Exchange Ratio rounded up to the nearest
whole number of shares of AES Common Stock, and (ii) the per share exercise
price for the shares of AES Common Stock issuable upon the exercise of such
assumed Chigen Option shall be equal to the quotient determined by dividing
the exercise price per share of Class B Common Stock specified for such
Chigen Option under the Chigen Option Plan or agreement in effect
immediately prior to the Effective Time by the Exchange Ratio rounding the
resulting exercise price down to the nearest whole cent. The date of grant
for such Chigen Option shall be the date on which the Chigen Option was
originally granted. At the Effective Time, AES shall reserve for issuance
the number of shares of AES Common Stock that will become issuable upon the
exercise of such Chigen Options pursuant to this Section 2.05. Nothing in
this Section 2.05 shall affect the schedule of vesting (or the acceleration
thereof) with respect to the Chigen Options to be assumed by AES as
provided in this Section 2.05. As soon as practicable after the Effective
Time, AES shall file a registration statement or registration statements on
Form S-8 (or any successor form), or another appropriate form with respect
to the shares of AES Common Stock subject to such Chigen Options, and shall
use its best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of
the prospectus contained therein) for so long as such Chigen Options remain
outstanding. It is the intention of the parties that, subject to applicable
law, the Chigen Options assumed by AES qualify following the Effective Time
as "incentive stock options" (as defined in Section 422 of the Code) to the
extent that the Chigen Options qualified as incentive stock options prior
to the Effective Time and, accordingly, the provisions of this Section 2.05
shall be deemed amended to the extent necessary to maintain such status of
the Chigen Options.
SECTION 2.6. Adjustments to Exchange Ratio, etc. The exchange
ratios set forth in Sections 2.01, 5.02(f) and 5.03(d) and any collar
amounts shall be adjusted to reflect fully the effect of any stock split
(including a consolidation) of AES Common Stock or a dividend payable in
AES Common Stock, or any other distribution of securities or dividend (in
cash or otherwise) to holders of AES Common Stock (including, without
limitation, such a distribution made in connection with a recapitalization,
reclassification, merger, consolidation, reorganization or similar
transaction, but excluding any regular quarterly dividend paid in cash)
occurring or having a record date after the date hereof and prior to the
Effective Time. ARTICLE III
Representations and Warranties
SECTION 3.1. Representations and Warranties of Chigen. Chigen
represents and warrants to AES as follows:
(a) Organization, Standing and Corporate Power. Chigen is a
company duly organized, validly existing and in compliance under the laws
of Bermuda and has the requisite corporate power and authority to carry on
its business as now being conducted. Chigen is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified, licensed or in good standing
(individually or in the aggregate) would not have a Material Adverse Effect
(as defined in Section 7.03(c) below) in respect of Chigen.
(b) Subsidiaries. All the outstanding shares of capital
stock, partnership interests or other equity interests owned by Chigen in
each subsidiary in which Chigen has a direct or indirect interest are,
directly or indirectly, free and clear of all Liens (as defined in Section
7.03(b) below).
(c) Capital Structure. The authorized capital stock of
Chigen is substantially as described in the Chigen SEC Documents (as
defined in Section 3.01(e) below). All outstanding shares of capital stock
of Chigen are, and all shares which may be issued will be, when issued,
duly authorized, validly issued and fully paid and not subject to
preemptive rights. There are no bonds, debentures, notes or other
indebtedness of Chigen having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which shareholders of Chigen may vote. Except as set forth above, as of the
date of this Agreement, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Chigen is a party or by which it is bound
obligating Chigen to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of Chigen or obligating Chigen to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are not any outstanding
contractual obligations of Chigen to repurchase, redeem or otherwise
acquire any shares of capital stock of Chigen.
(d) Authority; Noncontravention. Chigen has the requisite
corporate power and authority to enter into this Agreement and, subject to
the approval of the Amalgamation and this Agreement by the requisite vote
of the holders of the outstanding shares of Chigen, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Chigen and the consummation by Chigen of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Chigen, subject, in the case of this
Agreement, to approval of the Amalgamation and this Agreement by the
requisite vote of the holders of the outstanding shares of Chigen Common
Stock. This Agreement has been duly executed and delivered by Chigen and,
assuming this Agreement constitutes the valid and binding obligation of
AES, this Agreement constitutes the valid and binding obligation of Chigen,
enforceable against Chigen in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Chigen or any
of its subsidiaries under, (i) the Memorandum of Association or Bye-laws of
Chigen or the comparable charter or organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Chigen or any of its subsidiaries or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Chigen or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) or (iii), any
such conflicts, violations, defaults, rights or Liens that individually or
in the aggregate would not (x) have a Material Adverse Effect in respect of
Chigen, (y) impair in any material respect the ability of Chigen to perform
its obligations under this Agreement or (z) prevent the consummation of any
of the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
U.S. federal, state or local government or foreign government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is
required by Chigen or any of its subsidiaries in connection with the
execution and delivery of this Agreement by Chigen or the consummation by
Chigen of the transactions contemplated by this Agreement, except for (i)
the filing with the United States Securities and Exchange Commission (the
"SEC") and the SEC's review of (x) the proxy statement relating to the
approval by Chigen's shareholders of the Amalgamation and this Agreement
(as amended or supplemented from time to time, the "Proxy Statement") and
(y) such other filings under the Securities and Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder,
the "Exchange Act"), as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (ii) any filings made
in compliance with the rules and regulations of the NYSE and the Nasdaq
National Market System, (iii) the filing of the Bermuda Applications, and
the appropriate documents with the relevant authorities of other
jurisdictions in which Chigen is qualified to do business, (iv) such
filings as may be required by any applicable state securities or "blue sky"
laws or state takeover laws, (v) such filings, consents, approvals, orders,
registrations and declarations as may be required under the laws of any
foreign country in which Chigen or any of its subsidiaries conducts any
business or owns any assets, (vi) the consent of the Bermuda Minister of
Finance to amalgamate Chigen with Sub, (vii) the issuance by the Bermuda
Registrar of Companies of the Certificate of Amalgamation, and (viii) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would
not, individually or in the aggregate (A) have a Material Adverse Effect in
respect of Chigen, (B) impair in any material respect the ability of Chigen
to perform its obligations under this Agreement or (C) prevent or
significantly delay the consummation of the transactions contemplated by
this Agreement.
(e) SEC Documents; Financial Statements. Chigen has filed
all required reports, forms and other documents with the SEC since February
23, 1994 (the "Chigen SEC Documents"). As of their respective dates, (i)
the Chigen SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
applicable to such Chigen SEC Documents, and (ii) none of the Chigen SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information
contained in any Chigen SEC Document has been revised or superseded by a
later-filed Chigen SEC Document filed and publicly available prior to the
date of this Agreement, none of the Chigen SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Chigen included in the Chigen SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of Chigen
and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Chigen SEC
Documents filed and publicly available prior to the date of this Agreement,
and except for Chigen's planned offering of notes due 2006 (the "Chigen
Debt Offering") and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the date of
the most recent consolidated balance sheet included in the Chigen SEC
Documents filed and publicly available prior to the date of this Agreement
and except for liabilities and obligations which would not, individually or
in the aggregate, have a Material Adverse Effect in respect of Chigen,
neither Chigen nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance sheet
of Chigen and its consolidated subsidiaries or in the notes thereto.
(f) Absence of Certain Changes or Events. Except as
disclosed in the Chigen SEC Documents filed and publicly available prior to
the date of this Agreement, since November 30, 1995, and except for the
Chigen Debt Offering, Chigen has conducted its business only in the
ordinary course, and there has not been (i) any Material Adverse Change (as
defined in ss. 7.03(c) below) in respect of Chigen, (ii) any split,
combination or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iii) (x)
any granting by Chigen to any officer of Chigen of any increase in
compensation, except in the ordinary course of business consistent with
prior practice, as was required under employment agreements in effect as of
the date of the most recent audited financial statements included in the
Chigen SEC Documents filed and publicly available prior to the date of this
Agreement, (y) any granting by Chigen to any such officer of any increase
in severance or termination pay, except as was required under employment,
severance or termination agreements in effect as of the date of the most
recent audited financial statements included in the Chigen SEC Documents
filed and publicly available prior to the date of this Agreement or (z) any
entry by Chigen or any of its subsidiaries into any employment, severance
or termination agreement with any such officer, (iv) any damage,
destruction or loss, whether or not covered by insurance, that has or
reasonably could be expected to have a Material Adverse Effect in respect
of Chigen or (v) any change in accounting methods, principles or practices
by Chigen materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in GAAP.
(g) Litigation. Except as disclosed in the Chigen SEC
Documents filed and publicly available prior to the date of this Agreement,
there is no suit, action or proceeding pending or, to the knowledge of
Chigen, threatened against Chigen or any of its subsidiaries that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect in respect of Chigen; it being understood that this
representation shall not include any litigation of the nature described in
Section 5.02(a)(i) through (iv).
(h) Compliance with Applicable Laws. Each of Chigen and its
subsidiaries has in effect all foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices,
permits and rights, including all authorizations under environmental laws
("Permits"), necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and there has
occurred no default under any such Permit, except for the lack of Permits
and except for defaults under Permits which such lack or default
individually or in the aggregate would not have a Material Adverse Effect
in respect of Chigen. Except as disclosed in the Chigen SEC Documents filed
and publicly available prior to the date of this Agreement, Chigen and its
subsidiaries are in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Entity,
except for any noncompliance which individually or in the aggregate would
not have a Material Adverse Effect in respect of Chigen.
(i) Brokers; Schedule of Fees and Expenses. No broker,
investment banker or financial advisor or other person, other than Merrill
Lynch & Co., the fees and expenses of which will be paid by Chigen, is
entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Chigen. Chigen
has provided AES true and correct copies of all agreements between Chigen
and Merrill Lynch & Co.
(j) Opinion of Financial Advisor. Chigen has received the
opinion of Merrill Lynch & Co., to the effect that, as of the date of this
Agreement, the consideration to be received in the Amalgamation by the
holders of Class A Common Stock is fair to the holders of Class A Common
Stock from a financial point of view, and a complete and correct copy of
such opinion has been, or promptly upon receipt thereof will be, delivered
to AES.
(k) Board Recommendation. At a meeting duly called and held
in compliance with Chigen's Bye-laws, (i) the Special Committee has adopted
a resolution approving the Amalgamation and recommended that the Board of
Directors of Chigen approve this Agreement and the transactions
contemplated hereby, (ii) the Board of Directors of Chigen has adopted a
resolution (A) approving the Amalgamation, based on a determination that
the Amalgamation is in the best interests of Chigen and the holders of
Class A Common Stock, and (B) approving and adopting this Agreement and the
transactions contemplated hereby and recommending approval and adoption of
this Agreement and the transactions contemplated hereby by the holders of
Class A Common Stock.
SECTION 3.2. Representations and Warranties of AES. AES
represents and warrants to Chigen as follows:
(a) Organization, Standing and Corporate Power. AES is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power and authority to
carry on its business as now being conducted. AES is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a Material Adverse Effect
in respect of AES. AES has delivered to Chigen complete and correct copies
of its certificate of incorporation and by-laws, in each case as amended to
the date of this Agreement.
(b) Capital Structure. The authorized capital stock of AES
is substantially as described in the AES SEC Documents (as defined in
Section 3.02(d) below). AES does not own any shares of the Class A Common
Stock of Chigen.
(c) Authority; Noncontravention. AES has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of AES. This Agreement has been duly executed
and delivered by AES and, assuming this Agreement constitutes the valid and
binding obligation of Chigen, this Agreement constitutes a valid and
binding obligation of AES, enforceable against AES, as applicable, in
accordance with its terms. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of
the properties or assets of AES under, (i) the certificate of incorporation
or by-laws of AES, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to AES or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to AES or its properties or assets, other than, in the case of
clauses (ii) or (iii), any such conflicts, violations, defaults, rights or
Liens that (A) will have been waived prior to the Effective Time or (B)
would not individually or in the aggregate (x) have a Material Adverse
Effect in respect of AES, (y) impair in any material respect the ability of
AES to perform its obligations under this Agreement or (z) prevent the
consummation of any of the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required by AES in connection
with the execution and delivery of this Agreement or the consummation by
AES of any of the transactions contemplated by this Agreement, except for
(i) the filing with the SEC of (x) the Registration Statement (as defined
in Section 4.01 below), and (y) such other filings under the Exchange Act
as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (ii) the SEC order declaring the
Registration Statement effective pursuant to Section 8(a) of the Securities
Act, (iii) any filings made in compliance with the rules and regulations of
the NYSE and the Nasdaq National Market System, (iv) the filing of the
Bermuda Applications, and the appropriate documents with the relevant
authorities of other states in which Chigen is qualified to do business,
(v) such filings as may be required by any applicable state securities or
"blue sky" laws or state takeover laws, (vi) the consent of the Bermuda
Minister of Finance to amalgamate Chigen with Sub, (vii) the issuance by
the Bermuda Registrar of Companies of the Certificate of Amalgamation, and
(viii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained
or made would not, individually or in the aggregate (A) have a Material
Adverse Effect in respect of AES, (B) impair the ability of AES to perform
its obligations under this Agreement or (C) prevent or significantly delay
the consummation of any transaction contemplated by this Agreement.
(d) SEC Documents; Financial Statements. AES has filed all
required reports, forms and other documents with the SEC since January 1,
1994 (the "AES SEC Documents"). As of their respective dates, (i) the AES
SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, applicable to
such AES SEC Documents, and (ii) none of the AES SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any AES SEC
Document has been revised or superseded by a later-filed AES SEC Document
filed and publicly available prior to the date of this Agreement, none of
the AES SEC Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of AES
included in the AES SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of AES and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the AES SEC Documents filed and publicly available prior to
the date of this Agreement, and except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice
since the date of the most recent consolidated balance sheet included in
the AES SEC Documents filed and publicly available prior to the date of
this Agreement and except for liabilities and obligations which would not,
individually or in the aggregate, have a Material Adverse Effect in respect
of AES, neither AES nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance sheet
of AES and its consolidated subsidiaries or in the notes thereto. (e)
Absence of Certain Changes or Events. Except as disclosed in the AES SEC
Documents filed and publicly available prior to the date of this Agreement,
since December 31, 1995 AES has conducted its business only in the ordinary
course, and there has not been (i) any Material Adverse Change in respect
of AES, (ii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iii) any damage, destruction or loss, whether or not
covered by insurance, that has or reasonably could be expected to have a
Material Adverse Effect in respect of AES or (iv) any change in accounting
methods, principles or practices by AES materially affecting its assets,
liabilities or business, except insofar as may have been required by a
change in GAAP.
(f) Litigation. Except as disclosed in the AES SEC Documents
filed and publicly available prior to the date of this Agreement, there is
no suit, action or proceeding pending or, to the knowledge of AES,
threatened against AES or any of its subsidiaries that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect in respect of AES.
(g) Brokers. No broker, investment banker, financial advisor
or other person, the fees and expenses of which will be paid by AES, is
entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of AES.
ARTICLE IV
Additional Agreements
SECTION 4.1. Registration Statement; Proxy Statement. (a)(i)
As promptly as practicable after the execution of this Agreement, AES and
Chigen shall prepare and file with the SEC a registration statement on Form
S-4 (together with all amendments thereto, the "Registration Statement") in
connection with the registration under the Securities Act of the shares of
AES Common Stock to be issued to the holders of the Class A Common Stock
pursuant to the Amalgamation, including therein a proxy statement for use
in connection with the Chigen Special Meeting (as defined in Section 4.02
below) (the "Proxy Statement"). AES and Chigen shall cooperate with each
other in connection with any other filings with the SEC that any of them is
obligated to make as a result of the transactions contemplated hereby. AES
and Chigen each shall use all reasonable efforts to cause the Registration
Statement to become effective (and to maintain such effectiveness until the
AES Common Stock covered thereby has been issued) and the Proxy Statement
to be reviewed by the SEC staff as promptly as practicable. Prior to the
effective date of the Registration Statement, AES shall take all or any
action required under any applicable federal or state securities laws in
connection with the issuance of shares of AES Common Stock pursuant to the
Amalgamation. Each of Chigen and AES shall pay its own expenses incurred in
connection with the Registration Statement, the Proxy Statement, and the
Chigen Special Meeting, including, without limitation, the fees and
disbursements of their respective counsel, accountants and other
representatives, except that Chigen and AES each shall pay one-half of any
printing expenses incurred in connection therewith and AES shall pay any
filing fees with respect to the filing of the Proxy Statement with the SEC.
Chigen shall furnish all information concerning Chigen as AES may
reasonably request in connection with such actions and the preparation of
the Registration Statement. As promptly as practicable after the
Registration Statement shall have become effective, Chigen shall mail the
Proxy Statement to its shareholders. The Proxy Statement shall include the
recommendation of the Special Committee and the recommendation of the Board
of Directors of Chigen in favor of the Amalgamation, unless the Special
Committee has, in accordance with the terms of this Agreement, withdrawn or
modified its recommendation or approval of this Agreement.
(ii) No amendment or supplement to the Registration Statement or
the Proxy Statement will be made by AES or Chigen without the approval
of the other party, which shall not be unreasonably withheld. AES and
Chigen each will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance
of any stop order, the suspension of the qualification of the AES
Common Stock issuable in connection with the Amalgamation for offering
or sale in any jurisdiction, or any request by the SEC for amendment
of the Registration Statement or the Proxy Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
(iii) AES shall promptly prepare and submit to the NYSE a
listing application covering the shares of AES Common Stock issuable
in the Amalgamation, and shall use its reasonable best efforts to
obtain, prior to the Effective Time, approval for the listing of such
AES Common Stock, subject to official notice of issuance, and Chigen
shall cooperate fully with AES with respect to such listing.
(b) AES represents, warrants and agrees that none of the
information supplied or to be supplied by AES for inclusion or
incorporation by reference in the Registration Statement (including the
Proxy Statement) shall, at (i) the time the Registration Statement is filed
with the SEC or declared effective, (ii) the time the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to the
shareholders of Chigen, (iii) the time of the Chigen Special Meeting and
(iv) the Effective Time, contain any untrue statement of a material fact or
any statement which, at such time and in light of the circumstances under
which it is made, is false or misleading with respect to any material fact,
or omit to state any material fact required to be stated therein, or
necessary in order to make the statements therein not false or misleading.
If at any time prior to the Effective Time any event or circumstance
relating to AES or any subsidiary of AES, or their respective officers or
directors, should be discovered by AES which should be set forth in an
amendment or a supplement to the Registration Statement or the Proxy
Statement, AES shall promptly inform Chigen of such event or circumstance.
Notwithstanding the foregoing, AES makes no representation or warranty with
respect to any information which is supplied for inclusion or incorporation
by reference in the Registration Statement (including the Proxy Statement)
by Chigen or any of its representatives and which is contained therein. All
documents that AES is responsible for filing with the SEC in connection
with the transactions contemplated hereby will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(c) Chigen represents, warrants and agrees that none of the
information supplied or to be supplied by Chigen for inclusion or
incorporation by reference in the Registration Statement (including the
Proxy Statement) shall, at the respective times the Registration Statement
is filed with the SEC or declared effective or the Proxy Statement
contained in the Registration Statement is first published, sent or given
to the holders of Class A Common Stock, and at the Effective Time, contain
any untrue statement of a material fact or any statement which, at such
time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or omit to state any material
fact required to be stated therein, or necessary in order to make the
statements therein not false or misleading. If at any time prior to the
Effective Time any event or circumstance relating to Chigen or any
subsidiary of Chigen, or their respective officers or directors, should be
discovered by Chigen which should be set forth in an amendment or
supplement to the Registration Statement or the Proxy Statement, Chigen
shall promptly inform AES of such event of circumstance. Notwithstanding
the foregoing, Chigen makes no representation or warranty with respect to
any information which is supplied for inclusion or incorporation by
reference in the Registration Statement (including the Proxy Statement) by
AES or any of its representatives and which is contained therein. All
documents that Chigen is responsible for filing with the SEC in connection
with the transactions contemplated hereby will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(d) Chigen and AES each hereby (i) consents to the use of its
name and, on behalf of its subsidiaries and affiliates, the names of such
subsidiaries and affiliates, and to the inclusion of financial statements
and business information relating to such party and its subsidiaries and
affiliates (in each case, to the extent required by applicable securities
laws), in the Registration Statement and the Proxy Statement, (ii) agrees
to use all reasonable efforts to obtain the written consent of any person
or entity retained by it which may be required to be named (as an expert or
otherwise) in the Registration Statement or the Proxy Statement, and (iii)
agrees to cooperate fully, and agrees to use all reasonable efforts to
cause its subsidiaries and affiliates to cooperate fully, with any legal
counsel, investment banker, accountant or other agent or representative
retained by any of the parties specified in clause (i) above in connection
with the preparation of any and all information required, as determined
after consultation with each party's counsel, to be disclosed by applicable
securities laws in the Registration Statement or the Proxy Statement.
SECTION 4.2. Shareholders' Meetings. Chigen shall call a special
general meeting of its shareholders (the "Chigen Special Meeting") as
promptly as practicable for the purpose of voting upon the approval of this
Agreement and the Amalgamation and Chigen shall use all commercially
reasonable efforts to hold the Chigen Special Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective. Unless the Special Committee has, in accordance with the terms
of this Agreement, withdrawn or modified its recommendation or approval of
this Agreement, Chigen shall use all commercially reasonable efforts to
solicit from its shareholders proxies in favor of the approval of this
Agreement and the Amalgamation, and shall take all other action reasonably
necessary or advisable to secure the vote or consent of shareholders
required by the Companies Act to obtain such approvals. AES shall vote its
shares of Class B Common Stock in favor of this Agreement and the
transactions contemplated hereby.
SECTION 4.3. No Solicitation. (a) Chigen shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or
other advisor or representative of, Chigen or any of its subsidiaries to,
(i) solicit or initiate, or encourage the submission of, any Takeover
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with
respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to
lead to, any Takeover Proposal; provided, however, that, if in the opinion
of the Special Committee, after consultation with counsel, such failure to
act would be inconsistent with its fiduciary duties to Chigen or the
holders of Class A Common Stock under applicable law, Chigen may, in
response to an unsolicited Takeover Proposal, and subject to compliance
with Section 4.03(c), (A) furnish information with respect to Chigen to any
person pursuant to a confidentiality agreement and (B) participate in
negotiations regarding such Takeover Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by any executive officer of Chigen or any
of its subsidiaries or any investment banker, attorney or other advisor or
representative of Chigen or any of its subsidiaries, whether or not such
person is purporting to act on behalf of Chigen or any of its subsidiaries
or otherwise, shall be deemed to be a breach of this Section 4.03(a) by
Chigen. For purposes of this Agreement, "Takeover Proposal" means any
inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of
Chigen or any of its subsidiaries (other than investors in the ordinary
course of business) or of over 20% of any class of equity securities of
Chigen or any of its subsidiaries or any tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or
more of any class of equity securities of Chigen or any of its
subsidiaries, or any amalgamation, consolidation, business combination,
sale of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving Chigen or any of its
subsidiaries other than the transactions contemplated by this Agreement, or
any other transaction the consummation of which would reasonably be
expected to impede, interfere with, prevent or materially delay the
Amalgamation or which would reasonably be expected to dilute materially the
benefits to AES of the transactions contemplated hereby.
(b) Except as set forth herein or as required by Bermuda law,
the Special Committee shall not (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to AES or Sub, the approval or
recommendation by such Special Committee of the Amalgamation or this
Agreement, (ii) approve or recommend, or propose to approve or recommend,
any Takeover Proposal or (iii) enter into any agreement with respect to any
Takeover Proposal. Notwithstanding the foregoing, if in the opinion of the
Special Committee, after consultation with counsel, failure to do so would
be inconsistent with its fiduciary duties to Chigen or the holders of the
Class A Common Stock under applicable law, the Special Committee may
(subject to the terms of this and the following sentences) withdraw or
modify its approval or recommendation of the Amalgamation or this
Agreement, approve or recommend a Superior Proposal (as hereinafter
defined), or enter into an agreement with respect to a Superior Proposal,
in each case relating to the receipt of a Superior Proposal at any time
after the second business day following AES's receipt of written notice (a
"Notice of Superior Proposal") advising AES that the Special Committee has
received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such Superior
Proposal; provided that Chigen shall not enter into an agreement with
respect to a Superior Proposal unless Chigen shall have furnished AES with
written notice no later than 12:00 noon, New York City time, one day in
advance of any date that it intends to enter into such agreement (it being
understood that such time periods may be concurrent). In addition, if
Chigen proposes to enter into an agreement with respect to any Takeover
Proposal, it shall concurrently with entering into such agreement pay, or
cause to be paid, to AES the Expenses (as defined in Section 4.07(b)
below). For purposes of this Agreement, a "Superior Proposal" means any
bona fide Takeover Proposal to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
shares of Class A Common Stock then outstanding or all or substantially all
the assets of Chigen and otherwise on terms which the Special Committee
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to Chigen
or the holders of the Class A Common Stock than the Amalgamation.
(c) In addition to the obligations of Chigen set forth in
Section 4.03(b), Chigen shall immediately advise AES orally and in writing
of any request for information or of any Takeover Proposal, or any inquiry
with respect to or which could lead to any Takeover Proposal, the material
terms and conditions of such request, Takeover Proposal or inquiry, and the
identity of the person making any such Takeover Proposal or inquiry. Chigen
will keep AES fully informed of the status and details (including
amendments or proposed amendments) of any such request, Takeover Proposal
or inquiry.
(d) Nothing contained in this Section 4.03 shall prohibit Chigen
from taking and disclosing to its shareholders a position contemplated by
Rule 14e-2(a) under the Exchange Act or from making any disclosure to the
holders of Class A Common Stock if, in the opinion of the Special
Committee, after consultation with counsel, failure to so disclose would be
inconsistent with its fiduciary duties to Chigen or the holders of Class A
Common Stock under applicable law; provided that Chigen does not, except as
permitted by Section 4.03(b) withdraw or modify, or propose to withdraw or
modify, its position with respect to the Amalgamation or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.
(e) For the purposes of determining compliance with the terms of
this Agreement, the parties hereto agree that the failure to take,
following receipt of a Takeover Proposal, an action which the Special
Committee reasonably believes is likely to result in a Superior Proposal
would be deemed to be a breach of the Special Committee's fiduciary duties.
SECTION 4.4. Access to Information; Confidentiality. Chigen
shall, and shall cause each of its subsidiaries to, afford to AES, and to
AES' officers, employees, accountants, counsel, financial advisers and
other representatives, reasonable access during normal business hours
during the period prior to Effective Time to all their respective
properties, books, contracts, commitments, personnel and records and,
during such period, Chigen shall, and shall cause each of its subsidiaries
to, furnish promptly to AES (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (b)
all other information concerning its business, properties and personnel as
AES may reasonably request.
SECTION 4.5. Reasonable Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of
the parties agrees to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other party in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Amalgamation and the transactions contemplated hereby,
including (i) approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of
any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of any of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated hereby, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing, Chigen
and its Board of Directors shall (i) take all reasonable actions to ensure
that no state takeover statute or similar statute or regulation is or
becomes applicable to the Amalgamation, this Agreement, or any of the other
transactions contemplated hereby, and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Amalgamation, this
Agreement, or the transactions contemplated hereby, take all reasonable
actions to ensure that the Amalgamation and the transactions contemplated
hereby may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Amalgamation, this Agreement and the
transactions contemplated hereby. Notwithstanding the foregoing, Chigen,
the Special Committee and the Board of Directors of Chigen shall not be
prohibited from taking any action permitted by the terms of this Agreement.
(b) Each of the parties shall give prompt notice to the other
parties of (i) any material representation or warranty made by it contained
in this Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such material representation or warranty
that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any material covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
SECTION 4.6. Employee Benefit Plans. AES and Chigen agree that
any employee benefit or compensation plans, agreements or arrangements,
including "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to
which Chigen or any subsidiary of Chigen is a party (together, the "Chigen
Benefit Plans") in effect at the date of this Agreement shall, to the
extent practicable, remain in effect until otherwise determined after the
Effective Time and, to the extent the Chigen Benefit Plans are not
continued, it is the current nonbinding intent of the parties that employee
benefit plans of AES which are no less favorable, in the aggregate, to the
employees covered by such plans shall be provided. The parties shall take
all actions necessary and appropriate to merge the AES China Generating Co.
Ltd. Profit Sharing and Employee Stock Ownership Plan (the "Chigen Profit
Sharing Plan") into The AES Corporation Profit Sharing and Stock Ownership
Plan if the Chigen Profit Sharing Plan has assets prior to the Effective
Time.
SECTION 4.7. Fees and Expenses. (a) Except as provided below and
in Section 4.01, all fees and expenses incurred in connection with the
Amalgamation, this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such fees or expenses, whether or not the
Amalgamation is consummated.
(b) Chigen shall pay, or cause to be paid, in same day funds to
AES all of AES's out-of-pocket expenses referred to in Section 4.07(a) in
an amount up to but not to exceed $750,000 (the "Expenses") upon demand if
(i) AES terminates this Agreement under Section 6.01(d) as a result of the
occurrence of an event under clause (ii) or (iii) of Section 6.01(d), (ii)
Chigen terminates this Agreement pursuant to Section 6.01(e) or (iii) prior
to the termination of this Agreement (other than by Chigen pursuant to
Section 6.01(f)), a Takeover Proposal shall have been made and within one
year of such termination, Chigen enters into an agreement with respect to,
approves or recommends or takes any action to facilitate, such Takeover
Proposal. The amount of Expenses so payable shall be the amount set forth
in an estimate delivered by AES, subject to upward or downward adjustment
(not to be in excess of the amount set forth above) upon delivery of
reasonable documentation therefor.
SECTION 4.8. Public Announcements. AES and Chigen will consult
with each other before issuing, and provide each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, including the
Amalgamation, and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement
shall be in the form heretofore agreed to by the parties.
SECTION 4.9 Indemnification; Insurance. (a) Chigen shall not,
and for a period of six years from and after the Effective Time AES and the
Amalgamated Company shall not, amend the provisions of the Bye-Laws
providing for the indemnification of directors and officers of Chigen in
any manner adverse to such directors and officers.
(b) For a period of six years after the Effective Time, AES
shall cause to be maintained in effect the current policies of directors'
and officers' liability insurance maintained by Chigen (provided that AES
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with
respect to claims arising from facts or events which occurred before the
Effective Time to the extent available.
The provisions of this Section 4.09 are intended to be for the
benefit of, and shall be enforceable by, each indemnified party, his or her
heirs and representatives.
SECTION 4.10. Formation of Sub; Interim Operations of Sub;
Amendment. (a) As soon as practicable, AES will cause the organization of
Sub as an exempted company limited by shares under the Companies Act, and
will deliver to Chigen complete and correct copies of Sub's memorandum of
association and bye-laws.
(b) AES will form Sub solely for the purpose of engaging in the
transactions and not to engage in any business activities or conduct any
operations other than in connection with the transactions contemplated
hereby.
(c) As soon as practicable, AES and Chigen will agree, and AES
will cause Sub to agree, to an amendment to this Agreement whereby Sub will
become a party to this Agreement. Such amendment will contain
representations, warranties, covenants and other agreements of Sub
reasonably acceptable to AES and Chigen.
SECTION 4.11. Termination of the Stock Purchase and
Shareholder's Agreement. AES and Chigen agree that each of the Stock
Purchase and Shareholder's Agreement, dated as of December 29, 1993, by and
between AES and Chigen, and the Non-Competition and Non-Disclosure
Agreement, dated as of December 29, 1993, and amended and restated as of
February 1, 1994, by and between AES and Chigen, shall be deemed terminated
as of the Effective Time.
ARTICLE V
Conditions to the Amalgamation
SECTION 5.1. Conditions to the Obligations of Each Party. The
obligations of Chigen and AES to consummate the Amalgamation are subject to
the satisfaction of the following conditions:
(a) this Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the
shareholders of Chigen in accordance with the Companies Act and Chigen's
Bye-laws;
(b) no Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (each an "Order") or statute, rule or regulation
which is in effect and which has the effect of making the Amalgamation
illegal or otherwise prohibiting consummation of the Amalgamation;
(c) the Registration Statement shall have been declared
effective, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect;
(d) AES and Chigen shall have received from the NYSE evidence
that the shares of AES Common Stock to be issued to the shareholders of
Chigen in the Amalgamation shall be listed on the NYSE immediately
following the Effective Time;
(e) Chigen shall have received the consent of the Bermuda
Minister of Finance to amalgamate with Sub;
(f) all other consents, authorizations, orders and approvals of
(or filings or registrations with) any third party or governmental
commission, board or other regulatory body required in connection with the
execution, delivery and performance of this Agreement shall have been
obtained or made, except for filings in connection with the Amalgamation
and any other documents required to be filed after the Effective Time and
except where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have a
Material Adverse Effect in respect of Chigen or AES following the Effective
Time; and
(g) AES and Chigen shall have received an opinion of Chadbourne
& Parke LLP, special counsel to AES, in form and substance reasonably
acceptable to AES and reasonably acceptable to Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel to Chigen, substantially to the effect
that the Amalgamation will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
AES, Sub and Chigen will each be a party to that reorganization within the
meaning of Section 368(b) of the Code.
SECTION 5.2. Conditions to the Obligations of AES and Sub. The
obligations of AES and Sub to consummate the Amalgamation are subject to
the satisfaction or waiver by AES of the following further conditions:
(a) there shall not be threatened or pending by any Governmental
Entity any suit, action or proceeding, (i) challenging the acquisition by
AES of Chigen, seeking to restrain or prohibit the consummation of the
Amalgamation or the performance of any of the other transactions
contemplated by this Agreement, or seeking to obtain from the Chigen or
AES, any damages that are material in relation to Chigen and its
subsidiaries taken as whole, (ii) seeking to prohibit or limit the
ownership or operation by Chigen, AES or any of their respective
subsidiaries of a material portion of the business or assets of Chigen and
its subsidiaries, taken as a whole, or AES and its subsidiaries, taken as a
whole, or to compel Chigen or AES to dispose of or hold separate any
material portion of the business or assets of Chigen and its subsidiaries,
taken as a whole, or AES and its subsidiaries, taken as a whole, as a
result of the Amalgamation or any of the other transactions contemplated by
this Agreement, (iii) seeking to prohibit AES or any other subsidiary of
AES from effectively controlling in any material respect the business or
operations of Chigen and its subsidiaries, taken as a whole, or (iv) which
otherwise is reasonably likely to have a Material Adverse Effect in respect
of Chigen;
(b) there shall not be any statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed
applicable to the Amalgamation, or any other action shall be taken by any
Governmental Entity or court, that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses (i)
through (iv) of paragraph (a) above;
(c) there shall not have occurred any Material Adverse Change in
respect of Chigen;
(d) all of the representations and warranties of Chigen set
forth in this Agreement that are qualified as to materiality shall be true
and correct and all such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date;
(e) Chigen shall not have failed to perform in any material
respect any material obligation or to comply in any material respect with
any material agreement or covenant of Chigen to be performed or complied
with by it under this Agreement; and
(f) the fraction of a share of AES Common Stock to be received
with respect to each share of Class A Common Stock pursuant to Section
2.01(c) shall not be more than 0.31 of a share.
SECTION 5.3. Conditions to the Obligations of Chigen. The
obligation of Chigen to consummate the Amalgamation is subject to the
satisfaction or waiver by Chigen of the following further conditions:
(a) all of the representations and warranties of AES set forth
in this Agreement that are qualified as to materiality shall be true and
correct and all such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date;
(b) AES shall not have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of AES to be performed or complied with by
it under this Agreement;
(c) Merrill Lynch & Co. shall not have withdrawn the Opinion;
and
(d) the fraction of a share of AES Common Stock to be received
with respect to each share of Class A Common Stock pursuant to Section
2.01(c) shall not be less than 0.28 of a share.
ARTICLE VI
Termination, Amendment and Waiver
SECTION 6.1. Termination. This Agreement may be terminated and
the Amalgamation and the other transactions contemplated hereby may be
abandoned at any time prior to the Effective Time, notwithstanding any
requisite approval and adoption of this Agreement and the transactions
contemplated hereby, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors (including the Special Committee) of each of AES and Chigen;
(b) by either AES or Chigen: (i) if as a result of the failure,
occurrence or existence of any of the conditions set forth in Article V of
this Agreement the Amalgamation shall not have occurred on or before March
31, 1997; provided, however, that the right to terminate this Agreement
pursuant to this Section 6.01(b)(i) shall not be available to any party
whose failure to perform any of its obligations under this Agreement
results in the failure, occurrence or existence of any such condition; or
(ii) if any Governmental Entity shall have issued an Order permanently
enjoining, restraining or otherwise prohibiting the Amalgamation and such
Order shall have become final and nonappealable;
(c) by AES in the event of a breach by Chigen of any
representation, warranty, covenant or other agreement contained in this
Agreement or any other development which (i) would give rise to the failure
of a condition set forth in Sections 5.02(d) and 5.02(e) and (ii) cannot be
or has not been cured within 30 days after the giving of written notice to
Chigen;
(d) by AES if (i) the Special Committee shall have withdrawn or
modified in a manner adverse to AES its approval or recommendation of the
Amalgamation or this Agreement, (ii) the Special Committee shall have
approved or recommended any Takeover Proposal or (iii) Chigen shall have
entered into any agreement with respect to any Superior Proposal in
accordance with Section 4.03(b) of this Agreement;
(e) by AES or Chigen if Chigen enters into a definitive
agreement in accordance with Section 4.03, provided that Chigen has
complied with all provisions thereof, including the notice provisions
therein, and provided that Chigen makes simultaneous payment of the
Expenses; or
(f) by Chigen in the event of a breach by AES in any material
respect of any representation, warranty, covenant or other agreement
contained in this Agreement, which (A) would give rise to the failure of a
condition set forth in Sections 5.03(a) and 5.03(b) and (B) cannot be or
has not been cured within 30 days after the giving of written notice to
AES, except, in any case, such failures which, in the aggregate, would not
have a Material Adverse Effect in respect of AES.
SECTION 6.2. Effect of Termination. In the event of termination
of this Agreement by either Chigen or AES as provided in Section 6.01, this
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of AES or Chigen, other than the
provisions of Section 3.01(i), Section 3.02(g), Section 4.01, Section 4.07,
this Section 6.02 and Article VII and except to the extent that such
termination results from the willful and material breach by a party of any
of its representations, warranties, covenants or agreements set forth in
this Agreement.
SECTION 6.3. Amendment. This Agreement may be amended by the
parties at any time. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 6.4. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
waive compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of those rights.
SECTION 6.5. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 6.01, an
amendment of this Agreement pursuant to Section 6.03, an extension or
waiver pursuant to Section 6.04, or any other action pursuant to this
Agreement shall, in order to be effective, require, in the case of Chigen,
action by the Special Committee, or action by the duly authorized designee
of such Special Committee. Any action permitted to be taken by Chigen
pursuant to this Agreement may be taken by the Special Committee on behalf
of Chigen.
ARTICLE VII
General Provisions
SECTION 7.1. Nonsurvival of Representations and Warranties;
Effect of Breach of Representation or Warranty. (a) None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive after the Effective
Time. This Section 7.01(a) shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after such date.
(b) For all purposes of this Agreement, Chigen shall be deemed
not to have breached any of its representations and warranties if any
senior officer of AES (other than any such senior officer who is also an
officer of Chigen) has knowledge of such breach at the time this Agreement
is delivered by AES. No party hereto shall have any liability for damages
to the other party for the breach of any of its representations or
warranties contained herein, whether before or after the Effective Time; it
being understood that the other party's sole remedy shall be to not
consummate the Amalgamation and/or terminate this Agreement, in either
instance in accordance with the terms of this Agreement. Notwithstanding
anything to the contrary contained in the previous sentence, this Section
7.01(b) shall not limit AES's rights under Section 4.07(b).
SECTION 7.2. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to AES, to
The AES Corporation
1001 N. 19th Street
Arlington, VA 22209
Facsimile: (703) 528-4510
Attention: William R. Luraschi, Esq.
with copies to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, NY 10112
Facsimile: (212) 541-5369
Attention: Philip D. Beaumont, Esq.
(b) if to Chigen, to
AES China Generating Co. Ltd.
9-F Allied Capital Resources Building
32-38 Ice House Street
Central Hong Kong
Facsimile: 011-852-2530-1673
Attention: Special Committee of the
Class A Directors
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Facsimile: (212) 735-2000
Attention: David J. Friedman, Esq.
SECTION 7.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "Liens" means any and all pledges, claims, liens or
encumbrances and security interests of any kind or nature whatsoever;
(c) "Material Adverse Change" or "Material Adverse Effect"
means, when used in connection with Chigen or AES, any change or effect
that is materially adverse to the business, financial condition or results
of operations of such party and its subsidiaries taken as a whole;
(d) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity;
(e) a "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board
of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person;
(f) "Superior Proposal" has the meaning assigned thereto in
Section 4.03(b); and
(g) "Takeover Proposal" has the meaning assigned thereto in
Section 4.03(a).
SECTION 7.4. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation."
SECTION 7.5. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 7.6. Entire Agreement; No Third-Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement and except for the
provisions of Section 4.06 and Section 4.09, are not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
SECTION 7.7. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof, except that all provisions in this
Agreement relating to the authorization, effectuation and manner and effect
of the Amalgamation shall be governed by the laws of Bermuda.
SECTION 7.8. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 7.9. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of New
York or in any New York state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of
the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of New York or any
New York state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or state
court sitting in the State of New York.
IN WITNESS WHEREOF, AES and Chigen have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
THE AES CORPORATION
By: /s/ Roger W. Sant
Name: Roger W. Sant
Title: Chairman Of the Board
AES CHINA GENERATING CO. LTD.
By: /s/ Paul T. Hanrahan
Name: Paul T. Hanrahan
Title: President and Chief
Executive