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Exhibit 10.19  

 
 

EMPLOYMENT AGREEMENT    
    

        AGREEMENT made as of this February 27, 2004 (the "Effective Date"), between The AES Corporation, a Delaware corporation (the "Company"), and Robert F.
Hemphill, Jr. (the "Executive"). 

        WHEREAS,
the Executive is currently employed by the Company in the position of Executive Vice President and the Company wishes to ensure the continued employment of the Executive with
the Company; 

        WHEREAS,
the parties desire to enter into this agreement setting forth the terms and conditions of the continuing employment relationship of the Executive with the Company (this
"Agreement"); 

        NOW,
THEREFORE, in consideration of the premises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows: 

        1.    Employment.    The Company hereby agrees to continue to employ the Executive, and
the Executive hereby agrees to continue to serve the Company, on the terms and conditions set forth herein. 

        2.    Term.    The term of this Agreement (the "Term") shall commence as of the Effective
Date and shall end on December 31, 2005, provided, however, that commencing on January 1, 2005, and on each subsequent January 1 (each such January 1, a
"Renewal Date"), the Term shall automatically be extended for one (1) additional year unless, not later than the date which is six (6) months prior to such
Renewal Date, the Company or the Executive shall have given notice not to extend the Term for such one (1) additional year; and further, provided, that if a Change in Control (as hereinafter
defined) occurs during the Term, the Term shall not end prior to the second anniversary of such Change in Control. 

        3.    Position and Duties.    The Executive shall serve as Executive Vice President of
the Company and shall have such responsibilities, duties and authorities consistent with such position as may from time to time be assigned to the Executive by the Chief Executive Officer of the
Company (the "CEO"). The Executive shall report to the CEO. The Executive shall devote substantially all of his working time and efforts to the business and affairs of the Company;  provided, however,
that the Executive will be permitted to serve as a director to other for-profit and
not-for-profit organizations and corporations so long as (a) such service does not materially interfere with the performance of his obligations hereunder,
(b) such organizations and corporations are not competitive in any business area in which the Company is engaged during the Employment Period and (c) such service, if first assumed after
the Effective Date, is approved by the Board of Directors of the Company (the "Board") prior to the commencement of such service. The Executive shall furnish to the Company a list of each such entity
on the Effective Date and shall update such list as appropriate. 

        4.    Place of Performance.    In connection with the Executive's employment by the
Company, the Executive shall initially perform his duties and conduct his business, and his initial principal place of employment shall be, at the Executive's principal place of employment immediately
prior to the Effective Date, except for required travel on the Company's business. From and after the Effective Date, and prior to the occurrence of a Change in Control (as defined in
Section 8(h) hereof), the Company shall have the ability, consistent with its overall business needs, to change the Executive's principal place of employment. 

        5.    Compensation and Related Matters.    

        (a)    Salary.    During the period of the Executive's employment hereunder, the Company
shall pay to the Executive an annual base salary at a rate of $465,000, which salary shall be reviewed annually by the Board (or a committee thereof) for possible increase but not decrease;  provided, however, that once the Executive's annual base salary is increased, it may not thereafter be
 

 

decreased
during the Term, as such Term may be extended pursuant to the terms hereof (such salary, as it may be increased, the "Base Salary"). The Base Salary shall be
paid in substantially equal installments, no less frequently than monthly, in accordance with the Company's standard payroll practices. 

        (b)    Annual Bonuses.    With respect to each fiscal year of the Company during the
Term, the Executive shall be eligible to receive an annual bonus with a target of 105% of his Base Salary, payable based on
the achievement of corporate performance goals and/or other conditions that are established by the Compensation Committee of the Board and which are generally applicable with respect to annual bonuses
for other senior executive officers of the Company. For purposes of the preceding sentence, the annual bonus in respect of fiscal year 2002 shall apply for the six-month period commencing
July 1, 2002 and shall be pro rated accordingly. 

        (c)    Long-Term Compensation.    The Executive shall be eligible to
participate in all of the Company's long-term cash and equity award and equity-based grant programs applicable to, and on a basis no less favorable than, other senior executive officers of
the Company, in accordance with the terms and conditions of such plans. 

        (d)    Other Benefits.    The Executive shall be eligible to participate in all employee
benefit plans and arrangements of the Company applicable to, and on a basis no less favorable than, other senior executive officers (including, without limitation, medical, dental, vision,
hospitalization, life insurance, short-term disability, long-term disability, accidental death and dismemberment protection, travel accident insurance plans, fringe benefits
and perquisites). 

        (e)    Vacations.    The Executive shall be entitled to four (4) weeks of vacation
in each calendar year. 

        (f)    Expenses.    During the term of the Executive's employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable and customary expenses incurred by the Executive in performing services hereunder, subject to submission of appropriate
documentation in accordance with Company policy. 

        (g)    Indemnification.    The Company agrees that if the Executive is made a party, or
is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that
he is or was a director or employee of the Company or is or was serving at the request of the Company as a director, employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive's alleged action in an official capacity while serving as a
director, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company's certificate of incorporation or
bylaws or resolutions of the Company's Board of Directors or, if greater, by the laws of the State of Delaware against all cost, expense, liability and loss (including, without limitation, attorney's
fees, judgments, fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall
continue as to the Executive even if he has ceased to be a director, employee or agent of the Company or other entity and shall inure to the benefit of the Executive's heirs, executors and
administrators. 

        6.    Directorships/Other Offices.    The Executive agrees to serve without additional
compensation, if elected or appointed thereto, as a director of any of the Company's subsidiaries and in one or more executive offices of any of the Company's subsidiaries, provided that the Executive
is indemnified for serving in any and all such capacities on a basis no less favorable than is from time to time provided by the Company or any of its subsidiaries to its other directors and senior
executive officers. 

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        7.    Termination.    Subject to the provisions of this Agreement, the Executive's
employment hereunder may be terminated under the following circumstances: 

        (a)    Death.    The Executive's employment shall terminate upon his death. 

        (b)    Disability.    If, the Executive is unable, due to physical or mental incapacity,
to substantially perform his full time duties and responsibilities under this Agreement for a period of six (6) consecutive months (as determined by a medical doctor selected by Company and
Executive) the Company may terminate the Executive's employment for "Disability". If the parties cannot agree on a medical doctor for purposes of such determination of Disability, each party shall
select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose. 

        (c)    Termination by the Company/Cause.    

        (i)    The
Company may terminate the Executive's employment (A) for Cause or (B) without Cause. 

        (ii)    For
purposes of this Agreement, "Cause" shall mean (A) the willful and continued failure by the Executive to substantially perform
his duties with the Company (other than any such failure resulting from the Executive's incapability due to physical or mental illness or any such actual or anticipated failure after the issuance of a
Notice of Termination by the Executive for Good Reason), after demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes that
the Executive has not substantially performed his duties, or (B) the willful engaging by the Executive in misconduct which is demonstrably and materially injurious to the Company, monetarily or
otherwise (including, but not limited to, conduct that constitutes a violation of Section 11 hereof). No act, or failure to act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause without (1) reasonable notice from the Board to Executive setting forth the reasons for Company's intention to terminate for Cause and
(2) delivery to the Executive of a Notice of Termination, which shall include a resolution duly adopted by the affirmative vote of two-thirds or more of the Board then in office at
a meeting of the
Board called and held for such purpose, and at which the Executive, together with his counsel, is given an opportunity to be heard, finding that in the good faith opinion of the Board, the Executive
was guilty of the conduct set forth in this section and specifying the particulars thereof in detail. 

        (d)    Termination by the Executive.    

        (i)    The
Executive may terminate his employment for (A) Good Reason or (B) without Good Reason. 

        (ii)    For
purposes of this Agreement, "Good Reason" shall mean, without the Executive's written consent, any material breach of this Agreement by
the Company which is not cured within ten (10) days of a written notice by the Executive. A material breach of this Agreement shall include, but not be limited to, (A) the failure by the
Company to have any successor to all or substantially all of the business and/or assets of the Company expressly assume and agree to perform this Agreement in accordance with Section 12 hereof,
(B) the Company requiring the Executive to report to any person other than the CEO, (C) following a Change in Control, the relocation of the Executive's principal place of employment to
a site outside of the metropolitan area of the Executive's previous principal place of employment, (D) following a Change in Control, any significant adverse change in the Executive's overall
responsibilities, duties and authorities from those in place immediately prior to such Change 

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in
Control, provided that the fact that the Executive continues to report to the CEO following a Change in Control will not preclude the Executive from claiming that a significant adverse change in
the Executive's overall responsibilities, duties and authorities has occurred, and (E) following a Change in Control, the failure by the Company to continue the Executive's participation in a
long-term cash or equity award or equity-based grant program (or in a comparable substitute program) on a basis not materially less favorable than that provided to the Executive
immediately prior to such Change in Control. For purposes of any determination regarding the existence of Good Reason following a Change in Control, any good faith claim by the Executive that Good
Reason exists shall be presumed to be correct unless the Company establishes by clear and convincing evidence that Good Reason does not exist. 

        (e)    Notice of Termination.    Any termination of the Executive's employment by the
Company or by the Executive (other than a termination by reason of death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 

        (f)    Date of Termination.    "Date of Termination" shall
mean (i) if the Executive's employment is terminated by his death, the date of his death, (ii) if the Executive's employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive's duties during such thirty (30) day period), and
(ii) if the Executive's employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less
than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty
(60) days, respectively, from the date such Notice of Termination is given). 

        8.    Compensation Upon Certain Events.    

        (a)    Any Termination of Employment.    Subject to Section 19 hereof, if the
Executive's employment with the Company is terminated for any reason, in addition to any amounts and benefits provided pursuant to the remainder of this Section 8, the Company shall pay or
provide to the Executive (i) any fully earned but unpaid bonus for completed periods, subject to any deferral election that the Executive has made with respect to such amounts, (ii) any
expense reimbursements owed to the Executive by the Company and (iii) all compensation and benefits that are due to the Executive under the terms of the Company's compensation and benefit
plans, programs and arrangements in accordance with the terms of such plans, programs and arrangements. 

        (b)    Disability.    Subject to Section 19 hereof, if the Executive's employment
with the Company is terminated by reason of the Executive's Disability, then (i) the Executive shall receive disability benefits in accordance with the terms of the long-term
disability program then in effect for senior executives of the Company, (ii) the Company shall pay to the Executive his Base Salary through the end of the month immediately preceding the month
in which such disability benefits commence and (iii) the Company shall pay to the Executive at the time bonuses are customarily paid to senior executive officers a bonus for the year in which
such termination of employment occurs equal to the Executive's annual bonus for such year, as described in Section 5(b) hereof, multiplied by a fraction, the numerator of which is the number of
days during such year that the Executive was employed by the Company and the denominator of which is 365 (the "Pro Rata Bonus"). 

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        (c)    Death.    If the Executive's employment is terminated by reason of the Executive's
death, then (i) the Company shall pay to his legal representative the Executive's Base Salary through the Date of Termination (the "Earned Salary") and (ii) the Company shall pay to the
Executive's legal representative the Pro Rata Bonus. 

        (d)    By the Company for Cause.    Subject to Section 19 hereof, if the
Executive's employment with the Company shall be terminated by the Company for Cause, then the Company shall pay to the Executive the Earned Salary. 

        (e)    By the Company other than for Disability or Cause; By the Executive for Good
Reason.    Subject to Section 19 hereof, if the Company shall terminate the Executive's employment other than for Disability or Cause or the Executive shall terminate
his employment for Good Reason, then: 

        (i)    the
Company shall pay to the Executive the Earned Salary; 

        (ii)    the
Company shall pay to the Executive the Pro Rata Bonus; 

        (iii)    except
as provided in paragraph (g) below, the Company shall pay to the Executive, within ten (10) days following the Date of Termination, a cash lump
sum equal to the product of (A) one (1) and (B) the sum of (1) the annual Base Salary rate in effect for the Executive immediately preceding the Date of Termination,
disregarding any reduction in annual Base Salary which constitutes Good Reason hereunder and (2) the Executive's target bonus for the year in which the Date of Termination occurs; 

        (iv)    except
as provided in paragraph (g) below, for the twelve (12) month period immediately following the Date of Termination, the Executive shall continue to
participate in all medical, dental, hospitalization, life insurance and other welfare, fringe benefit and perquisite plans and programs, in each case in which he was participating on the Date of
Termination (or, if any such plan or program does not permit his participation, the Company shall provide the Executive with the economic equivalent on an after-tax basis). Benefits or
payments otherwise receivable by the Executive pursuant to this Section 8(e)(iv) shall be reduced to the extent benefits of the same type are received by or made available to the
Executive by a subsequent employer during the twelve (12) month period following the Date of Termination (and any such benefits received by or made available to the Executive shall be reported
to the Company by the Executive); and 

        (v)    except
as provided in paragraph (g) below, each option to acquire common stock of the Company granted under a Company incentive plan or other arrangement that is
held by the Executive on the Date of Termination shall remain outstanding, and shall continue to vest according to its terms as if the Executive remained employed by the Company, until the earlier of
(i) the end of the original term of such option or (ii) the second anniversary of the Date of Termination. 

        (f)    Upon Termination of Employment by the Executive Other Than for Good Reason or Other Than by Reason of
Death.    Subject to Section 19 hereof, if the Executive terminates his employment with the Company other than for Good Reason or other than by reason of his death,
then the Company shall pay to the Executive the Earned Salary. 

        (g)    Change in Control.    Subject to Section 19 hereof, if the Executive's
employment is terminated by the Company other than for Cause or Disability or if the Executive terminates his employment for Good Reason, in either case within two (2) years following a Change
in Control, then (i) the Executive shall receive the payments and benefits set forth in Section 8(e) above, except that the one (1) times multiplier set forth in
Section 8(e)(iii) shall be increased to three (3), (ii) the twelve (12) month benefit continuation period set forth in Section 8(e)(iv) shall be 

5

 

extended
to thirty-six (36) months and (iii) each option held by the Executive described in Section 8(e)(v) shall vest and become immediately exercisable in
full on the Date of Termination and shall remain exercisable until the earlier of (A) the end of the original term of such option or (B) the fourth anniversary of the Date of
Termination. 

        (h)    Definitions.    For purposes of this Agreement, the following terms shall have the
following meanings: 

        (i)    "Change
in Control" shall mean the occurrence of any one of the following events: 

        (A)    any
Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person
any securities acquired directly from the Company or its Affiliates) representing 30% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in clause (1) of paragraph (C) below; or 

        (B)    the
following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the
Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; or 

        (C)    there
is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (1) a
merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the Company, the entity
surviving such merger or consolidation or any parent thereof, or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such
Person any securities acquired directly from the Company or its Affiliates) representing 30% or more of the combined voting power of the Company's then outstanding securities; or 

        (D)    the
stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets immediately following which the
individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof. 

Notwithstanding
the foregoing, a "Change in Control" shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following
which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. 

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        (ii)    "Affiliate"
shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. 

        (iii)    "Beneficial
Owner" shall have the meaning used in Rule 13d-3 promulgated under the Exchange Act. 

        (iv)    "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended. 

        (v)    "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the
Company or any of its Affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. 

        9.    Excise Tax Reimbursement.    

        (a)    If
any of the payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment,
whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the
Company or such Person (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the "Total Payments") will be subject
to the excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the
Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any
Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the Total Payments. 

        (b)    For
purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments
shall be treated as "parachute payments" (within the meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"),
such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments"
within the meaning of Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the base amount (within the meaning of
Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or if there is no
Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section), net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. 

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        (c)    In
the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the
Executive shall repay to the Company, within five (5) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment
taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a
dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest
on the amount of such repayment at 120% of the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account
hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) within five
(5) business days following the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. 

        10.    No Mitigation.    The Company agrees that, if the Executive's employment with the
Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company hereunder. Further,
the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise, except as specifically provided in this Agreement. 

        11.    Non-competition/ Inventions/ Confidential Information.    The
Executive agrees that restrictions on his activities during and after his employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and
its Subsidiaries, and that the agreed restrictions set forth below will not deprive the Executive of the ability to earn a livelihood: 

        (a)    Subject
to Section 11(h) hereof, while the Executive is in the employment of the Company and for a period of twelve (12) months after a termination of
Executive's employment with the Company (the "Non-Competition Period"), the Executive shall not, directly or indirectly, whether as owner, partner, investor,
consultant, agent, employee, co-venturer or otherwise, engage in Competitive Activity. For purposes of this Agreement, "Competitive Activity" means any
activity that is (i) directly or indirectly competitive with the business of the Company or any of its Subsidiaries, as conducted or which has been proposed by management to be conducted within
six (6) months prior to termination of the Executive's employment and (ii) conducted in the geographic areas in which the Company or any of its Subsidiaries operate on the Executive's
Date of Termination. Competitive Activity also includes without limitation accepting employment or a consulting position with any person who is, or at any time within twelve (12) months prior
to termination of the Executive's employment has been, a licensee of the Company or any of its Subsidiaries. For the purposes of this Section 11, the business of the Company and its
Subsidiaries, as currently conducted, consists of the generation, sale, supply or distribution of electricity. 

        (b)    The
Executive agrees that during the Non-Competition Period, the Executive will not, either directly or through any agent or employee, Solicit any employee
of the Company or any of its Subsidiaries to terminate his or her relationship with the Company or any of its Subsidiaries or to apply for or accept employment with any enterprise engaged in
Competitive Activity with the Company, or Solicit any customer, supplier, licensee or vendor of the Company or any of its Subsidiaries to terminate or materially modify its relationship with them, or,
in the case of a 

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customer,
to conduct with any person any business or activity which such customer conducts or could conduct with the Company or any of its Subsidiaries. 

        (c)    The
Executive and the Company further agree that following any termination of the Executive's employment, (i) the Executive shall not make statements or
representations, otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly, or indirectly, disparage or be damaging to the Company or any
if its Subsidiaries or affiliates or their respective former or current officers, directors, employees, advisors, businesses or reputations, (ii) the Company shall instruct its Board members
and senior management to not make statements or representations, otherwise communicate, directly, or indirectly, in writing, orally or otherwise, or take any action which may, directly, or indirectly,
disparage or be damaging to the Executive or his reputation. Nothing in this paragraph is intended to undermine any obligations the Executive or the Company may have to comply with applicable law, or
prohibit the Executive or the Company from providing truthful testimony or information pursuant to subpoena, court order, discovery demand or similar legal process, or truthfully responding to lawful
inquiries by any governmental or regulatory entity. 

        (d)    Nothing
in this Agreement shall prevent the Executive, during the Non-Competition Period and following termination of employment hereunder, from acquiring or
holding, solely as an investment, publicly traded securities of any competitor corporation so long as such securities do not, in the aggregate, constitute more than 3% of the outstanding voting
securities of such corporation. 

        (e)    Executive
agrees that all inventions, improvements, discoveries, patents, trade concepts and copyrightable materials made, conceived or developed by Executive during the
Term, in respect of the business of the Company, either singly or in collaboration with others, shall be the sole and exclusive property of the Company. 

        (f)    The
Executive acknowledges that the Company and its Subsidiaries continually develop Confidential Information, that the Executive may develop Confidential Information
for the Company or its Subsidiaries and that the Executive may learn of Confidential Information during the course of his employment under this Agreement. The Executive will comply with the policies
and procedures of the Company and its Subsidiaries for protecting Confidential Information and shall not disclose to any person (except as required by applicable law or legal process or for the proper
performance of his duties and responsibilities to the Company and its Subsidiaries, or in connection with any litigation between the Company and the Executive (provided that the Company shall be
afforded a reasonable
opportunity in each case to obtain a protective order)), or use for his own benefit or gain, any Confidential Information obtained by the Executive incident to his employment or other association with
the Company or any of its Subsidiaries. The Executive understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination. All
documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Subsidiaries and any copies, in whole or in part, thereof
(the "Documents"), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company and its Subsidiaries. The Executive shall safeguard
all Documents and shall surrender to the Company at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in the Executive's
possession or control. 

        (g)    Without
limiting the foregoing, it is understood that the Company shall not be obligated to make any of the payments or to provide for any of the benefits specified in
Section 8 hereof in connection with the termination of Executive's employment (other than by reason of death), and shall be entitled to recoup the pro rata portion of any such payments and of
the value of any such benefits previously provided to the Executive in the event of a material breach by the Executive of 

9

 

the
provisions of this Section 11 (such pro ration to be determined as a fraction, the numerator of which is the number of days from such breach to the first anniversary of the date on which
the Executive terminates employment and the denominator of which is 365), which breach continues without having been cured within fifteen (15) days after written notice to the Executive
specifying the breach in reasonable detail. 

        (h)    Following
a Change in Control, the covenants contained in Section 11(a) hereof shall cease to apply. 

        (i)    Definitions.    For purposes of this Section 11, the following definitions
shall apply: 

        (i)    "Confidential
Information" means any and all information of the Company and its Subsidiaries that is not generally known by others with whom
they compete or do business, or with whom they plan to compete or do business and any and all information not readily available to the public, which, if disclosed by the Company or its Subsidiaries
could reasonably be of benefit to such person or business in competing with or doing business with the Company. Confidential Information includes without limitation such information relating to
(A) the development, research, testing, manufacturing, store operational processes, marketing and financial activities, including costs, profits and sales, of the Company and its Subsidiaries,
(B) the costs, sources of supply, financial performance and strategic plans of the Company and its Subsidiaries, (C) the identity and special needs of the customers and suppliers of the
Company and its Subsidiaries and (D) the people and organizations with whom the Company and its Subsidiaries have business relationships and those relationships. Confidential Information also
includes comparable information that the Company or any of its Subsidiaries have received belonging to others or which was received by the Company or any of its Subsidiaries with an agreement by the
Company that it would not be disclosed. Confidential Information does not include information which (1) is or becomes available to the public generally (other than as a result of a disclosure
by the
Executive), (2) was within the Executive's possession prior to the date hereof or prior to its being furnished to the Executive by or on behalf of the Company, provided that the source of such
information was not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the Company or any other party with respect to such information,
(3) becomes available to the Executive on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with
or other contractual, legal or fiduciary obligation of confidentiality to the Company or any other party with respect to such information, or (4) was independently developed the Executive
without reference to the Confidential Information. 

        (ii)    "Subsidiary"
means any corporation or other business organization of which the securities having a majority of the normal voting power in
electing the board of directors or similar governing body of such entity are, at the time of determination, owned by the Company directly or indirectly through one or more Subsidiaries. 

        (iii)    "Solicit"
means any direct or indirect communication of any kind whatsoever, regardless of by whom initiated, inviting, advising,
encouraging or requesting any person or entity, in any manner, with respect to any action. 

        (j)    The
provisions of this Section 11 shall survive the expiration or termination of the Term. 

        12.    Successors; Binding Agreement.    

        (a)    The
Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken
place. 

10

 

As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined and, except in determining under Section 8(h) hereof whether or not any Change
in Control of the Company has occurred, any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 12 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of law. 

        (b)    This
Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate. 

        13.    Notice.    For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as follows: 

If
to the Executive: 

Robert
F. Hemphill, Jr.

9306 Kendale Road

Potomac, MD 20854 

If
to the Company: 

The
AES Corporation

1011 North 19th Street

Arlington, VA 22209

Attn: Board of Directors 

or
to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 

        14.    Miscellaneous.    No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such officer of the Company as may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware without regard to its conflicts of law principles. 

        15.    Validity.    The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 

        16.    Counterparts.    This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 

        17.    Injunctive Relief.    The Executive acknowledges that he has carefully read and
considered all the terms and conditions of this Agreement, including the restraints imposed upon him pursuant to 

11

 

Section 11
hereof. The Executive agrees that said restraints are necessary for the reasonable and proper protection of the Company and that each and every one of the restraints is reasonable in
respect to subject matter, length of time and geographic area. The Executive further acknowledges that, were he to breach any of the covenants contained in Section 11 hereof, the damage to the
Company would be irreparable. The Executive therefore agrees that the Company, in addition to any other remedies available to it, and notwithstanding any provision of this Agreement to the contrary,
shall be entitled to seek preliminary and permanent injunctive relief against any breach or threatened breach by the Executive of any of said covenants, without having to post bond. The parties
further agree that, in the event that any provisions of Section 11 hereof shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too
great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law. 

        18.    Resolution of Disputes.    Any disputes arising under or in connection with this
Agreement shall be resolved by binding arbitration, to be held in Arlington, Virginia in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. All costs and expenses of any arbitration or court proceeding (including fees and disbursements of counsel) shall
be borne by the respective party incurring such costs and expenses; provided, that the Company shall reimburse the Executive for such reasonable costs and expenses in the
event he substantially prevails in such arbitration or court proceeding; and further provided, that if the events to which such dispute relates occurred on or after a Change in Control, the Executive
shall be reimbursed by the Company for all such reasonable costs and expenses incurred by the Executive in seeking good faith to enforce his rights hereunder. Notwithstanding the foregoing, the
Company shall be entitled to seek equitable relief pursuant to Section 17 hereof without otherwise waiving the right to exclusive arbitration of all other disputes. 

        19.    Release.    The Company shall not be required to make any payment pursuant to
Section 8 hereof in connection with the termination of Executive's employment (other than by reason of death) unless and until the Executive executes a standard form of release provided by the
Company. 

        20.    Entire Agreement.    This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written,
by any officer, employee or representative of any party hereto; and any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and canceled. In
the event of any inconsistency between any provision of this Agreement and any provision applicable to the Executive in any plan, program, policy or other agreement of the Company, the provisions of
this Agreement shall control to the extent that such provisions of this Agreement are more favorable to the Executive. 

12

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. 

	EXECUTIVE
 
	 	THE AES CORPORATION
 

	/s/  ROBERT F. HEMPHILL      
	 	By:	 	/s/  BRIAN A. MILLER      

	Robert F. Hemphill, Jr.	 	Name:	 	Brian A. Miller
	 	 	Title:	 	Vice President

QuickLinks

EMPLOYMENT AGREEMENT<Page>

                                     REEBOK
                      EXECUTIVE DEFERRED COMPENSATION PLAN

                 AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004

1.       PURPOSE AND SCOPE OF PLAN; EFFECTIVE DATE.

         The purpose of this Plan is to reward key executives and to provide a
         select group of managerial and highly compensated employees with
         unfunded nonqualified deferred compensation, as more fully described
         herein. This Plan incorporates by reference each of the Compensation
         Deferral Plan ("Deferral Plan"), the Excess Benefit Plan ("Excess
         Benefit Plan") and the Supplemental Executive Retirement Plan ("SERP")
         previously established and maintained by the Company for the benefit of
         eligible employees, which plans are made a part hereof and are subject
         to all of the terms and conditions hereof, effective as of the
         Effective Date.

         The "Effective Date" of this Plan is January 1, 2004.

2.       DEFINITIONS.

         The following terms shall have the meanings specified below, unless a
         different meaning is clearly indicated by the context.

         2.1 "Account" means, for each Participant, the account established for
         his or her benefit under the Deferral Plan or the Excess Benefit Plan.

         2.2 "Administrator" means the Committee, or the executive officer(s) to
         whom the Committee has delegated its authority pursuant to Section 3.1
         herein.

         2.3 "Board" means the Board of Directors of Reebok International Ltd.

         2.4 "Code" means the Internal Revenue Code of 1986, as from time to
         time in effect. Reference to any section or subsection of the Code
         includes reference to any comparable or succeeding provisions of any
         legislation which amends, supplements or replaces such section or
         subsection.

         2.5 "Committee" means the Management Development and Compensation
         Committee of the Board.

         2.6 "Company" means Reebok International Ltd., any affiliates that
         adopt the Plan with the knowledge and consent of the Administrator,
         and any successor to all or a major portion of the Company's assets or
         business which assumes the obligations of the Company generally.

         2.7 "Employee" means an employee of the Company or its subsidiaries.

         2.8 "Participant" means an Employee who participates in the Plan.

         2.9 "Plan" means the Reebok International Ltd. Executive Deferred
         Compensation Plan set forth herein, as amended from time to time.

                                       1
<Page>

         2.10 "Plan Year" means each 12 month period ending each December 31.

         2.11 "SERP Participant" means a key executive of the Company
         selected by the Committee to participate in the SERP.

3.       ADMINISTRATION

         3.1 PLAN ADMINISTRATOR. The Plan will be administered by the
         Committee, provided that the Committee has the authority to delegate
         any aspect of the Plan's administration to any person or persons.
         References in the Plan to the Committee shall mean references to the
         delegee, where appropriate.

         3.2 PLAN ADMINISTRATION. The Committee has the full discretionary power
         and authority to interpret the Plan, select employees to participate in
         the Plan, determine benefit amounts, make all other decisions relating
         to the administration and operation of the Plan, and may promulgate
         rules and regulations governing the administration and operation of the
         Plan and its own acts and proceedings. The decisions of the Committee
         relating to the Plan will be final and conclusive on all persons.

4.       ACCELERATION OF PAYMENT

         4.1 ELECTION TO ACCELERATE. Notwithstanding any other provisions of the
         Plan to the contrary, with respect to any or all of the benefits
         payable under the Deferral Plan or the Excess Benefit Plan, a
         Participant may elect at any time prior to the commencement of the
         calendar year in which a "Payment Event" (as hereinafter defined)
         occurs, to have the vested and non forfeitable benefits credited to the
         Participant's Account (including Interest), paid in the form of a
         single lump sum cash payment coincident with or as soon as reasonably
         practicable following the occurrence of such Payment Event. In
         addition, the Committee may, in its sole discretion, extend this
         election to any SERP Participant who is otherwise eligible to receive
         the payment of a benefit but for the fact that he or she remains
         employed by the Company or is presently in pay status; in that case,
         the payment will be in the form of the lump sum actuarial equivalent of
         the accrued benefit determined in accordance with the SERP. To the
         extent that a the payment of a benefit is accelerated hereunder, the
         Participant shall cease participation under the Deferral Plan, the
         Excess Plan or the SERP, as the case may be, and shall be entitled to
         no further payments under such plan with respect to which the
         acceleration election has been made.

         4.2 PAYMENT EVENTS. For purposes of the Plan, a "Payment Event" shall
         occur upon the earliest of (a) a Change in Control or (b) a
         Downgrade Event.

                          4.2.1 A Change of Control will occur for purposes of
                 this Agreement if (i) any Person (other than Paul Fireman)
                 becomes the "beneficial owner" (as defined in Rule 13d-3 under
                 the Act) of securities of the Company representing more than
                 30% of the combined voting power of the Company's
                 then-outstanding securities, (ii) there is a change of control
                 of the Company of a kind which would be required to be reported
                 under Item 6(e) of Schedule 14A of Regulation 14A promulgated
                 under the Act (or a similar item in a similar schedule or
                 form), whether or not the

                                       2
<Page>

                 Company is then subject to such reporting requirement, (iii)
                 the Company is a party to a merger, consolidation, sale of
                 assets or other reorganization, or a proxy contest, as a
                 consequence of which members of the Board in office
                 immediately prior to such transaction or event constitute
                 less than a majority of the Board thereafter, or (iv)
                 individuals who, at the date hereof, constitute the Board
                 (the "Continuing Directors") cease for any reason to
                 constitute a majority thereof, provided, however, that any
                 director who is not in office at the date hereof but whose
                 election by the Board or whose nomination for election by
                 the Company's shareholders was approved by a vote of at
                 least two-thirds of the directors then still in office who
                 either were directors at the date hereof or whose election
                 or nomination for election was previously so approved shall
                 be deemed to be a Continuing Director for purposes of this
                 Plan.

                 Notwithstanding the foregoing provisions of this paragraph
                 4.2.1, a "Change of Control" will not be deemed to have
                 occurred solely because of the acquisition of securities of the
                 Company (or any reporting requirement under the Act relating
                 thereto) by an employee benefit plan maintained by the Company
                 for its employees.

                          4.2.2 A "Downgrade Event" will occur if the Company's
                 credit rating is lower than (a) BBB-, as defined by Standard &
                 Poors, or (b) Baa3, as defined by Moody's Investment Services,
                 or (c) if the Company is notified that it is on negative watch
                 for possible down grade to a rating below that set forth in (a)
                 or (b) herein.

         4.3 ELECTION. Any election to accelerate the payment of any benefit
         hereunder shall be made on a form approved or prescribed by the
         Administrator, and shall be irrevocable by the Participant for the Plan
         Year in which the election is made.

5.       MISCELLANEOUS

         5.1      PLAN NOT FUNDED.

                          5.1.1 Nothing herein shall be construed as requiring
                 the Company or any subsidiary to establish a trust or otherwise
                 to set aside assets to fund the benefits hereunder, and nothing
                 herein shall be construed as giving any Participant any rights
                 to particular assets of the Company or any subsidiary. The
                 rights of the Participant under this Plan are those of the
                 general creditor only.

                          5.1.2 The Company may, but is not required to,
                 establish a trust of which the Company is treated as the owner
                 under subpart E, part I, subchapter J, chapter 1, subtitle A of
                 the Internal Revenue Code of 1986, as amended, (a "grantor
                 trust") and may deposit funds with the trustee of the grantor
                 trust (the "Trustee") sufficient to satisfy the benefits
                 provided under the Plan. If the Company establishes such a
                 grantor trust for the benefit of the SERP Participants and, if
                 at the time of a "Change of Control," as defined in Section
                 4.2.1, the grantor trust has not been fully funded, the Company
                 shall, within the time and manner specified under

                                       3

<Page>

                 such trust, deposit in such trust amounts sufficient to satisfy
                 all obligations under the SERP as of the date of deposit. In
                 all events, however, the Company shall remain ultimately liable
                 for the benefits payable under the SERP, and to the extent the
                 assets at the disposal of the Trustee are insufficient to
                 enable the Trustee to satisfy all benefits, the Company shall
                 pay all such benefits necessary to meet its obligations under
                 the SERP.

         5.2 BENEFITS INALIENABLE. A Participant's right to a benefit under the
         Plan cannot be assigned, pledged, hypothecated or otherwise alienated,
         except that a Participant may designate a beneficiary under the
         Deferral Plan or the Excess Benefit Plan to receive the balance to the
         credit of the Participant's Account (as such amount is determined in
         accordance with the Deferral Plan or the Excess Benefit Plan, as the
         case may be) in the event of the Participant's death. Such beneficiary
         designation must be on a form prescribed or approved by the
         Administrator; absent any effective beneficiary designation, the
         beneficiary will be deemed to be the Participant's estate. The Plan
         shall be binding upon the heirs, executors, administrators, successors
         and assigns of the parties, including each Participant and beneficiary,
         present and future.

         5.3 NO CONTINUING EMPLOYMENT. Nothing in the Plan shall be construed as
         conferring on any Employee rights to continued employment with the
         Company or any of its subsidiaries, or as constraining the right of the
         Company or its subsidiaries to terminate the employment of any
         Employee.

         5.4 AMENDMENT AND TERMINATION. This Plan may be terminated at any time
         by the Board and may be amended at any time by the Board or the
         Committee, PROVIDED, that no such amendment or termination shall
         deprive any Participant of the right to vested amounts then credited to
         his or her Excess Benefit Plan Account hereunder. Except as otherwise
         specified by the Board, upon termination of the Plan all accounts
         hereunder shall be promptly distributed. This Plan may be amended or
         terminated at any time and in any respect by the Committee or the
         Company, and the Committee may, in its sole discretion, at any time
         amend individual arrangements with Participants.

         5.5 LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
         expenses, including but not limited to counsel fees, stenographer fees,
         printing cost, etc. reasonably incurred by a Participant in obtaining
         any benefit to which the Participant is entitled under this Plan.

         5.6 GOVERNING LAW. This Plan shall be construed and applied in
         accordance with the laws of the Commonwealth of Massachusetts.

         IN WITNESS WHEREOF, Reebok International Ltd. has caused this Plan to
be executed by its officer hereunto duly authorized this 11th day of February,
2004.

                                    REEBOK INTERNATIONAL LTD.

                                           /s/ David A. Pace
                                    By: ________________________________

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