
                                                                     EXHIBIT 1.4

                          [FORM OF PREFERRED SECURITIES
                             UNDERWRITING AGREEMENT]

                                  $___________

                               THE AES CORPORATION

                           ______ Preferred Securities
                           AES Trust [-] Guaranteed by

                               ------------------



                             UNDERWRITING AGREEMENT



                                                 _______, 199_





Dear Sirs:

     AES Trust [_] (the "Trust"), a statutory business trust organized under the
Business  Trust Act (the "Delaware  Act") of the State of Delaware  (Chapter 38,
Title 12, of the Delaware  Code, 12 Del. C. ss.3801 et seq.),  proposes to issue
and sell  ____________  shares of its ___% preferred trust securities (the "Firm
Securities")  to the  several  underwriters  named in  Schedule  I  hereto  (the
"Underwriters").  The  Trust  also  proposes  to issue  and sell to the  several
Underwriters not more than _______ additional shares of its ___% preferred trust
securities (the  "Additional  Securities")  if requested by the  Underwriters as
provided in Section 2 hereof. The Firm Securities and the Additional  Securities
are  herein  collectively  called  the  "Securities".  The  Securities  will  be
guaranteed by The AES Corporation, a Delaware corporation (the "Company") to the
extent set forth in the Prospectus (as defined herein).

     It is understood that substantially contemporaneously with the offering and
sale of the Firm Securities to the  Underwriters  contemplated  hereby,  (i) the
Trust,  its trustees (the  "Trustees")  and the Company shall take all necessary
action to adopt an Amended and Restated  Declaration  of Trust in  substantially
the form of the Form of






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Amended and Restated  Declaration of Trust  incorporated by reference as Exhibit
4.7 to the  Registration  Statement  referred  to  below,  (as  so  amended  and
restated,  the  "Declaration")  pursuant  to which the Trust shall (x) issue and
sell the Securities to the Underwriters pursuant hereto and (y) issue [_] shares
of its [___]% common  securities  [(and up to an  additional  [_] shares of such
securities  in  connection   with  the  issuance  and  sale  of  the  Additional
Securities)]  (the "Common  Securities" and,  together with the Securities,  the
"Trust  Securities")  to  the  Company,  in  each  case  with  such  rights  and
obligations as shall be set forth in such Declaration,  (ii) the Company and The
Bank of New York, as Trustee, shall enter into an Indenture in substantially the
form of the Form of the  Junior  Subordinated  Debt Trust  Securities  Indenture
incorporated by reference as Exhibit 4.4 to the Registration  Statement referred
to below (as  supplemented by the  Supplemental  Indenture  substantially in the
form  incorporated  by  reference as Exhibit 4.9 to the  Registration  Statement
referred   to  below,   the   "Indenture")   providing   for  the   issuance  of
$[____________]   in  aggregate   principal   amount  of  the  Company's  Junior
Subordinated  Debt Trust  Securities  Debentures,  Series  [_],  due 20[__] (the
"Debentures"),  (iii) the Company shall deposit such  Debentures in the Trust in
conjunction  with  the  consummation  of  the  sale  of  the  Securities  to the
Underwriters     contemplated     hereby    and    (iv)    the    Company    and
_________________________,  as Guarantee  Trustee,  shall enter into a Guarantee
Agreement in  substantially  the form of the Form of  Guarantee  with respect to
Securities  incorporated  by  reference  as  Exhibit  4.11  of the  Registration
Statement  referred to below (the  "Guarantee")  for the benefit of holders from
time to time of the Securities.

     1  Registration  Statement and  Prospectus.  The Trust and the Company have
prepared  and  filed  with  the   Securities   and  Exchange   Commission   (the
"Commission")  in accordance  with the provisions of the Securities Act of 1933,
as  amended,  and  the  rules  and  regulations  of  the  Commission  thereunder
(collectively  called the  "Securities  Act"), a registration  statement on Form
S-3, including a prospectus,  relating to, among other things, certain preferred
securities  of AES Trust III, IV and V,  certain  junior  subordinated  debt and
guarantees of preferred securities of AES Trust III, IV and V (collectively, the
"Shelf Securities").  The Trust and the Company also have filed with, or propose
to file with,  the  Commission  pursuant to Rule 424 under the  Securities Act a
prospectus supplement specifically relating to the Securities.  The registration
statement as amended to the date of this Agreement is hereinafter referred to as
the "Base Registration  Statement" and any registration statement filed pursuant
to Rule 462(b) under the  Securities  Act relating to the  Securities  is herein
referred to as the "Additional Registration  Statement",  and, together with the
Base  Registration  Statement,   the  "Registration   Statement".   The  related
prospectus covering the Shelf Securities in the form first used to confirm sales
of the  Securities is  hereinafter  referred to as the "Basic  Prospectus".  The
Basic  Prospectus as  supplemented  by the  prospectus  supplement  specifically
relating  to the  Securities  in the form  first  used to  confirm  sales of the
Securities is hereinafter referred to as the "Prospectus". Any reference in this
Agreement to the Registration Statement,  the Basic Prospectus,  any preliminary
form of Prospectus


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(a "preliminary  prospectus")  previously filed with the Commission  pursuant to
Rule 424 or the Prospectus shall be deemed to refer to and include the documents
incorporated  by  reference  therein  pursuant  to Item 12 of Form S-3 under the
Securities  Act which were filed under the  Securities  Exchange Act of 1934, as
amended,   and  the  rules  and   regulations  of  the   Commission   thereunder
(collectively,  the "Exchange  Act") on or before the date of this  Agreement or
the date of the Basic Prospectus,  any preliminary prospectus or the Prospectus,
as the case may be; and any reference to "amend",  "amendment"  or  "supplement"
with  respect  to  the  Registration  Statement,   the  Basic  Prospectus,   any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
any documents filed under the Exchange Act after the date of this Agreement,  or
the date of the Basic Prospectus,  any preliminary prospectus or the Prospectus,
as the case may be, which are deemed to be incorporated by reference therein.

     2 Agreements to Sell and Purchase.  On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions,
the Company agrees to issue and sell and each Underwriter agrees,  severally and
not  jointly,  to  purchase  from the Trust at a price per share of $_____  (the
"Purchase Price"),  the number of Firm Securities set forth opposite the name of
such Underwriter in Schedule I hereto.

     On the  basis  of the  representations  and  warranties  contained  in this
Agreement,  and subject to its terms and  conditions,  the Trust agrees to issue
and sell the Additional  Securities and the Underwriters shall have the right to
purchase,  severally and not jointly,  up to _______ Additional  Securities from
the Trust at the Purchase Price.  Additional  Securities may be purchased solely
for the purpose of covering over-allotments made in connection with the offering
of the Firm  Securities.  The  Underwriters may exercise their right to purchase
Additional  Securities  in whole or in part from time to time by giving  written
notice thereof to the Company  within 30 days after the date of this  Agreement.
You shall give any such  notice on behalf of the  Underwriters  and such  notice
shall  specify the  aggregate  number of  Additional  Securities to be purchased
pursuant to such  exercise  and the date for payment and delivery  thereof.  The
date  specified  in any such notice  shall be a business day (i) no earlier than
the Closing Date (as hereinafter defined),  (ii) no later than ten business days
after such  notice has been given and (iii) no earlier  than two  business  days
after  such  notice  has been  given.  If any  Additional  Securities  are to be
purchased, each Underwriter,  severally and not jointly, agrees to purchase from
the Trust the number of Additional  Securities  (subject to such  adjustments to
eliminate  fractional  shares  as  you  may  determine)  which  bears  the  same
proportion to the total number of Additional Securities to be purchased from the
Trust as the  number  of Firm  Securities  set forth  opposite  the name of such
Underwriter in Schedule I bears to the total number of Firm Securities.

     In view of the fact that the proceeds of the sale of the Securities will be
used to purchase Debentures, the Company agrees to pay as compensation


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("Underwriter's  Compensation")  for the Underwriters'  arranging the investment
therein  of such  proceeds  an amount in  immediately  available  funds of $ per
Security purchased hereunder.

     [The Trust and the Company  hereby  agree not to offer,  sell,  contract to
sell, grant any option to purchase,  or otherwise dispose of any preferred trust
securities or any securities convertible into or exercisable or exchangeable for
such preferred trust securities or in any other manner transfer all or a portion
of the economic consequences associated with the ownership of any such preferred
trust securities,  except to the Underwriters pursuant to this Agreement,  for a
period of ___ days after the date of the  Prospectus  without the prior  written
consent of ____________________________.]

     3 Terms  of  Public  Offering.  The  Company  is  advised  by you  that the
Underwriters  propose (i) to make a public offering of their respective portions
of the Securities as soon after the effective date of the Registration Statement
as in your judgment is advisable and (ii) initially to offer the Securities upon
the terms set forth in the Prospectus.

     4 Delivery and Payment. Delivery to the Underwriters of and payment for the
Firm Securities and payment of the related  Underwriters'  Compensation shall be
made at 10:00 A.M.,  New York City time, on ______,  199_, or at such other time
or such  other  date as the  Underwriters  and the  Company  may  agree  upon in
writing.  The  time and date of such  payment  are  referred  to  herein  as the
"Closing Date". As used herein, the term "Business Day" means any day other than
a day on which banks are permitted or required to be closed in New York City.

     Delivery to the  Underwriters of and payment for any Additional  Securities
to be purchased  by the  Underwriters  and payment of the related  Underwriters'
Compensation  shall be made at such place as you shall  designate at 10:00 A.M.,
New York City time,  on the date  specified in the  applicable  exercise  notice
given by you pursuant to Section 2 (an "Option Closing  Date").  Any such Option
Closing  Date and the  location  of delivery of and the form of payment for such
Additional Securities may be varied by agreement between you and the Company.

     Certificates  for the  Securities  shall be  registered  in such  names and
issued in such  denominations as you shall request in writing not later than two
full business  days prior to the Closing Date or an Option  Closing Date, as the
case may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
Closing  Date  or the  applicable  Option  Closing  Date,  as the  case  may be.
Certificates in definitive form evidencing the Securities  shall be delivered to
you on the Closing Date or the  applicable  Option Closing Date, as the case may
be with any transfer taxes thereon duly paid by the Company,  for the respective
accounts of the several Underwriters, against payment of the Purchase


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Price  therefor by wire transfer in immediately  available  funds to the account
specified  by the Company to the  Underwriters  (no later than noon the Business
Day prior to the Closing Date or the applicable Option Closing Date, as the case
may be) at the office of Davis Polk & Wardwell, counsel to the Company.

     5 Agreements of the Company. The Company agrees with you:

          (a) To  file  the  Prospectus  in a form  approved  by  you  with  the
     Commission  within  the time  periods  specified  by Rule 424;  and to file
     promptly all reports and any  definitive  proxy or  information  statements
     required to be filed by the Company with the Commission pursuant to Section
     13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
     Prospectus  and for so long as the delivery of a prospectus  is required in
     connection  with the  offering  or sale of the  Securities;  and to furnish
     copies of the  Prospectus  to the  Underwriters  in New York City  prior to
     10:00 a.m.,  New York City time,  on the Business Day next  succeeding  the
     date  of  this  Agreement  in  such  quantities  as  the  Underwriters  may
     reasonably request;

          (b) To advise you  promptly  and, if requested by you, to confirm such
     advice  in  writing,   (i)  when  any   post-effective   amendment  to  the
     Registration  Statement  has been filed or becomes  effective,  (ii) of any
     request by the Commission for amendments to the  Registration  Statement or
     amendments or supplements to the Prospectus or for additional  information,
     (iii) of the issuance by the  Commission of any stop order  suspending  the
     effectiveness  of  the  Registration  Statement  or of  the  suspension  of
     qualification  of the Securities for offering or sale in any  jurisdiction,
     or the  initiation of any  proceeding  for such  purposes,  and (iv) of the
     happening of any event during the period referred to in paragraph (e) below
     which  makes any  statement  of a  material  fact made in the  Registration
     Statement  or the  Prospectus  untrue or which  requires  the making of any
     additions to or changes in the Registration  Statement or the Prospectus in
     order to make the  statements  therein not  misleading.  If at any time the
     Commission shall issue any stop order  suspending the  effectiveness of the
     Registration  Statement,  the Company will make every reasonable  effort to
     obtain the  withdrawal  or lifting of such order at the  earliest  possible
     time.

          (c) To  furnish  to  you  three  signed  copies  of  the  Registration
     Statement as first filed with the  Commission  and of each amendment to it,
     including  all exhibits  thereto and  documents  incorporated  by reference
     therein, and to furnish to you and each Underwriter  designated by you such
     number of conformed copies of the Registration Statement as so filed and of
     each amendment to it, without exhibits  thereto and documents  incorporated
     by reference therein, as you may reasonably request.


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          (d)  Not to file  any  amendment  or  supplement  to the  Registration
     Statement,  whether before or after the time when it becomes effective,  or
     to make any amendment or  supplement  to the  Prospectus of which you shall
     not previously have been advised or to which you shall  reasonably  object;
     and to prepare and file with the Commission,  promptly upon your reasonable
     request,  any amendment to the Registration  Statement or supplement to the
     Prospectus  which may be  necessary or  advisable  in  connection  with the
     distribution of the Securities by you, and to use its best efforts to cause
     the same to become promptly effective.

          (e) Promptly after the Registration  Statement becomes effective,  and
     from time to time  thereafter  for such period as in the opinion of counsel
     for the  Underwriters  a  prospectus  is required by law to be delivered in
     connection  with sales by an  Underwriter  or a dealer,  to furnish to each
     Underwriter  and  dealer  as  many  copies  of the  Prospectus  (and of any
     amendment or supplement to the  Prospectus)  as such  Underwriter or dealer
     may reasonably request.

          (f) If during the period  specified in  paragraph  (e) any event shall
     occur as a result of which, in the opinion of counsel for the Underwriters,
     it becomes necessary to amend or supplement the Prospectus in order to make
     the  statements  therein,  in the  light  of  the  circumstances  when  the
     Prospectus  is  delivered  to a  purchaser,  not  misleading,  or  if it is
     necessary to amend or  supplement  the  Prospectus  to comply with any law,
     forthwith to prepare and file with the Commission an appropriate  amendment
     or supplement to the Prospectus so that the  statements in the  Prospectus,
     as so amended or supplemented,  will not in the light of the  circumstances
     when it is so delivered,  be  misleading,  or so that the  Prospectus  will
     comply with law, and to furnish to each  Underwriter and to such dealers as
     you shall  specify,  such number of copies  thereof as such  Underwriter or
     dealers may reasonably request.

          (g) Prior to any public offering of the Securities,  to cooperate with
     you and counsel for the Underwriters in connection with the registration or
     qualification  of  the  Securities  for  offer  and  sale  by  the  several
     Underwriters  and by dealers under the state securities or Blue Sky laws of
     such  jurisdictions as you may request,  to continue such  qualification in
     effect so long as required for  distribution  of the Securities and to file
     such consents to service of process or other  documents as may be necessary
     in order to effect such registration or qualification.

          (h) To mail and make  generally  available to its  securityholders  as
     soon as reasonably  practicable an earnings  statement covering a period of
     at  least  twelve  months  after  the  effective  date of the  Registration
     Statement (but in no event  commencing  later than 90 days after such date)
     which shall satisfy the


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     provisions  of Section  11(a) of the  Securities  Act, and to advise you in
     writing when such statement has been so made available.

          (i) During the period of five years after the date of this  Agreement,
     or for such shorter period if the Securities no longer remain  outstanding,
     (i) to mail as soon as reasonably  practicable after the end of each fiscal
     year to the record  holders of its  Securities  a  financial  report of the
     Company  and  its  subsidiaries  on a  consolidated  basis  (and a  similar
     financial  report  of  all  unconsolidated  subsidiaries,  if  required  by
     Regulation  S-X),  all such  financial  reports to  include a  consolidated
     balance  sheet,  a  consolidated  statement of  operations,  a consolidated
     statement  of cash  flows and a  consolidated  statement  of  shareholders'
     equity as of the end of and for such fiscal year,  together with comparable
     information  as of the end of and  for the  preceding  year,  certified  by
     independent  certified  public  accountants,  and  (ii)  to mail  and  make
     generally  available as soon as practicable after the end of each quarterly
     period (except for the last  quarterly  period of each fiscal year) to such
     holders,  a  consolidated  balance  sheet,  a  consolidated   statement  of
     operations  and  a  consolidated  statement  of  cash  flows  (and  similar
     financial  reports  of all  unconsolidated  subsidiaries,  if  required  by
     Regulation  S-X) as of the end of and for such  period,  and for the period
     from the  beginning  of such  year to the close of such  quarterly  period,
     together with comparable  information for the corresponding  periods of the
     preceding year.

          (j) During the period  referred to in paragraph (i), to furnish to you
     as soon as  available  a copy of each  report or other  publicly  available
     information of the Company mailed to the  securityholders of the Company or
     filed with the  Commission and such other  publicly  available  information
     concerning the Company and its subsidiaries as you may reasonably request.

          (k) To pay  all  costs,  expenses,  fees  and  taxes  incident  to the
     performance of its obligations  hereunder,  including  without limiting the
     generality  of the  foregoing,  all costs and expenses  incident to (i) the
     preparation, issuance, and delivery of the certificates for the Securities,
     including  any expenses of the  Trustee,  (ii) the  preparation,  printing,
     filing  and  distribution  under  the  Securities  Act of the  Registration
     Statement (including  financial statements and exhibits),  each preliminary
     prospectus and all  amendments  and  supplements to any of them prior to or
     during the period  specified  in  paragraph  (e),  (iii) the  printing  and
     delivery  of  the  Prospectus  and  any  Preliminary   Prospectus  and  all
     amendments or  supplements  to it during the period  specified in paragraph
     (e),  (iv) the  printing  and delivery of this  Agreement,  the  Indenture,
     Preliminary and Supplemental  Blue Sky Memoranda and all other  agreements,
     memoranda,  correspondence  and other  documents  printed and  delivered in
     connection with the offering of the Securities  (including in each case any
     disbursements of counsel for the Underwriters relating to such printing and
     delivery), (v) the registration or qualification of the Securities


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     for offer and sale  under the  securities  or Blue Sky laws of the  several
     states  (including in each case the fees and  disbursements  of counsel for
     the  Underwriters  relating  to  such  registration  or  qualification  and
     memoranda relating  thereto),  (vi) filings and clearance with the National
     Association of Securities  Dealers,  Inc. in connection  with the offering,
     (vii) furnishing such copies of the Registration Statement,  the Prospectus
     and all amendments and  supplements  thereto as may be requested for use in
     connection with the offering or sale of the Securities by the  Underwriters
     or by dealers to whom  Securities  may be sold and (viii) the rating of the
     Securities including,  without limitation,  fees payable to rating agencies
     in connection therewith.

          (l) To use its best  efforts to do and perform all things  required or
     necessary  to be done and  performed  under this  Agreement  by the Company
     prior to the Closing  Date and to satisfy all  conditions  precedent to the
     delivery of the Securities.

     6 Representations and Warranties of the Company. The Company represents and
warrants to each Underwriter that:

          (a) The  Registration  Statement  has been  declared  effective by the
     Commission   under  the  Securities  Act;  no  stop  order  suspending  the
     effectiveness  of  the  Registration  Statement  has  been  issued  and  no
     proceeding for that purpose has been instituted or, to the knowledge of the
     Company,  threatened by the Commission;  and the Registration Statement and
     Prospectus (as amended or  supplemented if the Company shall have furnished
     any amendments or supplements  thereto) comply, or will comply, as the case
     may be, in all  material  respects  with the  Securities  Act and the Trust
     Indenture Act of 1939,  as amended,  and the rules and  regulations  of the
     Commission thereunder (collectively, the "Trust Indenture Act"), and do not
     and will not, as of the applicable  effective  date as to the  Registration
     Statement  and any amendment  thereto and as of the date of the  Prospectus
     and any amendment or supplement thereto,  contain any untrue statement of a
     material  fact or omit to state any  material  fact  required  to be stated
     therein or necessary to make the  statements  therein,  in the light of the
     circumstances  under  which  they  were  made,  not  misleading,   and  the
     Prospectus,  as amended or supplemented at the Closing Date, if applicable,
     will not contain any untrue statement of a material fact or omit to state a
     material fact necessary to make the statements therein, in the light of the
     circumstances  under which they were made, not misleading;  except that the
     foregoing  representations  and warranties shall not apply to (i) that part
     of  the   Registration   Statement  which   constitutes  the  Statement  of
     Eligibility and  Qualification  (Form T-1) under the Trust Indenture Act of
     the Trustee, and (ii) statements or omissions in the Registration Statement
     or the Prospectus made in reliance upon and in conformity


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     with  information  relating to any Underwriter  furnished to the Company in
     writing by such Underwriter through the  Representatives  expressly for use
     therein;

          (b) The documents  incorporated by reference in the  Prospectus,  when
     they were filed with the Commission,  conformed in all material respects to
     the requirements of the Exchange Act, and none of such documents  contained
     an untrue  statement of a material fact or omitted to state a material fact
     necessary to make the statements therein, in the light of the circumstances
     under which they were made, not  misleading;  and any further  documents so
     filed and incorporated by reference in the Prospectus,  when such documents
     are filed with the Commission will conform in all material  respects to the
     requirements  of the Exchange Act, as  applicable,  and will not contain an
     untrue  statement  of a  material  fact or omit to  state a  material  fact
     necessary to make the statements therein, in the light of the circumstances
     under which they were made, not misleading;

          (c)  The  Company  and  each  of  its  subsidiaries  and  each  of its
     affiliates  which meets the  criteria  in the  definition  of  "significant
     subsidiary" pursuant to Rule 1-02(w) of Regulation S-X under the Securities
     Act (each, a "Principal Subsidiary") has been duly incorporated, is validly
     existing  as  a  corporation  in  good  standing  under  the  laws  of  its
     jurisdiction  of  incorporation  and has the corporate  power and authority
     required to carry on its business as it is currently being conducted and to
     own, lease and operate its properties, and each is duly qualified and is in
     good  standing as a foreign  corporation  authorized to do business in each
     jurisdiction  in which  the  nature of its  business  or its  ownership  or
     leasing of property requires such  qualification,  except where the failure
     to be so  qualified  would  not  have  a  material  adverse  effect  on the
     business,  financial  condition or results of operations of the Company and
     the Principal Subsidiaries, taken as a whole.

          (d) Except as set forth in the  Registration  Statement  or on Annex I
     hereto,  all of the  outstanding  shares  of  capital  stock  of,  or other
     ownership  interests  in,  the  Principal  Subsidiaries  have been duly and
     validly  authorized and issued and are fully paid and  non-assessable,  and
     are owned by the  Company or one of the  Principal  Subsidiaries,  free and
     clear  of any  security  interest,  claim,  lien,  encumbrance  or  adverse
     interest of any nature.

          (e) As of the Closing Date, the Trust  Securities  will have been duly
     authorized by the  Declaration  and (x) when the  Securities  are issued in
     accordance  with the terms of this  Agreement and delivered to and paid for
     by the  Underwriters  and (y) the  Common  Securities  are  issued  against
     payment therefor as provided in the Declaration, such Trust Securities will
     be duly and validly is sued and  (subject to the terms of the  Declaration)
     will be fully paid and nonassess-


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     able undivided beneficial interests in the assets of the Trust, not subject
     to any preemptive or similar  rights.  Holders of Trust  Securities will be
     entitled  to  the  same  limitation  of  personal   liability  extended  to
     stockholders  of  private  corpora  tions for  profit  organized  under the
     General Corporation Law of the State of Delaware.

          (f) As of the  Closing  Date,  the  Declaration  will  have  been duly
     authorized, executed and delivered by the Company and the Trustees and will
     be a  valid  and  binding  obligation  of the  Company  and  the  Trustees,
     enforceable  against the Company and the  Trustees in  accordance  with its
     terms,  subject to  applicable  bankruptcy,  insolvency  and  similar  laws
     affecting   creditors'  rights  and  remedies   generally  and  to  general
     principles  of equity  (regardless  of whether  enforcement  is sought in a
     proceeding at law or in equity).

          (g) The Trust has been duly  created  and is validly  existing in good
     standing as a business trust under the Delaware Act, is and will be treated
     as a "grantor  trust" for Federal  income tax purposes  under existing law,
     has the  business  trust power and  authority  to conduct  its  business as
     presently  conducted  and as described in the  Registration  Statement  and
     Prospectus,  and is not  required  to be  authorized  to do business in any
     other jurisdiction.

          (h) The Indenture has been duly  qualified  under the Trust  Indenture
     Act and has been duly authorized, executed and delivered by the Company and
     is a valid and binding agreement of the Company,  enforceable in accordance
     with its terms  except as the  enforceability  thereof  may be  limited  by
     bankruptcy,   insolvency  or  similar  laws  affecting   creditors'  rights
     generally  and  by  equitable  principles  of  general  applicability;  the
     Debentures have been duly authorized and when executed and authenticated in
     accordance  with the provisions of the Indenture and delivered to the Trust
     against payment therefore as provided in the Prospectus will be entitled to
     the benefits of the Indenture and the  Indenture  and the  Debentures  will
     conform in all respects to  statements  relating  thereto  contained in the
     Registration Statement and the Prospectus.

          (i) The Guarantee has been duly  qualified  under the Trust  Indenture
     Act of 1939, as amended,  and, as of the Closing Date, assuming due authori
     zation, execution and delivery by the Company thereunder, of the Guarantee,
     the  Guarantee  will be a  valid  and  binding  agreement  of the  Company,
     enforceable in accordance with its terms subject to applicable  bankruptcy,
     insolvency  and  similar  laws  affecting  creditors'  rights and  remedies
     generally  and to  general  principles  of equity  (regardless  of  whether
     enforcement is sought in a proceeding at law or in equity).


                                       10

<PAGE>



          (j) This Agreement has been duly authorized, executed and delivered by
     the Company and is a valid and binding  agreement of the Company (except as
     rights to indemnity and contribution hereunder may be limited by applicable
     law).

          (k) The  Securities  conform as to legal  matters  to the  description
     thereof contained in the Registration Statement and the Prospectus.

          (l) The Company is not in  violation of its  Restated  Certificate  of
     Incorporation  or its  By-laws  and  neither  the Trust  nor the  Principal
     Subsidiaries   are  in  violation  of,  as  applicable,   their  respective
     Declaration,  charter or,  except for any such  violations  which would not
     have  a  material  adverse  effect  on  the  Trust,  the  Company  and  its
     subsidiaries taken as a whole, their by-laws, nor is the Trust, the Company
     or  any  of  the  Principal  Subsidiaries,  except  as  set  forth  in  the
     Registration  Statement,  in default in, as applicable,  the performance of
     any obligation,  agreement or condition  contained in any bond,  debenture,
     note or any other  evidence  of  indebtedness  or in any  other  agreement,
     indenture  or  instrument  to which the  Trust,  the  Company or any of the
     Principal Subsidiaries is a party or by which the Trust, the Company or any
     of the Principal  Subsidiaries or their respective property is bound except
     for any such defaults which,  individually  or in the aggregate,  would not
     have a material  adverse  effect on the  business,  financial  condition or
     results of operations of the Company and the Principal Subsidiaries,  taken
     as a whole.

          (m) The execution,  delivery and  performance of this  Agreement,  the
     Indenture,   the  Debentures,   the  Guarantee,  the  Declaration  and  the
     Securities  and the  compliance  by the Trust and the Company  with all the
     provisions  hereof and thereof  and the  consummation  of the  transactions
     contemplated  hereby and thereby  will not require any  consent,  approval,
     authorization or other order of any court, regulatory body,  administrative
     agency or other governmental body (except such as may be required under the
     Securities  Act,  the  Exchange  Act,  the Trust  Indenture  Act,  or other
     securities  or Blue Sky laws) and will not  conflict  with or  constitute a
     breach  of any of the terms or  provisions  of,  or a  default  under,  the
     Declaration, charter or by-laws, as applicable, or any agreement, indenture
     or other instrument to which the Trust, the Company or any of the Principal
     Subsidiaries  is a party or by which the Trust,  the  Company or any of the
     Principal Subsidiaries or their respective property is bound, or violate or
     conflict  with any laws,  administrative  regulations  or  rulings or court
     decrees  applicable  to the  Trust,  the  Company,  any  of  the  Principal
     Subsidiaries or their respective  property (except state securities or Blue
     Sky laws).

          (n) Except as set forth in the  Registration  Statement,  there are no
     material legal or governmental  proceedings pending to which the Trust, the
     Company or any of the Principal  Subsidiaries is a party or to which any of
     their


                                       11

<PAGE>



     respective  property  is the  subject,  and,  to the best of the  Company's
     knowledge, no such proceedings are threatened or contemplated.  No contract
     or document of a character  required to be  described  in the  Registration
     Statement  or  the  Prospectus  or  to  be  filed  as  an  exhibit  to  the
     Registration Statement is not so described or filed as required.

          (o) Except as set forth in the  Registration  Statement,  neither  the
     Company nor any of the Principal Subsidiaries has violated any U.S. federal
     or state law relating to discrimination in the hiring,  promotion or pay of
     employees nor any applicable U.S. federal or state wages and hours laws, or
     any provisions of the Employee  Retirement Income Security Act or the rules
     and regulations promulgated thereunder,  which in each case could result in
     any material adverse change in the business, financial condition or results
     of  operations of the Company and the  Principal  Subsidiaries,  taken as a
     whole.

          (p) Except as set forth in the Registration Statement, the Company and
     each of the Principal  Subsidiaries has good and marketable title, free and
     clear  of all  liens,  claims,  encumbrances  and  restrictions  which  are
     required to be described  in the  Registration  Statement  except liens for
     taxes not yet due and payable,  to all property and assets described in the
     Registration  Statement  as being  owned by it.  All  leases  to which  the
     Company  or any of the  Principal  Subsidiaries  is a party  are  valid and
     binding and no default by the Company or any such Principal Subsidiary, or,
     to the best of the  Company's  knowledge,  by any  other  party to any such
     leases, has occurred or is continuing thereunder, which could result in any
     material adverse change in the business,  financial condition or results of
     operations of the Trust, the Company and the Principal  Subsidiaries  taken
     as a whole, and the Company and the Principal  Subsidiaries  enjoy peaceful
     and undisturbed  possession under all such leases to which any of them is a
     party as lessee with such  exceptions as do not  materially  interfere with
     the use made by the Company or such Principal Subsidiary.

          (q) Deloitte & Touche are independent  public accountants with respect
     to the Company as required by the Securities Act.

          (r) The  financial  statements,  together  with related  schedules and
     Notes forming part of the  Registration  Statement and the Prospectus  (and
     any  amendment or  supplement  thereto),  present  fairly the  consolidated
     financial  position,  results of operations  and statements of cash flow of
     the Company and its  subsidiaries  on the basis stated in the  Registration
     Statement at the respective  dates and for the respective  periods to which
     they  apply;  such  statements  and related  schedules  and Notes have been
     prepared  in  accordance  with  generally  accepted  accounting  principles
     consistently  applied throughout the periods involved,  except as disclosed
     therein; and the other financial and statistical


                                       12

<PAGE>



     information  and  data  set  forth in the  Registration  Statement  and the
     Prospectus  (and any  amendment  or  supplement  thereto),  in all material
     respects,  present fairly the information  purported to be shown thereby at
     the respective dates or for the respective  periods to which they apply and
     have been prepared on a basis consistent with such financial statements and
     the books and records of the Company.

          (s)  Each of the  Company  and the  Principal  Subsidiaries  has  such
     permits,  licenses,   franchises  and  authorizations  of  governmental  or
     regulatory authorities ("permits") which are required to have been obtained
     by it prior to the date hereof and which are  material to the  ownership or
     leasing and operation of or construction  of its respective  properties and
     to the conduct of its business in the manner  described in the  Prospectus,
     except for any such permits, the failure of which to have,  individually or
     in the aggregate, would not have a material adverse effect on the business,
     financial  condition  or  results  of  operations  of the  Company  and the
     Principal   Subsidiaries,   taken  as  a  whole,   and   subject   to  such
     qualifications as may be set forth in the Registration  Statement;  each of
     the Company and the Principal  Subsidiaries has fulfilled and performed all
     of its material  obligations  with respect to such permits required to have
     been  fulfilled  and  performed  prior to the date  hereof and no event has
     occurred  which  allows,  or after  notice  or lapse of time  would  allow,
     revocation  or  termination   thereof  or  result  in  any  other  material
     impairment of the rights of the holder of any such permit,  subject in each
     case  to  such  qualification  as  may  be set  forth  in the  Registration
     Statement;  and, except as described in the  Registration  Statement,  such
     permits  do not  materially  interfere  with  the use or  operation  of the
     electric  power  generation  facilities  of the Principal  Subsidiaries  as
     currently used or operated or as contemplated to be used or operated.

          (t)  Each  of the  AES  Beaver  Valley,  the  AES  Deepwater,  the AES
     Placerita,  the AES Shady Point,  the AES Barbers  Point and the AES Thames
     facilities (each as defined in the Registration Statement) is a "qualifying
     cogeneration  facility" under the Federal Power Act ("FPA"),  as amended by
     Section 201 of the Public Utility Regulatory Policies Act of 1978 ("PURPA")
     and the FERC's regulations promulgated thereunder, and each such facility's
     current use,  operation and ownership are consistent  with such  facility's
     status as a "qualifying cogeneration facility".

          (u)  None  of  the  Trust,   the  Company  or  any  of  the  Principal
     Subsidiaries  is (i)  subject to  regulation  as a "holding  company"  or a
     "subsidiary  company" of a holding  company or a "public  utility  company"
     under  Section  2(a) of the  Public  Utility  Holding  Company  Act of 1935
     ("PUHCA"),  except  that  the  Company  and its  subsidiary  in the  United
     Kingdom,  Applied  Energy  Services  Electric  Limited,  are exempt holding
     companies under Section 3(a)(5) of PUHCA


                                       13

<PAGE>



     by order of the Commission, (ii) subject to regulation under the FPA, other
     than as contemplated by 18 C.F.R.  Section  292.601(c),  or (iii) except as
     described  in the  Registration  Statement  (other  than  contained  in the
     exhibits  thereto),  subject to regulation by any state law with respect to
     rates or the financial or organizational regulation of electric utilities.

          (v) Neither the Trust nor the Company is an "investment  company" or a
     company  "controlled" by an "investment  company" within the meaning of the
     Investment Company Act of 1940, as amended.

          (w)  Except as set forth in the  Registration  Statement,  each of the
     Company,  each  Principal  Subsidiary,  and any other  subsidiary or entity
     which the Company  may be deemed to operate  (together  with the  Principal
     Subsidiaries,  the  "Subsidiaries")  is in compliance  with all  applicable
     foreign,  federal,  state  and  local  environmental  (including,   without
     limitation,  the  Comprehensive  Environmental  Response,   Compensation  &
     Liability  Act of 1980,  as  amended),  safety  or  similar  law,  rule and
     regulation,  and there are no costs or liabilities associated with any such
     law,  rule or  regulation,  except  for any such  noncompliances,  costs or
     liabilities  which,  individually  or in the  aggregate,  would  not have a
     material adverse effect on the business,  financial condition or results of
     operations of the Company and the Subsidiaries, taken as a whole.

          (x) The Trust and the Company have  complied  with all  provisions  of
     Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).

     7  Indemnification.  (a) The Company  agrees to indemnify and hold harmless
each  Underwriter and each person,  if any, who controls any Underwriter  within
the meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange
Act,  from and against  any and all losses,  claims,  damages,  liabilities  and
judgments (i) caused by any untrue  statement or alleged  untrue  statement of a
material fact contained in the  Registration  Statement (other than that part of
the Registration  Statement that constitutes the Form T-1) or the Prospectus (as
amended or  supplemented  if the Trust and the Company shall have  furnished any
amendments or supplements thereto) or any preliminary  prospectus,  or caused by
any omission or alleged omission to state therein a material fact required to be
stated  therein or  necessary  to make the  statements  therein not  misleading,
except  insofar as such losses,  claims,  damages,  liabilities or judgments are
caused by any such untrue  statement or omission or alleged untrue  statement or
omission based upon information relating to any Underwriter furnished in writing
to the Company by or on behalf of any Underwriter  through you expressly for use
therein; provided,  however, that the foregoing indemnity agreement with respect
to any preliminary  prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages,  liabilities or
judgments purchased Securities, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended


                                       14

<PAGE>



or   supplemented  if  the  Company  shall  have  furnished  any  amendments  or
supplements  thereto) was not sent or given by or on behalf of such  Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written  confirmation  of the sale of the Securities to such person,  and if the
Prospectus  (as so amended or  supplemented)  would have cured the defect giving
rise to such losses, claims, damages, liabilities or judgments.

     (b) In case any action  shall be brought  against  any  Underwriter  or any
person controlling such Underwriter,  based upon any preliminary prospectus, the
Registration  Statement or the Prospectus or any amendment or supplement thereto
and with respect to which  indemnity  may be sought  against the  Company,  such
Underwriter  shall promptly  notify the Company in writing and the Company shall
assume the defense  thereof,  including  the  employment  of counsel  reasonably
satisfactory to such indemnified party and payment of all fees and expenses. Any
Underwriter  or any such  controlling  person  shall  have the  right to  employ
separate counsel in any such action and participate in the defense thereof,  but
the  fees  and  expenses  of  such  counsel  shall  be at the  expense  of  such
Underwriter or such controlling person unless (i) the employment of such counsel
has been specifically authorized in writing by the Company, (ii) the Company has
failed to assume the  defense and employ  counsel or (iii) the named  parties to
any such action (including any impleaded  parties) include both such Underwriter
or such  controlling  person  and  the  Company  and  such  Underwriter  or such
controlling person shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those  available  to the Company  (in which case the Company  shall not have the
right to assume the defense of such action on behalf of such Underwriter or such
controlling person, it being understood, however, that the Company shall not, in
connection  with any one such action or separate  but  substantially  similar or
related  actions  in the  same  jurisdiction  arising  out of the  same  general
allegations or circumstances,  be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local  counsel) for
all such Underwriters and controlling persons, which firm shall be designated in
writing  by  __________________  and that all such  fees and  expenses  shall be
reimbursed  as they are  incurred).  The  Company  shall not be  liable  for any
settlement  of any such  action  effected  without  the  written  consent of the
Company but if settled  with the  written  consent of the  Company,  the Company
agrees to indemnify and hold harmless any Underwriter  and any such  controlling
person  from and  against any loss or  liability  by reason of such  settlement.
Notwithstanding  the foregoing  sentence,  if at any time an  indemnified  party
shall have requested an indemnifying  party to reimburse the  indemnified  party
for fees and expenses of counsel as  contemplated by the second sentence of this
paragraph,  the  indemnifying  party  agrees  that it  shall be  liable  for any
settlement of any proceeding  effected  without its written  consent if (i) such
settlement  is entered  into more than 10  business  days after  receipt by such
indemnifying  party of the aforesaid  request and (ii) such  indemnifying  party
shall not have reimbursed the indemnified  party in accordance with such request
prior to the date of such settlement.


                                       15

<PAGE>



No  indemnifying  party  shall,   without  the  prior  written  consent  of  the
indemnified party, effect any settlement of any pending or threatened proceeding
in  respect  of which any  indemnified  party is or could  have been a party and
indemnity could have been sought  hereunder by such  indemnified  party,  unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.

     (c) Each Underwriter  agrees,  severally and not jointly,  to indemnify and
hold  harmless  (i)  the  Trust,  the  Trustees,   its  officers  who  sign  the
Registration  Statement and any person  controlling the Trust within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act and
(ii) the  Company,  its  directors,  its  officers  who  sign  the  Registration
Statement and any person  controlling  the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, in each such case to
the same extent as the foregoing  indemnity from the Company to each Underwriter
but only with reference to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for use in the
Registration  Statement,  the  Prospectus,  any  preliminary  prospectus  or any
amendment or supplement thereto. In case any action shall be brought against the
Trust,  the Trustees,  its officers who sign the  Registration  Statement or any
person controlling the Trust or against the Company,  any of its directors,  any
such officer or any person  controlling  the Company  based on the  Registration
Statement,  the  Prospectus  or any  preliminary  prospectus or any amendment or
supplement  thereto and in respect of which  indemnity may be sought against any
Underwriter,  the  Underwriter  shall have the  rights  and duties  given to the
Company (except that if the Company shall have assumed the defense thereof, such
Underwriter  shall not be  required  to do so, but may employ  separate  counsel
therein and participate in the defense thereof but the fees and expenses of such
counsel  shall  be at the  expense  of such  Underwriter),  and the  Trust,  the
Trustees,  its  officers  who sign the  Registration  Statement  and any  person
controlling  the Trust,  the Company,  its directors,  any such officers and any
person  controlling  the Company  shall have the rights and duties  given to the
Underwriter, by Section 7(b) hereof.

     (d) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party in respect of any losses, claims,  damages,  liabilities or
judgments  referred  to  therein,  then  each  indemnifying  party,  in  lieu of
indemnifying  such  indemnified  party,  shall  contribute to the amount paid or
payable by such indemnified party as a result of such losses,  claims,  damages,
liabilities  and judgments (i) in such  proportion as is  appropriate to reflect
the relative  benefits received by the Trust and the Company on the one hand and
the  Underwriters  on the other hand from the offering of the Securities or (ii)
if the  allocation  provided by clause (i) above is not  permitted by applicable
law, in such  proportion  as is  appropriate  to reflect  not only the  relative
benefits  referred  to in clause  (i) above but also the  relative  fault of the
Trust,  the Company and the  Underwriters  in connection  with the statements or
omissions  which  resulted  in such  losses,  claims,  damages,  liabilities  or
judgments, as well as any other relevant equitable


                                       16

<PAGE>



considerations. The relative benefits received by the Trust, the Company and the
Underwriters  shall be  deemed  to be in the same  proportion  as the  total net
proceeds from the offering (before deducting expenses) received by the Trust and
the Company,  and the total underwriting  discounts and commissions  received by
the  Underwriters,  bear to the total price to the public of the Securities,  in
each case as set forth in the table on the  cover  page of the  Prospectus.  The
relative  fault  of the  Trust,  the  Company  and  the  Underwriters  shall  be
determined by reference  to, among other  things,  whether the untrue or alleged
untrue  statement of a material  fact or the  omission to state a material  fact
relates to information  supplied by the Trust,  the Company or the  Underwriters
and  the  parties'  relative  intent,  knowledge,   access  to  information  and
opportunity to correct or prevent such statement or omission.

     The Trust, the Company and the Underwriters agree that it would not be just
and equitable if  contribution  pursuant to this Section 7(d) were determined by
pro rata  allocation  (even if the  Underwriters  were treated as one entity for
such purpose) or by any other method of  allocation  which does not take account
of  the  equitable  considerations  referred  to in  the  immediately  preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding  paragraph shall be deemed to include,  subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection  with  investigating  or defending any such action or claim.
Notwithstanding  the  provisions  of this  Section  7, no  Underwriter  shall be
required  to  contribute  any  amount in excess of the amount by which the total
price at which the Securities  underwritten  by it and distributed to the public
was  offered  to the  public  exceeds  the  amount  of any  damages  which  such
Underwriter  has  otherwise  been  required  to pay by reason of such  untrue or
alleged untrue  statement or omission or alleged  omission.  No person guilty of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities  Act) shall be entitled to  contribution  from any person who was not
guilty of such fraudulent  misrepresentation.  The Underwriters'  obligations to
contribute  pursuant  to this  Section  7(d) are  several in  proportion  to the
respective number of Securities purchased by each of the Underwriters  hereunder
and not joint.

     8 Conditions of Underwriters'  Obligations.  The several obligations of the
Underwriters to purchase the Firm Securities under this Agreement are subject to
the satisfaction of each of the following conditions:

          (a) All the representations and warranties of the Company contained in
     this Agreement  shall be true and correct on the Closing Date with the same
     force and effect as if made on and as of the Closing Date.

          (b) No stop order  suspending the  effectiveness  of the  Registration
     Statement  shall have been issued and no proceedings for that purpose shall
     have


                                       17

<PAGE>



     been  commenced or shall be pending before or, to the best of the Company's
     knowledge, contemplated by the Commission.

          (c)  Subsequent to the  execution  and delivery of this  Agreement and
     prior to the Closing Date, there shall not have been any  downgrading,  nor
     shall any notice have been given of any intended or  potential  downgrading
     or of any review for a possible change that does not indicate the direction
     of the possible  change,  in the rating accorded to any of the Company's or
     the Trust's  securities or to any securities of any other AES Trust that is
     organized  in  substantially  the form of, and for  substantially  the same
     purpose as, the Trust and whose  common  equity  capital is wholly owned by
     the Company or any subsidiary,  by any "nationally  recognized  statistical
     rating  organization",  as  such  term  is  defined  for  purposes  of Rule
     436(g)(2) under the Securities Act.

          (d)(i)  Since the date of the latest  balance  sheet  included  in the
     Registration  Statement,  there  shall not have been any  material  adverse
     change, or any development involving a prospective material adverse change,
     in the condition,  financial or otherwise,  or in the earnings,  affairs or
     business  prospects,  whether  or not  arising  in the  ordinary  course of
     business, of the Company and the Principal Subsidiaries,  taken as a whole,
     from that described in the Registration  Statement,  (ii) since the date of
     the latest balance sheet included in the Registration Statement there shall
     not  have  been  any  material  change,  or  any  development  involving  a
     prospective  material  adverse  change,  in  the  capital  stock  or in the
     long-term  debt of the  Company  from  that set  forth in the  Registration
     Statement,  (iii) the Trust and the  Company  shall  have no  liability  or
     obligation,  direct or  contingent,  which is  material  to the Trust,  the
     Company and the Principal Subsidiaries,  taken as a whole, other than those
     reflected in the  Registration  Statement  and (iv) on the Closing Date you
     shall have  received a certificate  dated the Closing Date,  signed by such
     executive  officers  of the  Company as you may  designate,  and such other
     certificates  of  executive  officers and key  personnel  of the  Principal
     Subsidiaries  as you may  specify  confirming  the  matters  set  forth  in
     paragraphs (a), (b), (c) and (d) of this Section 8.

          (e)  You  shall  have   received  on  the  Closing   Date  an  opinion
     (satisfactory to you and counsel for the  Underwriters),  dated the Closing
     Date, of William R. Luraschi, General Counsel of AES, to the effect that:

               (i) the Company  and each of the  Principal  Subsidiaries  (other
          than Principal Subsidiaries that are incorporated or organized outside
          of the United  States as to which Mr.  Luraschi  expresses no opinion)
          has been duly  incorporated,  is validly  existing as a corporation in
          good standing under the laws of its jurisdiction of incorporation  and
          has the corporate


                                       18

<PAGE>



          power  and  authority  required  to  carry  on its  business  as it is
          currently being conducted and to own its properties;

               (ii) the Company and each of the  Principal  Subsidiaries  (other
          than Principal Subsidiaries that are incorporated or organized outside
          of the United States as to which Mr. Luraschi expresses no opinion) is
          duly  qualified  and is in  good  standing  as a  foreign  corporation
          authorized to do business in each  jurisdiction in which the nature of
          its  business or its  ownership or leasing of property  requires  such
          qualification,  except where the failure to be so qualified  would not
          have a  material  adverse  effect  on the  Company  and the  Principal
          Subsidiaries, taken as a whole;

               (iii)  except  as set  forth  in the  Registration  Statement  or
          otherwise  set  forth on Annex I,  all of the  outstanding  shares  of
          capital  stock of, or other  ownership  interests  in,  the  Principal
          Subsidiaries have been duly and validly  authorized and issued and are
          fully paid and  non-assessable,  and are owned of  record,  and to the
          knowledge of such  counsel,  after due inquiry,  beneficially,  by the
          Company or the Principal  Subsidiary as set forth in such opinion; and
          such  counsel,  after  due  inquiry,  is not  aware  of  any  security
          interest,  claim, lien,  encumbrance or adverse interest of any nature
          on such shares or other ownership interests except as set forth in the
          Registration Statement or in Annex I;

               (iv) the Company is not in violation of its Restated  Certificate
          of  Incorporation  or in  violation  of its  By-laws  and  none of the
          Principal  Subsidiaries  is in violation of its respective  charter or
          their by-laws,  except for any such violations  which would not have a
          material adverse effect on the Trust, the Company and its subsidiaries
          taken as a whole;

               (v) the execution,  delivery and  performance of this  Agreement,
          the Indenture,  Debentures,  Guarantee and Declaration by the Company,
          compliance by the Trust and the Company with all the provisions hereof
          and thereof,  issuance of the Securities and the  consummation  of the
          transactions  contemplated  hereby and  thereby  will not  require any
          consent,  approval,   authorization  or  other  order  of  any  court,
          regulatory  body,  administrative  agency or other  governmental  body
          (except such as may be required under the Securities Act, the Exchange
          Act, the Trust Indenture Act or other securities or Blue Sky laws) and
          will not conflict  with or  constitute a breach of any of the terms or
          provisions of, or a default under, the Declaration, charter or by-laws
          of the Trust, the Company or any of the Principal  Subsidiaries or any
          agreement,  indenture or other  instrument  known to such counsel,  to
          which the Trust, the Company or any of the Principal Subsidiaries is a
          party or by which the Trust, the Company or


                                       19

<PAGE>



          any of the Principal  Subsidiaries or their respective  properties are
          bound that is  material to the Trust,  the  Company and its  Principal
          Subsidiaries,  taken as a whole, or violate or conflict with any laws,
          administrative  regulations  or rulings or court decrees known to such
          counsel,  after due inquiry,  applicable to the Trust,  the Company or
          any of the Principal Subsidiaries or their respective properties;

               (vi)  such  counsel  does not know of any  legal or  governmental
          proceeding  pending or threatened  to which the Trust,  the Company or
          any of the Principal  Subsidiaries is a party or to which any of their
          respective  property is subject  which is required to be  described in
          the Registration  Statement or the Prospectus and is not so described,
          or of any contract or other document which is required to be described
          in the  Registration  Statement or the Prospectus or is required to be
          filed  as an  exhibit  to  the  Registration  Statement  which  is not
          described or filed as required;

               (vii) each of the applicable Principal  Subsidiaries has obtained
          all permits,  licenses,  franchises and authorizations of governmental
          or regulatory authorities  ("permits") which are required to have been
          obtained by it prior to the date hereof and which are  material to the
          construction,  ownership  or  leasing  and  operation  of  each of the
          Principal  Subsidiaries,  as the case may be, as  contemplated  by the
          Registration  Statement,  except for any such permits,  the failure to
          have obtained which, individually or in the aggregate would not have a
          material  adverse  effect  on the  business,  financial  condition  or
          results of  operations  of the Trust,  the Company  and the  Principal
          Subsidiaries,  taken as a whole, and subject to such qualifications as
          may be set forth in the Registration  Statement,  and all such permits
          are in full  force  and  effect;  and such  counsel  has no  reason to
          believe  that  any  other   permits  which  may  be  material  to  the
          construction,  ownership or leasing and  operation of such  facilities
          will not be obtained in due course;

               (viii) each of the AES Beaver Valley, the AES Deepwater,  the AES
          Placerita,  the AES Shady  Point,  the AES  Barbers  Point and the AES
          Thames  facilities is a "qualifying  cogeneration  facility" under the
          FPA,  as  amended  by  Section  201 of PURPA and the FERC  regulations
          promulgated thereunder,  and, to the best of such counsel's knowledge,
          after due inquiry,  each such  facility's  current use,  operation and
          ownership are consistent with such facility's  status as a "qualifying
          cogeneration facility";

               (ix) none of the  Trust,  the  Company  nor any of the  Principal
          Subsidiaries is (i) subject to regulation as a "holding company" or a


                                       20

<PAGE>



          "subsidiary  company"  of a holding  company  or an  "affiliate"  of a
          subsidiary  or holding  company or a "public  utility  company"  under
          Section 2(a) of PUHCA,  except that the Company and its  subsidiary in
          the United Kingdom,  Applied Energy  Services  Electric  Limited,  are
          exempt holding  companies  under Section  3(a)(5) of PUHCA by order of
          the Commission,  (ii) subject to regulation  under the FPA, other than
          as contemplated by 18 C.F.R.  Section  292.601(c),  or (iii) except as
          described in the Registration  Statement,  subject to regulation under
          any  state  law  with  respect  to  the  rates  or  the  financial  or
          organizational regulation of electric utilities; and

               (x) neither the Trust nor the Company is an "investment  company"
          or a  company  "controlled"  by an  "investment  company"  within  the
          meaning of the Investment Company Act of 1940, as amended.

          (f)  You  shall  have   received  on  the  Closing   Date  an  opinion
     (satisfactory to you and counsel for the  Underwriters),  dated the Closing
     Date,  of Davis Polk &  Wardwell,  counsel for the  Company,  to the effect
     that:

               (i) the Debentures  have been duly  authorized and, when executed
          and  authenticated  in accordance with the provisions of the Indenture
          and  delivered  to and  paid  for by the  Trust  as set  forth  in the
          Prospectus, will be entitled to the benefits of the Indenture and will
          be  valid  and  binding  obligations  of the  Company  enforceable  in
          accordance with their terms except as the  enforceability  thereof may
          be  limited by  bankruptcy,  insolvency,  reorganization,  moratorium,
          fraudulent  conveyance  or similar laws  affecting  creditors'  rights
          generally and by equitable principles of general applicability;

               (ii)  this  Agreement  has been  duly  authorized,  executed  and
          delivered  by the Company and is a valid and binding  agreement of the
          Company (except as rights to indemnity and contribution  hereunder may
          be limited by applicable law);

               (iii) the Indenture and the  Guarantee  have been duly  qualified
          under the Trust  Indenture  Act, and the  Indenture,  Declaration  and
          Guarantee  have been duly  authorized,  executed and  delivered by the
          Company and  (assuming the due  authorization,  execution and delivery
          thereof by the respective  Trustees) are valid and binding  agreements
          of the Company,  enforceable in accordance  with their terms except as
          the enforceability  thereof may be limited by bankruptcy,  insolvency,
          reorganization, moratorium, fraudulent conveyance or similar laws


                                       21

<PAGE>



          affecting  creditors' rights generally and be equitable  principles of
          general applicability;

               (iv) the Securities  conform in all material respects as to legal
          matters  to the  description  thereof  contained  in the  Registration
          Statement and the Prospectus;

               (v) the  Registration  Statement has become  effective  under the
          Securities Act (assuming  compliance with clause (2) of Rule 462(b) in
          the case of the Additional Registration Statement) and, to the best of
          such counsel's  knowledge,  no stop order suspending its effectiveness
          has been issued and no proceedings for that purpose are pending before
          or contemplated by the Commission;

               (vi) the  statements  under the  captions  "____________"  in the
          Prospectus,  insofar as such  statements  constitute  a summary of the
          legal  matters,  documents  or  proceedings  specifically  referred to
          therein,  fairly present all the material  information called for with
          respect to such legal matters, documents or proceedings;

               (vii)  except  for  the  order  of  the  Commission   making  the
          Registration    Statement    effective   and   permits   and   similar
          authorizations  required  under  the  securities  or Blue  Sky laws of
          certain states, no consent, approval,  authorization or other order of
          any regulatory body,  administrative agency or other governmental body
          is legally required for the valid issuance and sale of [the Securities
          to the  Underwriters  as  contemplated by this Agreement or the public
          offering of the Securities contemplated by the Prospectus]; and

               (viii) the  Registration  Statement  and the  Prospectus  and any
          supplement or amendment  thereto (except for financial  statements and
          other financial and statistical  information  included or incorporated
          by reference  therein as to which no opinion need be expressed) comply
          as to form in all material respects with the Securities Act.

          In addition,  Davis Polk & Wardwell will deliver a separate  letter to
     the  effect  that  such  counsel  has   participated  in  conferences  with
     directors,   officers  and  other   representatives   of  the  Company  and
     representatives of the independent  public accountants for the Company,  at
     which  conferences the contents of the  Registration  Statement and related
     matters were discussed,  and,  although such counsel has not  independently
     verified  and is not  passing  upon and  assume no  responsibility  for the
     accuracy,  completeness  or fairness  of the  statements  contained  in the
     Registration Statement, except as specified, no facts have come to


                                       22

<PAGE>



          such counsel's  attention  which lead such counsel to believe that the
     Registration  Statement  (other  than  any  financial  statements  or other
     financial or statistical  information included or incorporated by reference
     therein and that part of the  Registration  Statement that  constitutes the
     Form  T-1 as to  which no  opinion  is  expressed)  at its  effective  date
     contained  any untrue  statement of a material fact or omitted to state any
     material  fact  required  to be stated  therein  or  necessary  to make the
     statements  contained therein not misleading,  or that the Prospectus as of
     its date or the Closing Date (other than any financial  statements or other
     financial or statistical  information included or incorporated by reference
     therein  as to  which  no  opinion  is  expressed),  contained  any  untrue
     statement  of a  material  fact or  omitted  to  state  any  material  fact
     necessary to make the  statements  contained  therein,  in the light of the
     circumstances under which they were made, not misleading.

          In rendering their opinions  above,  Davis Polk & Wardwell may rely as
     to factual  matters on such  certificates  of the Company's  officers or of
     governmental  officials  as they may deem  relevant or  necessary  for such
     opinions  and as to matters  governed by other than federal or New York law
     or by the General Corporation Law of Delaware on opinions of local counsel.

          In addition, Mr. Luraschi will deliver a separate letter to the effect
     that such counsel has participated in conferences with directors,  officers
     and  other  representatives  of  the  Company  and  representatives  of the
     independent  public  accountants for the Company,  at which conferences the
     contents of the Registration  Statement and related matters were discussed,
     and,  although  such  counsel  has not  independently  verified  and is not
     passing upon and assume no responsibility for the accuracy, completeness or
     fairness of the statements contained in the Registration Statement,  except
     as specified,  no facts have come to such  counsel's  attention  which lead
     such counsel to believe  that the  Registration  Statement  (other than any
     financial statements or other financial or statistical information included
     or  incorporated  by  reference  therein and that part of the  Registration
     Statement  that  constitutes  the  Form  T-1  as to  which  no  opinion  is
     expressed)  at its  effective  date  contained  any untrue  statement  of a
     material  fact or omitted to state any material  fact required to be stated
     therein  or  necessary  to  make  the  statements   contained  therein  not
     misleading,  or that  the  Prospectus  as of its date or the  Closing  Date
     (other than any  financial  statements  or other  financial or  statistical
     information  included or incorporated  by reference  therein as to which no
     opinion is expressed), contained any untrue statement of a material fact or
     omitted  to state  any  material  fact  necessary  to make  the  statements
     contained therein,  in the light of the circumstances under which they were
     made, not misleading.


                                       23

<PAGE>



          In rendering the opinions  above,  Mr. Luraschi may rely as to factual
     matters on such  certificates of the Company's  officers or of governmental
     officials as he may deem  relevant or necessary for such opinions and as to
     matters  governed  by other than  federal or New York law or by the General
     Corporation Law of Delaware on opinions of local counsel.

          (g) You shall have received on the Closing Date an opinion,  dated the
     Closing  Date,  of  ___________,  counsel for the  Underwriters,  as to the
     matters  referred  to in  clauses  (i),  (ii),  (iii),  (vi) (but only with
     respect to the statements  under the captions  "Description  of __________"
     and "Underwriting") and (viii) of the foregoing paragraph (f).

          With respect to  subparagraph  (viii) of  paragraph  (f) above and the
     final  subparagraph of this paragraph (g),  __________ may state that their
     opinion and belief is based upon their  participation in the preparation of
     the  Registration  Statement  and  the  Prospectus  and any  amendments  or
     supplements  thereto (but not including documents  incorporated  therein by
     reference)  and review and  discussion of the contents  thereof  (including
     documents  incorporated  therein by reference),  but is without independent
     check or verification except as specified.

          (h)  You  shall  have   received  on  the  Closing   Date  an  opinion
     (satisfactory to you and counsel for the  Underwriters),  dated the Closing
     Date of Richards,  Layton & Finger,  special  counsel for the Trust, to the
     effect that:

               (i) the Trust has been duly  created  and is validly  existing in
          good standing as a business trust under the Delaware Act and under the
          Declara tion and the  Delaware  Act has the  business  trust power and
          authority to conduct its  business as  described  in the  Registration
          Statement and Prospectus;

               (ii)  assuming due  authorization,  execution and delivery of the
          Declaration  by the Company and the  Trustees,  the  Declaration  is a
          legal,  valid and binding  agreement of the Company and the  Trustees,
          enforceable  against the Company and the Trustees in  accordance  with
          its terms, except as (a) the enforceability  thereof may be limited by
          bankruptcy,  insolvency,  moratorium,  receivership,   reorganization,
          liquidation,  fraudulent  conveyance or other similar laws relating to
          or affecting  the rights and remedies of creditors  generally  and (b)
          principles of equity,  including applicable laws relating to fiduciary
          duties  (regardless of whether  considered and applied in a proceeding
          in equity or at law);

               (iii) under the  Declaration  and the Delaware Act, the execution
          and delivery of this  Agreement by the Trust,  and the  performance by
          the


                                       24

<PAGE>



          Trust of its obligations  hereunder,  have been duly authorized by all
          business trust action on the part of the Trust;

               (iv) the  Trust  Securities  have  been  duly  authorized  by the
          Declaration  and (x) when the Securities are issued in accordance with
          the  terms  of this  Agreement  and  delivered  to and paid for by the
          Underwriters and (y) the Common  Securities are issued against payment
          therefor as provided in the Declaration, such Trust Securities will be
          duly and  validly  issued  and,  will be fully paid and  nonassessable
          undivided beneficial interests in the assets of the Trust; the holders
          of Trust  Securities,  as  beneficial  owners  of the  Trust,  will be
          entitled  to the same  limitation  of personal  liability  extended to
          stockholders of private  corporations  for profit  organized under the
          General Corporation Law of the State of Delaware;

               (v) under the  Declaration  and the Delaware Act, the issuance of
          the Trust Securities is not subject to preemptive rights; and

               (vi)  the  statements  in  the   Prospectus   under  the  caption
          "_____________________"   insofar  as  such  statements  constitute  a
          summary of legal  matters or  documents  referred to  therein,  fairly
          present the information  called for with respect to such legal matters
          and documents.

     In  rendering  such  opinion,  such  counsel may note that holders of Trust
     Securities may be obligated,  pursuant to the  Declaration,  to (i) provide
     indemnity  and  security  in  connection   with  and  pay  taxes  or  other
     governmental  charges  arising  from  transfers of  certificates  for Trust
     Securities  and  the  issuance  of  replacement   certificates   for  Trust
     Securities, (ii) provide security and indemnity in connection with requests
     of or  directions  to the  Property  Trustee  to  exercise  its  rights and
     remedies under the  Declaration  and (iii) undertake as a party litigant to
     pay costs in any suit for the  enforcement of any right or remedy under the
     Declaration or against the Property Trustee,  to the extent provided in the
     Declaration.  In rendering such opinion such counsel may also note that the
     Company,  in its  capacity as Sponsor and not in its  capacity as a holder,
     has undertaken certain payment obligations as set forth in the Declaration.

          (i) You shall have received a letter on and as of the Closing Date, in
     form and substance satisfactory to you, from Deloitte & Touche, independent
     public  accountants,  with respect to the financial  statements and certain
     financial  information  contained  in the  Registration  Statement  and the
     Prospectus  and  substantially  in the form  and  substance  of the  letter
     delivered to you by Deloitte & Touche on the date of this Agreement.


                                       25

<PAGE>



          (j) The Company and the Trust shall not have failed at or prior to the
     Closing  Date to  perform  or  comply  with  any of the  agreements  herein
     contained  and required to be performed or complied  with by the Company or
     the Trust at or prior to the Closing Date.

     9 Effective Date of Agreement and Termination.  This Agreement shall become
effective  upon the  later of (i)  execution  of this  Agreement  and (ii)  when
notification  of  the  effectiveness  of the  Registration  Statement  has  been
released by the Commission.

     This  Agreement  may be terminated at any time prior to the Closing Date by
you by written  notice to the Company if any of the following has occurred:  (i)
since the respective dates as of which  information is given in the Registration
Statement and the  Prospectus,  any adverse  change or  development  involving a
prospective  adverse  change in the  condition,  financial or otherwise,  of the
Company,  any  Principal  Subsidiary  or  the  earnings,  affairs,  or  business
prospects of the Company or any Principal Subsidiary,  whether or not arising in
the ordinary course of business,  which would, in your reasonable judgment, make
it  impracticable  to market  the  Securities  on the  terms  and in the  manner
contemplated in the  Prospectus,  (ii) any outbreak or escalation of hostilities
or other  national or  international  calamity  or crisis or material  change in
economic  conditions,  if the  effect of such  outbreak,  escalation,  calamity,
crisis or change on the  financial  markets  of the United  States or  elsewhere
would,  in  your  reasonable  judgment,  make it  impracticable  to  market  the
Securities on the terms and in the manner contemplated in the Prospectus,  (iii)
the  suspension or material  limitation of trading in securities on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ National Market System
or limitation on prices for  securities on any such exchange or National  Market
System,  (iv) the enactment,  publication,  decree or other  promulgation of any
federal  or state  statute,  regulation,  rule or  order  of any  court or other
governmental   authority  which  in  your  reasonable  judgment  materially  and
adversely  affects,  or will  materially and adversely  affect,  the business or
operations of the Company, (v) the declaration of a banking moratorium by either
federal  or New York State  authorities  or (vi) the taking of any action by any
federal,  state or local  government  or agency in  respect of its  monetary  or
fiscal affairs which in your reasonable  judgment has a material  adverse effect
on the financial markets in the United States.

     If on the Closing Date or on an Option  Closing  Date,  as the case may be,
any  one or more of the  Underwriters  shall  fail or  refuse  to  purchase  the
Securities  which it or they have agreed to purchase  hereunder on such date and
the aggregate  Firm  Securities or  Additional  Securities,  as the case may be,
which such defaulting  Underwriter or  Underwriters,  as the case may be, agreed
but failed or refused to purchase is not more than one-tenth of the total number
of  Securities  to  be  purchased  by  all  Underwriters,   each  non-defaulting
Underwriter shall be obligated severally,  in the proportion which the number of
Securities set forth opposite its name in Schedule I bears


                                       26

<PAGE>



to the aggregate number of Securities which all the non-defaulting Underwriters,
as the case may be, have agreed to purchase,  or in such other proportion as you
may specify,  to purchase the Securities  which such  defaulting  Underwriter or
Underwriters,  as the case may be,  agreed but failed or refused to  purchase on
such date;  provided  that in no event  shall the number of Firm  Securities  or
Additional  Securities,  as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Firm Securities or Additional
Securities, as the case may be, without the written consent of such Underwriter.
If on the Closing  Date or on an Option  Closing  Date,  as the case may be, any
Underwriter or Underwriters shall fail or refuse to purchase  Securities and the
aggregate  number of Firm Securities or Additional  Securities,  as the case may
be, with  respect to which such  default  occurs is more than  one-tenth  of the
aggregate  number  of  Firm  Securities  to be  purchased  on  such  date by all
Underwriters  in the  event  of a  default  by a  Underwriter  and  arrangements
satisfactory to you and the Company for purchase of such Securities are not made
within 48 hours  after such  default,  this  Agreement  will  terminate  without
liability on the part of any non-defaulting  Underwriter and the Company. In any
such case which does not result in termination of this Agreement,  either you or
the Company  shall have the right to postpone  the Closing  Date or on an Option
Closing Date, as the case may be, but in no event for longer than seven days, in
order that the required changes,  if any, in the Registration  Statement and the
Prospectus or any other  documents or arrangements  may be effected.  Any action
taken under this  paragraph  shall not relieve any defaulting  Underwriter  from
liability  in  respect  of  any  default  of any  such  Underwriter  under  this
Agreement.

     10 Miscellaneous. Notices given pursuant to any provision of this Agreement
shall be addressed as follows:  (a) if to the Trust,  to AES Trust, [ ], c/o The
AES  Corporation,  1001 N. 19th Street,  Arlington,  Virginia 22209,  Attention:
General Counsel;  (b) if to the Company,  to The AES  Corporation,  1001 N. 19th
Street, Arlington,  Virginia 22209, Attention: General Counsel and (C) if to any
Underwriter  or to  you,  to you  c/o  ____________________________,  Attention:
Syndicate  Department,  or in any case to such other address as the person to be
notified may have requested in writing.

     The  respective  indemnities,  contribution  agreements,   representations,
warranties  and other  statements of the Company,  its officers and directors of
the Trust,  the Trustee and its  officers  and of the several  Underwriters  set
forth in or made pursuant to this Agreement  shall remain  operative and in full
force and effect,  and will survive  delivery of and payment for the Securities,
regardless  of (i) any  investigation,  or statement as to the results  thereof,
made by or on behalf of any  Underwriter or by or on behalf of the Company,  the
officers or directors of the Company or any controlling person of the Company or
by or on behalf of the Trust,  the Trustees or the  officers or any  controlling
person of the Trust,  (ii)  acceptance  of the  Securities  and payment for them
hereunder and (iii) termination of this Agreement.


                                       27

<PAGE>



     If this Agreement  shall be terminated by the  Underwriters  because of any
failure or refusal  on the part of the Trust or the  Company to comply  with the
terms or to fulfill any of the conditions of this Agreement,  the Company agrees
to reimburse the several Underwriters for all out-of-pocket  expenses (including
the fees and disbursements of counsel) reasonably incurred by them.

     Except as otherwise  provided,  this  Agreement has been and is made solely
for the  benefit  of and shall be  binding  upon the  Trust,  the  Company,  the
Underwriters,  any controlling  persons  referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other  person  shall  acquire  or have any  right  under or by virtue of this
Agreement.  The term  "successors  and assigns" shall not include a purchaser of
any of the  Securities  from any of the several  Underwriters  merely because of
such purchase.

     This Agreement  shall be governed and construed in accordance with the laws
of the State of New York.

     This Agreement may be signed in various  counterparts  which together shall
constitute one and the same instrument.


                                       28

<PAGE>



     Please confirm that the foregoing  correctly sets forth the agreement among
the Trust, the Company and the Underwriters.


                                         Very truly yours,

                                         AES TRUST [_______],
                                           a Delaware statutory business trust

                                         By: THE AES CORPORATION,
                                           as Sponsor


                                         By
                                           -------------------------------------
                                           Title:


                                         THE AES CORPORATION



                                         By
                                           -------------------------------------
                                           Title:







Acting severally on behalf of
itself and the several Underwriters
named above





By
  --------------------------------



<PAGE>




                                   SCHEDULE I
                                   ----------



                                                    Number of Firm Securities
   Underwriters                                          to be Purchased
   ------------                                          ---------------



Total                                                     $







<PAGE>


                                     Annex I
                                     -------

                             Principal Subsidiaries
                             ----------------------


                                 Ownership                      Security
Name                              Interest                      Interest
----                              --------                      --------








