SUBSIDIARY GUARANTY
GUARANTY, dated as of September 30, 1999 made by AES Oklahoma
Management Co., Inc. ("AES OKLAHOMA"), AES Hawaii Management Company, Inc.
("AES Hawaii"), AES Southland Funding LLC, a Delaware limited liability
company ("AES SOUTHLAND") and AES Warrior Run Funding LLC, in Delaware
limited liability company ("AES WARRIOR RUN"), (each individually a
"Guarantor" and, collectively, the "Guarantors"), in favor of the banks (the
"Banks") and the fronting banks (the "Fronting Banks") party to the Credit
Agreement (as defined below) and XXXXXX GUARANTY TRUST COMPANY OF NEW YORK,
as agent (the "Agent") for the Banks.
PRELIMINARY STATEMENTS:
(1) The Banks, the Fronting Banks and the Agent have entered into a
Credit Agreement, dated as of December 19, 1997 as amended and restated as of
March 31, 1999 and as further amended by Amendment No. 1 dated as of May 21,
1999, Amendment No. 2 dated as of July 27, 1999 and Amendment No.3 dated as
of September 28, 1999 (as so amended and as further amended from time to
time, the "Credit Agreement"), with The AES Corporation, a corporation
organized and existing under the laws of Delaware ("AES"), which owns 100% of
the outstanding shares of stock of each Guarantor.
(2) Each Guarantor and its respective wholly-owned subsidiaries may
receive a portion of the proceeds of the Loans made, and the benefit of
Letters of Credit issued, under the Credit Agreement and otherwise derive
substantial direct and indirect benefit from the Credit Agreement.
(3) It is a condition under the Credit Agreement that each
Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
satisfy the condition on which the Banks, the Fronting Banks and the Agent
were willing to enter into the Credit Agreement, the Guarantors hereby
jointly and severally agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined.
SECTION 2. GUARANTY. Subject to Section 10, each Guarantor, jointly
and severally, hereby unconditionally guarantees, as primary obligor and not
merely as surety, the full and punctual payment as and when the same shall
become due and
payable (whether at stated maturity, upon acceleration or otherwise) of the
principal of and interest on each Note issued by any Borrower pursuant to the
Credit Agreement, the full and punctual payment of each Reimbursement
Obligation under the Credit Agreement and the full and punctual payment of
all other amounts payable by any Borrower under the Credit Agreement. Upon
failure by any Borrower to pay punctually any such amount, the Guarantors
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Credit Agreement. The obligations of the Borrowers
guaranteed by the Guarantors are referred to herein as the "Guaranteed
Obligations". Without limiting the generality of the foregoing, each
Guarantor's liability shall extend to all amounts which constitute part of
the Guaranteed Obligations and would be owed by any Borrower under the Credit
Agreement but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding
involving such Borrower.
SECTION 3. GUARANTY ABSOLUTE. Each Guarantor, jointly and severally,
guarantees that, subject to Section 10 hereof, the Guaranteed Obligations
will be paid strictly in accordance with the terms of the Credit Agreement,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Banks and the
Agent with respect thereto. The obligations of the Guarantors under this
Guaranty are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against the Guarantors to enforce
this Guaranty, irrespective of whether any action is brought against any
Borrower or whether any Borrower is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall, subject to Section 10
hereof, be absolute and unconditional and, without limiting the generality of
the foregoing, irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement or any other agreement or instrument relating thereto, or any
provision of applicable law or regulation purporting to prohibit the
payment by any Borrower of any of the Guaranteed Obligations or any
other amount payable by any Borrower under the Credit Agreement;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations, or any
other amendment, waiver, extension, renewal, settlement, compromise or
release in respect of or any consent to departure from the Credit
Agreement including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to AES or
any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release, impairment, invalidity or
nonperfection of any collateral, or any taking, release or amendment or
waiver of or consent to departure from any guaranty, for all or any of
the Guaranteed Obligations;
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(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any collateral for all or any of the
Guaranteed Obligations or any other assets of AES or any of its
Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of AES or any of its Subsidiaries;
(vi) any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Borrower or its assets or any
resulting release or discharge of any of the Guaranteed Obligations or
any other obligation of any Borrower contained in the Credit Agreement
(other than as a result of the payment or performance in full thereof);
(vii) the existence of any claim, set-off or other rights which
the Guarantors may have at any time against any Borrower, the Agent,
any Bank or any other corporation or person, whether in connection
herewith or with any unrelated transactions, PROVIDED that nothing
herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim; or
(viii) any other circumstances which might, but for this Section,
otherwise constitute a defense available to, or a discharge of, any
Borrower or Guarantor.
This Guaranty shall continue to be effective or shall be reinstated,
as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Agent or any
Bank upon the insolvency, bankruptcy or reorganization of any Borrower or
otherwise, all as though such payment had been due but not been made at such
time.
SECTION 4. CASH COLLATERAL ACCOUNT. (a) Each Guarantor further
agrees that if any Borrower shall fail to deposit in the Cash Collateral
Account any amount required to be deposited therein pursuant to the Credit
Agreement, the Guarantors shall deposit such amount in a subaccount of the
Cash Collateral Account as collateral security for each Guarantor's potential
obligations hereunder. If the Guarantors fail to furnish such funds, the
Agent shall be authorized to debit any accounts the Guarantors maintain with
the Agent in such amount. Cash deposited in such subaccount of the Cash
Collateral Account pursuant to this Section shall be returned to the
Guarantors depositing the same to the extent that funds deposited by any
Borrower in the Cash Collateral Account would have been required to be
returned to such Borrower under the Credit Agreement.
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(b) Each Guarantor hereby pledges and grants to the Agent, for the
benefit of the Banks and the Agent, a continuing lien on and security
interest in all right, title and interest of such Guarantor with respect to
any funds held in the Cash Collateral Account from time to time, and all
proceeds thereof, as security for the payment of the Guaranteed Obligations.
(c) The Agent may, at any time or from time to time after funds are
deposited in the Cash Collateral Account, apply funds then held in the Cash
Collateral Account to the payment of any of the Guaranteed Obligations, in
such order as the Agent may elect, as shall have become or shall become due
and payable by any Borrower to the Banks or the Agent under the Credit
Agreement.
(d) Neither the Guarantors nor any person or entity claiming on
behalf of or through the Guarantors shall have any right to withdraw any of
the funds held in the Cash Collateral Account.
(e) Each Guarantor agrees that it will not (i) sell or otherwise
dispose of any interest in the Cash Collateral Account or any funds held
therein, or (ii) create or permit to exist any lien, security interest or
other charge or encumbrance upon or with respect to the Cash Collateral
Account or any funds held therein, except as contemplated by the terms hereof.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each
Guarantor respectively represents and warrants as follows:
(a) Such Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
(b) The execution, delivery and performance by such Guarantor of
this Guaranty are within such Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable
law or regulation applicable to such Guarantor or the certificate of
incorporation or by-laws of such Guarantor or any judgment, injunction,
order, decree, material agreement or other material instrument binding upon
such Guarantor or result in the creation or imposition of any Lien on any
asset of AES or any of its Subsidiaries, except as contemplated by the terms
hereof.
(c) This Guaranty constitutes a valid and binding obligation of
such Guarantor enforceable against such Guarantor in accordance with its
terms, except as the enforceability hereof may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights generally or by general principles of equity
limiting the availability of equitable remedies.
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SECTION 6. COVENANTS. So long as any Note or Letter of Credit shall
remain outstanding or Loan or Reimbursement Obligation shall remain unpaid or
any Commitment shall remain outstanding under the Credit Agreement, no
Guarantor will, without the written consent of the Required Banks, if, and
for so long as, an Actionable Default shall have occurred and be continuing
under the Credit Agreement, (i) declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities
on account of any shares of any class of capital stock of such Guarantor
(other than stock splits and dividends payable solely in equity securities of
such Guarantor), or purchase, redeem or otherwise acquire for value (or
permit any of its Subsidiaries to do so) any shares of any class of capital
stock of such Guarantor or any warrants, rights or options to acquire any
such shares, now or hereafter outstanding or (ii) make any Investment in or
otherwise advance any funds to any Borrower, or, except as may be required by
the Shady Point Financing Documents (as defined in Schedule I hereto), any
Subsidiary of AES. "Actionable Default" means an Event of Default described
in clauses (a), (e), (f), (g) and (h) of Section 6.01 of the Credit Agreement.
SECTION 7. WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance, presentment, protest and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and
waives any requirement that the Agent or any Bank protect, secure, perfect or
insure any security interest or lien on any property subject thereto or
exhaust any right or take any action against any Borrower or any other person
or entity or any collateral.
SECTION 8. SUBROGATION. Upon making any payment with respect to a
Borrower under this Guaranty, the Guarantor making such payment shall be
subrogated to the rights of the payee against such Borrower with respect to
such payment; PROVIDED that neither Guarantor shall enforce any payment by
way of subrogation until all amounts of principal of and interest on the
Notes and all other amounts payable by any Borrower under any Financing
Document shall have been paid in full.
SECTION 9. STAY OF ACCELERATION. If acceleration of the time for
payment of any Guaranteed Obligation is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, all such Guaranteed Obligations
otherwise subject to acceleration under the terms of the Credit Agreement
shall nonetheless be payable by the Guarantors hereunder forthwith on demand
by the Agent made at the request of the requisite proportion of the Banks
specified in Article VI of the Credit Agreement.
SECTION 10. LIMIT OF LIABILITY. The obligations of each Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Xxxxxxx 000
0
xx xxx Xxxxxx Xxxxxx Bankruptcy Code or any comparable provisions of any
applicable state law (including, without limitation, the provisions of the
Uniform Fraudulent Transfer Act and the Uniform Fraudulent Conveyance Act, to
the extent incorporated in applicable state law).
SECTION 11. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Guaranty, and no consent to any departure by either Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Banks and each Guarantor, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED that neither Guarantor shall be released
from its obligations under Section 2 hereof without the consent of all of the
Banks.
SECTION 12. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including
telecopier, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered to it, if to a
Guarantor, to it in care of The AES Corporation at its address at 0000 Xxxxx
00xx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Vice President, Chief
Financial Officer and Secretary, and if to the Agent, at its address
specified in the Credit Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall be effective in the
manner and at the time set forth in Section 10.01 of the Credit Agreement.
SECTION 13. NO WAIVER; REMEDIES. No failure on the part of the Agent
or any Bank to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise
of any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
SECTION 14. CONTINUING GUARANTY; ASSIGNMENT UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty, (y) the
termination of all Commitments under the Credit Agreement and (z) the
surrender to the Fronting Bank or the expiration of all Letters of Credit
issued under the Credit Agreement, (ii) be binding upon the Guarantors and
their respective successors and assigns, and (iii) inure to the benefit of,
and be enforceable by, the Banks, the Fronting Banks, the Agent and their
respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), the Agent, any Fronting Bank and
any Bank may assign or otherwise transfer all or any portion of its rights
and obligations under the Credit Agreement and the Notes to any other person
or entity (to the extent therein provided), and such other person or entity
shall
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thereupon become vested with all the benefits in respect thereof granted to
such assigning party herein or otherwise, subject, however, to the provisions
of Article VII (concerning the Agent) and Section 10.06 of the Credit
Agreement.
SECTION 15. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
AES SOUTHLAND FUNDING LLC
By: _______________________________
Name:
Title:
AES WARRIOR RUN FUNDING LLC
By:________________________________
Name:
Title:
AES OKLAHOMA MANAGEMENT CO., INC.
By:________________________________
Name:
Title:
AES HAWAII MANAGEMENT COMPANY, INC.
By:________________________________
Name:
Title:
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