Exhibit







PERFORMANCE CASH UNIT AWARD AGREEMENT 
PURSUANT TO 
THE AES CORPORATION 2003 LONG TERM COMPENSATION PLAN
The AES Corporation, a Delaware Corporation (the “Company”), grants to the Employee named below, pursuant to The AES Corporation 2003 Long Term Compensation Plan, as amended (the “Plan”), and this Performance Cash Unit Award Agreement (this “Agreement”), this Award of Performance Cash Units (“PCUs”), the value of which is related to and contingent upon the achievement of predetermined performance target (as set forth herein).  Capitalized terms not otherwise defined herein shall each have the meaning assigned to them in the Plan. 
		
	1.
	This Award of PCUs is subject to all terms and conditions of this Agreement and the Plan, the terms of which are incorporated herein by reference:  


	
		
	Name of Employee:
	 

	 
	 

	Fidelity System ID:
	 

	 
	 

	Grant Date:
	 

	 
	 

	Target Number of PCUs:
	 

	 
	 

	Target Value:
	 






Notwithstanding any provision of the Plan to the contrary, this Award of PCUs is subject to the terms and conditions of this Agreement and the Plan regardless of whether the Employee is a Covered Person, as defined in the Plan. 
		
	2.
	The Employee is hereby granted an Award of the Target number of PCUs set forth above.  The PCUs will be reflected in a book account by the Company during the Performance Period (as defined below).  Contingent upon achieving required performance levels, the value of vested PCUs, will be paid in cash in the calendar year following the completion of the Performance Period (the “Payment Date”), as soon as administratively practicable following the end of the Performance Period.  









		
	3.
	The “Performance Period” is the three calendar year period beginning on January 1st in the year of grant and ending on and through December 31st in the second year following the year of the grant date.  


		
	4.
	Except as otherwise provided in this Agreement, this Award of PCUs will vest, in accordance with and subject to the terms of this Agreement, in three equal installments on  December 31st in each year during the Performance Period (each a “Vesting Date”); provided, however, that if:  


		
	(A)
	the Employee Separates from Service prior to the end of the Performance Period by reason of the Employee’s death or a Separation from Service on account of Disability, all PCUs referenced in the chart above shall vest on such termination date and a cash amount equal to $1 for each PCU shall be paid to the Employee on the date of Separation from Service (or as soon as practicable thereafter); provided, however, any payment due to the Employee by reason of a Separation from Service on account of Disability shall be delayed to the extent required by Section 14(k)(i) of the Plan;  


		
	(B)
	(i) the Employee Separates from Service prior to the Payment Date by reason of a Separation from Service by the Company for Cause (as defined in the Plan and as may otherwise be determined by the Committee in its sole discretion for all purposes of this Agreement) or (ii) the Employee Separates from Service prior to the final Vesting Date by reason of a voluntary Separation from Service by the Employee (including any retirement other than a Qualified Retirement (as defined below)), this Award of PCUs (including any vested portion) will be forfeited in full and cancelled by the Company, and shall cease to be outstanding, upon such termination date; and  


		
	(C)
	the Employee Separates from Service for any other reason, including on account of a Qualified Retirement, by reason of death or Disability subsequent to the end of the Performance Period, or by reason of a Separation from Service by the Company (other than for Cause, voluntarily by the Employee not as part of a Qualified Retirement or due to death or Disability as provided in paragraphs 4(A) and 4(B)), the Employee will be eligible to receive the value of his or her vested PCUs, as of the date of Separation from Service, on the Payment Date in accordance with and subject to the terms set forth in paragraph 5 below.  For purposes of this Agreement, “Qualified Retirement” means the Employee’s retirement at a time when such Employee is at least 60 years of age and has at least seven years of service as an employee of the Company and/or one or more of its Affiliates.



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Any PCUs that have not vested on or before the date that an Employee Separates from Service for any reason (other than by reason of death or Disability as provided in paragraph 4(A)), (i) will not subsequently vest; and (ii) will be immediately cancelled and forfeited without payment or further obligation by the Company or any Affiliate.  In addition, the Employee’s right to receive the applicable PCU value in respect of vested PCUs that have not been forfeited will be paid on the Payment Date, if, and only if, all relevant performance conditions are met, in accordance with the terms and conditions of this Agreement and the Plan. 
		
	5.
	Each PCU represents a right to receive the applicable PCU value in the chart below, in cash on the Payment Date, if and only if, such PCU (i) has not been forfeited prior to its Vesting Date and (ii) has vested in accordance with the terms of this Agreement.  


The value of each PCU will depend upon the performance of the Total Shareholder Return of AES common stock (“AES TSR”) as compared to the Total Shareholder Return of companies in the peer groups listed below over the Performance Period: 


	
		
	PEER GROUP INDEX
	PROPORTIONAL WEIGHTING

	S&P Utilities Index
	50%

	S&P 500 Index
	25%

	MSCI Emerging Markets Index
	25%






	
						
	 
	 
	 

	 
	ACTUAL AES-TSR COMPARED TO
EACH PEER GROUP INDEX FOR THE
PERFORMANCE PERIOD
	INDEX SCORE
	 

	 
	Below 30th Percentile
	0%
	 

	 
	Equal to the 30th Percentile
	50%
	 

	 
	Equal to the 50th Percentile
	100%
	 

	 
	Equal to or the 70th Percentile
	150%
	 

	 
	Equal to or greater than 90th Percentile
	200%
	 






For AES TSR levels achieved greater than the 30th percentile and less than the 50th percentile, greater than 50th percentile and less than 70th percentile, and greater than the 70th percentile and less than the 90th percentile, the Index Score will be determined based on straight-line interpolation. The maximum Index Score is 200%.

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The AES TSR will be evaluated against each of the separate peer group indices separately to determine the three index scores.  The overall performance value for a PCU will be equal to:
The number of vested PCUs x $1.00 x [(S&P 500 Utilities Index Score x 50%) + (S&P 500 Index Score x 25%) + (MSCI Emerging Markets Index Score x 25%)] = Total Earned PCU Value
Notwithstanding the performance level achieved, the Committee may reduce or terminate the PCUs altogether, but in no event may the Committee increase the value of a PCU underlying this Award beyond the performance levels achieved. 
		
	6.
	Notwithstanding the foregoing, in the event of a (i) Change in Control (as defined below) and (ii) a Qualifying Event (as defined below) prior to the end of the Performance Period, if the PCUs described herein have not already been previously forfeited or cancelled, such PCUs shall become fully vested (for the Target number of PCUs set forth in paragraph 1) and payable in a cash amount equal to $1.00 for each PCU, and the Payment Date will occur contemporaneous with the Qualifying Event; provided, however, that in connection with a Change in Control, payment of any obligation payable pursuant to the preceding sentence may be made in cash of equivalent value and/or securities or other property in the Committee’s discretion.


		
	(A)
	Change in Control means the occurrence of one or more of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company to any Person or group (as that term is used in Section 13(d) (3) of the Exchange Act) of Persons, (ii) a Person or group (as defined in the Plan) of Persons (other than Management of the Company on the date of the most recent adoption of the Plan by the Company's stockholders or their Affiliates) shall have become the beneficial owner (as defined below) of more than 35% of the outstanding voting stock of the Company, (iii) during any one-year period, individuals who at the beginning of such period constitute the Board (together with any new Director whose election or nomination was approved by a majority of the Directors then in office who were either Directors at the beginning of such period or who were previously so approved, but excluding under all circumstances any such new Director whose initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, corporation, partnership or other entity or group, including through the use of proxy access procedures as may be provided in the Company’s bylaws) cease to constitute a majority of the Board, or 



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(iv) the consummation of a merger, consolidation, business combination or similar transaction involving the Company unless securities representing 65% or more of the then outstanding voting stock of the corporation resulting from such transaction are held subsequent to such transaction by the Person or Persons who were the beneficial owners of the outstanding voting stock of the Company immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction. Notwithstanding the foregoing or any provision to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change in Control is a distribution event for purposes of an Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5).  For purposes of this Agreement, “beneficial owner(s)” shall have the meaning set forth in Rule 13d-3 of the Exchange Act.
		
	(B)
	Qualifying Event means the occurrence of one or more of the following events: (i) immediately upon the consummation of a Change in Control event, failure of the successor company in a Change in Control event to provide Substitute Awards that are substantially similar in both nature and terms (including having an equivalent realizable pre-tax value to outstanding Awards assuming vesting and delivery at the consummation of the Change in Control); (ii) within two years of the consummation of a Change in Control event, an  involuntary termination without Cause of the Employee; or (iii) within two years of the consummation of a Change in Control event, a Good Reason Termination (as defined in Section 6(C) below) by the Employee.


		
	(C)
	Good Reason Termination means, without an Employee’s written consent, the Separation from Service (for reasons other than death, Disability or Cause) by an Employee due to any of the following events occurring within two years of the consummation of a Change in Control: (i) the relocation of an Employee’s principal place of employment to a location that is more than 50 miles from the principal place of employment in effect immediately prior to such Change in Control; (ii) a material diminution in the duties or responsibilities of an Employee from those in place immediately prior to such Change in Control; and (iii) a material reduction in the base salary or annual incentive opportunity of an Employee from what was in place immediately prior to such Change in Control. 



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In order for an Employee to have a Good Reason Termination, (i) an Employee  must notify the successor entity in writing, within ninety (90) days of the event constituting Good Reason of the Employee’s intent to terminate employment for Good Reason, that specifically identifies in reasonable detail the manner of the Good Reason event, (ii) the event must remain uncorrected for thirty (30) days following the date that an Employee notifies the successor entity in writing of the Employee’s intent to terminate employment for Good Reason (the “Notice Period”), and (iii) the termination date must occur within sixty (60) days after expiration of the Notice Period.
		
	7.
	Notices hereunder and under the Plan, if to the Company, shall be delivered to the Plan Administrator (as so designated by the Company) or mailed to the Company’s principal office, 4300 Wilson Boulevard, Arlington, VA 22203 (or as subsequently designated by the Company), attention of the Plan Administrator, or, if to the Employee, shall be delivered to the Employee, which may include electronic delivery, or mailed to his or her address as the same appears on the records of the Company.  


		
	8.
	All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive on all persons. Unless otherwise specifically provided herein, in the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan will govern.  


		
	9.
	By accepting this Award of PCUs, the Employee acknowledges receipt of a copy of the Plan and the prospectus relating to this Award of PCUs, and agrees to be bound by the terms and conditions set forth in the Plan and this Agreement, as in effect and/or amended from time to time.   
 
The Employee further acknowledges that the Plan and related documents, which may include the Plan prospectus, may be delivered electronically.  Such means of delivery may include the delivery of a link to a Company intranet site or the internet site of a third party involved in administering the Plan, the delivery of the documents via e-mail or CD-ROM or such other delivery determined at the Plan Administrator’s discretion.  The Employee acknowledges that the Employee may receive from the Company a paper copy of any documents delivered electronically at no cost if the Employee contacts the Human Resources department of the Company by telephone at (703) 682-6553 or by mail to 4300 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203.  The Employee further acknowledges that the Employee will be provided with a paper copy of any documents delivered electronically if electronic delivery fails.



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	10.
	This Award is intended to satisfy the requirements of Section 409A of the Code (or an exception thereto) and shall be administered, interpreted and construed accordingly.  A payment shall be treated as made on the specified date of payment if such payment is made at such date or a later date in the same calendar year or, if later, by the 15th day of the third calendar month following the specified date of payment, as provided and in accordance with Treas. Reg. § 1.409A-3(d).  The Company may, in its sole discretion and without the Employee’s consent, modify or amend the terms and conditions of this Award, impose conditions on the timings and effectiveness of the payment of the PCUs, or take any other action it deems necessary or advisable, to cause this Award to comply with Section 409A of the Code (or an exception thereto).  Notwithstanding, the Employee recognizes and acknowledges that Section 409A of the Code may impose upon the Employee certain taxes or interest charges for which the Employee is and shall remain solely responsible.  


		
	11.
	The Employee acknowledges that any income for federal, state or local income tax purposes that the Employee is required to recognize on account of the vesting of the PCUs and/or payment in settlement of the PCUs to the Employee shall be subject to withholding of tax by the Company.  In accordance with administrative procedures established by the Company, the Company shall mandatorily satisfy the Employee’s minimum statutory withholding tax obligations, if any, by withholding from the payment in settlement of the PCUs to be made to the Employee a sufficient amount equal to the applicable minimum statutory withholding tax obligation.


		
	12.
	Notwithstanding any other provisions in this Agreement, any PCUs subject to recovery under any law, government regulation, stock exchange listing requirement, or Company policy, shall be subject to such deductions, recoupment and clawback as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or Company policy, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this Award and recovery of amounts relating thereto.  By accepting this Award, Employee agrees and acknowledges that he or she is obligated to cooperate with, and provide any and all assistance necessary to, the Company to recover, recoup or recapture this Award or amounts paid under the Plan pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or amounts paid under the Plan from Employee’s accounts, or pending or future compensation or other grants. 


		
	13.
	This Agreement will be governed by the laws of the State of Delaware without giving effect to its choice of law provisions.  



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The AES CORPORATION 


By: 
Tish Mendoza
Senior Vice President and Chief Human Resources Officer

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