<SUBMISSION>
<ACCESSION-NUMBER>0000912057-99-005829
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>9
<PERIOD>19990930
<FILING-DATE>19991115
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>AES CORPORATION
<CIK>0000874761
<ASSIGNED-SIC>4991
<IRS-NUMBER>541163725
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-12291
<FILM-NUMBER>99753201
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1001 N 19TH ST
<STREET2>STE 2000
<CITY>ARLINGTON
<STATE>VA
<ZIP>22209
<PHONE>7035221315
</BUSINESS-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<DESCRIPTION>10-Q
<TEXT>

<HTML>
<HEAD>
<TITLE> Prepared by MERRILL CORPORATION www.edgaradvantage.com
</TITLE>
</HEAD>
<BODY BGCOLOR="#FFFFFF">
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<BR>
<P ALIGN="CENTER"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR></B></FONT><FONT SIZE=2><B>Washington, D.C. 20549</B></FONT></P>

<HR NOSHADE WIDTH=120>
<BR>
<P ALIGN="CENTER"><FONT SIZE=5><B>FORM 10-Q</B></FONT></P>

<P><FONT SIZE=2><B>(Mark One)</B></FONT></P>

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<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>&nbsp;<BR></FONT><FONT SIZE=3>/x/</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=3>&nbsp;<BR></FONT><FONT SIZE=3><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934<BR></B></FONT></TD>
</TR>
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<P ALIGN="CENTER"><FONT SIZE=2><B>For the quarterly period ended September&nbsp;30, 1999</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>or</B></FONT></P>

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<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=3>/&nbsp;/</FONT></TD>
<TD WIDTH="88%"><FONT SIZE=3><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934<BR></B></FONT></TD>
</TR>
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<P ALIGN="CENTER"><FONT SIZE=2><B>Commission file number 0-19281</B></FONT></P>

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<BR>
<P ALIGN="CENTER"><FONT SIZE=5><B>THE AES CORPORATION<BR></B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter)</FONT></P>

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<TD WIDTH="48%" ALIGN="CENTER"><FONT SIZE=2><B>Delaware<BR></B></FONT><FONT SIZE=1>(State or Other Jurisdiction of Incorporation or Organization)</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="43%" ALIGN="CENTER"><FONT SIZE=2><B>54-1163725<BR></B></FONT><FONT SIZE=1>(I.R.S. Employer Identification No.)</FONT></TD>
</TR>
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<TD WIDTH="48%" ALIGN="CENTER"><FONT SIZE=1>&nbsp;<BR></FONT><FONT SIZE=2><B>1001 North 19th Street, Arlington, Virginia<BR></B></FONT><FONT SIZE=1>(Address of Principal Executive Offices)</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="43%" ALIGN="CENTER"><FONT SIZE=1>&nbsp;<BR></FONT><FONT SIZE=2><B>22209<BR></B></FONT><FONT SIZE=1>(Zip Code)</FONT></TD>
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</TABLE></CENTER>
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<P ALIGN="CENTER"><FONT SIZE=2><B>(703) 522-1315<BR></B></FONT><FONT SIZE=2>(Registrant's Telephone Number, Including Area Code)</FONT></P>

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<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12&nbsp;months (or for such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been subject to such filing requirements for the past
90&nbsp;days.&nbsp;Yes&nbsp;/x/&nbsp;&nbsp;No&nbsp;/&nbsp;/</FONT></P>

<HR NOSHADE WIDTH=120>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
number of shares outstanding of Registrant's Common Stock, par value $0.01 per share, at November&nbsp;5, 1999, was 206,384,035.</FONT></P>

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<P><FONT SIZE=2>
<!-- ZEQ.=1,SEQ=1,EFW="9927435",CP="AES CORPORATION",DN="1",FOLIO=blank,FILE='DISK037:[99WDC5.99WDC2765]DE2765A.;7',USER='CBROWN',CD='12-NOV-1999;23:52' -->
</FONT></P>

<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>THE AES CORPORATION</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>INDEX</B></FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="9%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="83%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="93%" COLSPAN=3><FONT SIZE=2>PART I. FINANCIAL INFORMATION</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;<BR>
Item 1.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>&nbsp;<BR>
Interim Financial Statements:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Consolidated Statements of Operations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Consolidated Balance Sheets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Consolidated Statements of Cash Flow</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Notes to Consolidated Financial Statements</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>Item 2.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>10</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>Item 3.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Quantitative and Qualitative Disclosures About Market Risk</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>15</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="93%" COLSPAN=3><FONT SIZE=2>&nbsp;<BR>
PART II. OTHER INFORMATION</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;<BR>
Item 1.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>&nbsp;<BR>
Legal Proceedings</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
16</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>Item 2.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Changes in Securities and Use of Proceeds</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>16</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="9%"><FONT SIZE=2>Item 6.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="83%"><FONT SIZE=2>Exhibits and Reports on Form 8-K</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>16</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="93%" COLSPAN=3><FONT SIZE=2>Signatures</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>20</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2>
<!-- ZEQ.=1,SEQ=2,EFW="9927435",CP="AES CORPORATION",DN="1",FOLIO=blank,FILE='DISK037:[99WDC5.99WDC2765]DF2765A.;9',USER='GWISNER',CD='13-NOV-1999;00:11' -->
</FONT></P>

<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND 1998</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>(Unaudited)</B></FONT></P>

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<TH WIDTH="56%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="19%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Nine Months Ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="56%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>9/30/99</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>9/30/98</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>9/30/99</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>9/30/98</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
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<TR VALIGN="BOTTOM">
<TH WIDTH="56%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="41%" COLSPAN=11 ALIGN="CENTER"><FONT SIZE=1><B>($ in millions,<BR>
except per share amounts)<BR></B></FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>REVENUES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Sales and services</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>847</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>612</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,125</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,752</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>OPERATING COSTS AND EXPENSES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Cost of sales and services</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>602</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>400</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,432</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,182</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Selling, general and administrative expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>44</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>42</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Provision to reduce (for recovery of) contract receivables</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>TOTAL OPERATING COSTS AND EXPENSES</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>622</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>412</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,483</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,236</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>OPERATING INCOME</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>225</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>200</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>642</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>516</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>OTHER INCOME AND (EXPENSE):</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Interest expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(141</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(126</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(417</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(346</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Interest and other income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>22</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>47</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Foreign currency exchange loss</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Equity in earnings (loss) before income tax (includes foreign currency transaction loss of $54 for the 3 months ended September&nbsp;30, 1999, and $198 for the 9 months ended September&nbsp;30, 1999)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>41</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(57</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>159</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Income before income taxes, minority interest and extraordinary item</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>96</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>131</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>214</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>376</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Income tax provision</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>27</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>30</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>99</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Minority interest</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>22</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>43</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>62</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Income before extraordinary item</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>58</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>79</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>116</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>215</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Extraordinary item&#151;Net gain on extinguishment of debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>NET INCOME</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>58</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>81</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>116</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>217</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>BASIC EARNINGS PER SHARE:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Before extraordinary item</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.30</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.44</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.62</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1.21</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Extraordinary item</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.30</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.45</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.62</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1.22</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>DILUTED EARNINGS PER SHARE:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Before extraordinary item</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.29</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.43</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.61</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1.18</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Extraordinary item</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="56%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.29</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.44</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.61</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1.19</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="56%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>See
Notes to Consolidated Financial Statements.</FONT></P>

<P><FONT SIZE=2>
<!-- ZEQ.=1,SEQ=3,EFW="9927435",CP="AES CORPORATION",DN="1",FOLIO=1,FILE='DISK037:[99WDC5.99WDC2765]DG2765A.;8',USER='JTEWELL',CD='14-NOV-1999;19:40' -->
</FONT></P>

<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>THE AES CORPORATION</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>CONSOLIDATED BALANCE SHEETS</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>SEPTEMBER 30, 1999 AND DECEMBER 31, 1998</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>(Unaudited)</B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="87%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="65%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>September 30,<BR>
1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 31,<BR>
1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="65%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="32%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>($ in millions)<BR></B></FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>ASSETS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>CURRENT ASSETS:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Cash and cash equivalents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>702</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>491</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Short-term investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>49</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>35</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Accounts receivable, less provision to reduce contract recievables (1999-$49 and 1998-$49)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>679</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>365</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Inventory</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>146</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>119</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Receivable from affiliates</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>18</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Deferred income taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>78</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>71</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Prepaid expenses and other current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>212</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>155</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Total current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,866</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,254</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>PROPERTY, PLANT AND EQUIPMENT:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Land</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>157</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>135</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Electric generation and distribution assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>5,990</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>5,301</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Accumulated depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(718</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(525</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Construction in progress</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,252</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>634</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Property, plant and equipment, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>6,681</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>5,545</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>OTHER ASSETS:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Deferred financing costs, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>151</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>167</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Project development costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>106</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>103</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Investments in and advances to affiliates</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,510</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,933</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Debt service reserves and other deposits</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>328</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>205</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Electricity sales concessions and contracts</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,050</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,280</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Goodwill</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>167</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>66</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Other assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>247</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>228</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Total other assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>3,559</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>3,982</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>TOTAL</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>12,106</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>10,781</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>LIABILITIES AND STOCKHOLDERS' EQUITY</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>CURRENT LIABILITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>261</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>215</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Accrued interest</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>206</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>113</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Accrued and other liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>443</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>235</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Other notes payable&#151;current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>8</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Project financing debt&#151;current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>958</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,405</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Total current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,878</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,976</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>LONG-TERM LIABILITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Project financing debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>4,786</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>3,597</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Other notes payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>2,051</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,644</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Deferred income taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>116</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>268</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Other long-term liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>259</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>220</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Total long-term liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>7,212</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>5,729</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>MINORITY INTEREST</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>964</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>732</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>COMPANY-OBLIGATED CONVERTIBLE MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUSTS HOLDING SOLELY JUNIOR SUBORDINATED DEBENTURES OF AES</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>550</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>550</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>STOCKHOLDERS' EQUITY:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Common stock</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>2</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Additional paid-in capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,806</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,243</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Retained earnings</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,008</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>892</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Accumulated other comprehensive loss</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(1,314</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>(343</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>Total stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,502</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>1,794</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="65%"><FONT SIZE=1>TOTAL</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>12,106</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=1>10,781</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="65%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>See Notes to Consolidated Financial Statements.</FONT></P>

<P><FONT SIZE=2>
<!-- ZEQ.=1,SEQ=4,EFW="9927435",CP="AES CORPORATION",DN="1",FOLIO=2,FILE='DISK037:[99WDC5.99WDC2765]DH2765A.;11',USER='JTEWELL',CD='14-NOV-1999;19:41' -->
</FONT></P>

<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>THE AES CORPORATION</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>(Unaudited)</B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="74%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="22%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Nine Months Ended<BR>
September 30</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="74%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="74%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="22%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>($ in millions)<BR></B></FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>OPERATING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Net cash provided by operating activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>343</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>137</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;<BR>
INVESTING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Property additions</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(641</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(256</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Acquisitions, net of cash acquired</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(1,439</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(1,356</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Proceeds from the sales of assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>666</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>254</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Sale of short-term investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>32</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Purchase of short-term investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(22</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Affiliate advances and equity investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(142</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(60</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Project development costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(44</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(26</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Debt service reserves and other assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(123</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>52</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(1,737</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(1,360</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;<BR>
FINANCING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Borrowings (repayments) under the revolver</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(91</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>171</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Issuance of project financing debt and other coupon bearing securities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,947</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,572</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Repayments of project financing debt and other coupon bearing securities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(706</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(559</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Payments for deferred financing costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(17</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Other liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(40</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(58</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Minority interest payments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Sales of common stock</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>514</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>195</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Net cash provided by financing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,605</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,304</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;<BR>
Increase in cash and cash equivalents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
211</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
81</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Cash and cash equivalents, beginning</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>491</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>302</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Cash and cash equivalents, ending</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>702</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>383</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>SUPPLEMENTAL INTEREST AND INCOME TAXES DISCLOSURES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Cash payments for interest</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>326</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>301</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Cash payments for income taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>53</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>37</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>NONCASH INVESTING AND FINANCING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Common stock issued for acquisition of NewEnergy</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>49</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<P ALIGN="CENTER"><FONT SIZE=2>See
Notes to Consolidated Financial Statements.</FONT></P>

<P><FONT SIZE=2>
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</FONT></P>

<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<P ALIGN="CENTER"><FONT SIZE=2><B>Notes to Consolidated Financial Statements</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>(unaudited)</B></FONT></P>

<P><FONT SIZE=2><B>1.&nbsp;Basis of Presentation</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements include the accounts of The AES Corporation, its subsidiaries and controlled affiliates (the "Company" or "AES").
Intercompany transactions and balances have been eliminated. Investments in 50% or less owned affiliates over which the Company has the ability to exercise significant influence, but not control, are
accounted for using the equity method.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
the Company's opinion, all adjustments necessary for a fair presentation of the unaudited results of operations for the nine months ended September&nbsp;30, 1999 and 1998,
respectively, are included. All such adjustments are accruals of a normal and recurring nature. The results of operations for the period ended September&nbsp;30, 1999 are not necessarily indicative
of the results of operations to be expected for the full year. The financial statements are unaudited and should be read in conjunction with the financial statements which are incorporated by
reference in the Company's Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31, 1998. Certain amounts previously presented have been reclassified to conform to the
September&nbsp;30, 1999 presentation.</FONT></P>

<P><FONT SIZE=2><B>2.&nbsp;Foreign Currency Translation</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;During 1999, the Brazilian Reais experienced a significant devaluation relative to the U.S. Dollar, declining from 1.21 Reais to the Dollar at
December&nbsp;31, 1998 to an average of 1.82 Reais to the Dollar for the nine months ended September&nbsp;30, 1999. This devaluation resulted in significant foreign currency translation and
transaction losses for the Company for both the three months and the nine months ended September&nbsp;30, 1999. A non-cash charge of approximately $61&nbsp;million and
$207&nbsp;million before income taxes was recorded during the three months and the nine months ended September&nbsp;30, 1999, respectively. The non-cash charge was approximately
$41&nbsp;million and $141&nbsp;million after considering income taxes at the effective tax rate of 32% during the three months and the nine months ended September&nbsp;30, 1999, respectively.
Excluding the effects of foreign currency transaction losses, the Company incurred net income of $99&nbsp;million and diluted earnings per share of $0.50 for the three months ended
September&nbsp;30, 1999, and net income of $257&nbsp;million and diluted earnings per share of $1.34 for the nine months ended September&nbsp;30, 1999. The Company also incurred $971 million in
foreign currency translation losses during the nine months ended September 30, 1999 which are included in "Accumulated other comprehensive loss" in the consolidated balance sheet.</FONT></P>


<P><FONT SIZE=2><B>3.&nbsp;Earnings Per Share</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted earnings per share computations are based on the weighted average number of shares of common stock and potential common stock outstanding
during the period, after giving effect to stock splits. Potential common stock, for purposes of determining diluted earnings per share, includes the dilutive effects of stock options, warrants,
deferred compensation arrangements and convertible securities. The effect of such potential common stock is computed using the treasury stock method or the if-converted method, in
accordance with SFAS (Statement of Financial Accounting Standards) No.&nbsp;128, Earnings Per Share. (See Exhibit&nbsp;11).</FONT></P>


<P><FONT SIZE=2><B>4.&nbsp;Investments in and Advances to Affiliates</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company is a party to joint venture/consortium agreements through which the Company has equity investments in several operating companies. The joint
venture/consortium parties generally share operational control of the investee. The agreements prescribe ownership and voting percentages as well as
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other matters. The Company records its share of earnings from its equity investees on a pre-tax basis. The Company's share of the investee's income taxes is recorded in income tax expense.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
following table presents summarized financial information (in millions) for equity method affiliates on a combined 100% basis. Amounts presented include condensed income statement
information of Northern/AES Energy (45% owned U.S. affiliate), NIGEN&nbsp;Ltd. (47% owned UK Affiliate), Medway Power&nbsp;Ltd. (25% owned UK affiliate), Elsta (50% owned Netherlands affiliate),
Light (18% and 14%, in 1999 and 1998, respectively, owned Brazilian affiliate), CEMIG (9.45% owned Brazilian affiliate), affiliates of Chigen, and Kingston (50% owned Canadian affiliate) for the nine
months ended September&nbsp;30, 1999 and 1998. In addition to the affiliates owned as of September&nbsp;30, 1998, the Company purchased OPGC (49% owned Indian affiliate) in late
December&nbsp;1998 which is included in the table below for the nine months ended September&nbsp;30, 1999.</FONT></P>

<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="69%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="25%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Nine Months Ended<BR>
September 30,<BR></B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Revenues</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2,461</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>4,845</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Operating Income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>781</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,448</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Net Income (Loss)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(381</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>815</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2><B>5.&nbsp;Legal Proceedings</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;14, 1999, the Company received a letter from the New York State Attorney General requesting operating and maintenance history for the
Greenidge and Westover stations which were recently acquired from NGE Generating Company. The information is being sought in connection with the Attorney General's investigation into whether major
modifications were made to several coal-fired electricity generating stations in New York without obtaining the requisite Prevention of Significance Deterioration ("PSD") and/or New Source Review
("NSR") pre-construction permits. The Company is cooperating with the Attorney General's investigation.</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
September, an appellate judge in the Minas Gerais state court system granted a temporary injunction that suspends the effectiveness of a shareholders' agreement for Cia. Energetica
de Minas Gerais ("CEMIG"). This appellate ruling suspends the shareholders' agreement while the action to determine the validity of the shareholders' agreement is litigated in the lower court. In
early November, the same appellate reversed this decision and reinstated the effectiveness of the shareholders' agreement, but did not restore the super majority voting rights that benefited the
Company. AES intends to vigorously pursue its legal rights in this matter and to restore all of its rights regarding CEMIG, and does not anticipate that this temporary suspension of the shareholders'
agreement will have a significant effect on its financial condition or results of operation.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
Company is also involved in certain legal proceedings in the normal course of business. It is the opinion of the Company that none of the pending matters are expected to have a
material adverse effect on its results of operations or financial position.
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</FONT></P>

<P><FONT SIZE=2><B>6.&nbsp;Acquisitions</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;1999, a subsidiary of the Company acquired approximately 51% of Central Electricity Supply Company of Orissa Limited (CESCO), an
electricity distribution company in the state of Orissa, India, for approximately $10&nbsp;million. In October 1999, a cyclone struck India including the state of Orissa and caused extensive damage
to the transmission and distribution system of CESCO. The Company is currently assessing the extent of the damage as well as the costs of repair.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
August&nbsp;1999, a subsidiary of the Company won a bid to acquire a controlling 51% interest in Eletronet in Brazil for approximately $155&nbsp;million. The remaining 49% will
be owned by a subsidiary of Eletrobas, a Brazilian utility. Eletronet was created in 1998 by the minority owner to construct a national broadband telecommunications network attached to the existing
national electrical transmission grid in Brazil. The business activities of Eletronet currently represent construction activities, preparing the network for its intended use. Therefore, no results of
operations have been included in the table below for this acquisition.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
August&nbsp;1999, a subsidiary of the Company acquired 50% of Empresa Distribuidora de Electricidad del Este S.A. ("Ede Este") the distribution company providing electricity to
approximately 400,000 users in the eastern portion of the Dominican Republic, for approximately $109&nbsp;million. The Company controls the operations, and therefore, consolidates Ede Este.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
July&nbsp;1999, a subsidiary of the Company acquired all the outstanding shares of NewEnergy Ventures, Inc., a retail energy service company for approximately $90&nbsp;million.
NewEnergy provides electric energy, energy products and services, and technology-based energy solutions to customers in deregulated energy markets in the U.S. The acquisition was financed through a
combination of cash, debt and AES common stock</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
May&nbsp;1999, a subsidiary of the Company acquired two gas-fired power plants totaling 966 MW ("Ecogen") from the government of Victoria, Australia for approximately
$100&nbsp;million.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
January&nbsp;1999, a subsidiary of the Company acquired 49% of both Empresa de Generaci&oacute;n Chiriqu&iacute; S.A. (EGE Chiriqu&iacute;) and Empresa de
Generaci&oacute;n Bayano (EGE Bayano), two hydroelectric generation companies in Panama, for approximately $91&nbsp;million. AES controls the operations of both entities, and therefore,
consolidates them.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
December&nbsp;1998, a subsidiary of the Company acquired a 75% interest in Telasi, the electricity distribution company of Tbilisi, Republic of Georgia, for approximately
$26&nbsp;million.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
June&nbsp;1998, a subsidiary of AES acquired approximately 90% of Empresa Distribuidora de La Plata S.A. ("EDELAP"), an electric distribution company in the province of Buenos
Aires, Argentina for approximately $355&nbsp;million.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
May&nbsp;1998, AES Southland and other subsidiaries of the Company completed the purchase of three natural gas-fired electric generating stations located in Southern
California from Southern California Edison for approximately $786&nbsp;million.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
February&nbsp;1998, the Company acquired approximately 80% of Compania de Luz Electrica de Santa Ana ("CLESA"), an electricity distribution company in El Salvador, for
approximately $97&nbsp;million.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
accompanying statements of operations include the operating results for all of the acquired companies from the dates of their respective acquisitions. The following table presents
supplemental
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unaudited pro forma operating information as if each of the acquisitions had occurred at the beginning of the periods presented (in millions, except per share amounts):</FONT></P>

<!-- User-specified TAGGED TABLE -->
<CENTER><TABLE WIDTH="69%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="26%" COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Nine Months Ended</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>9/30/99</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>9/30/98</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Revenues</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,390</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,112</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Income before extraordinary item</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>99</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>196</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Net Income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>99</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>198</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Basic Earnings Per Share before extraordinary item</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.53</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1.10</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Basic Earnings Per Share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.53</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1.12</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Diluted Earnings Per Share before extraordinary item</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.51</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1.08</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Diluted Earnings Per Share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.51</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1.09</FONT></TD>
</TR>
</TABLE></CENTER>
<!-- end of user-specified TAGGED TABLE -->
<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
pro forma results are based upon assumptions and estimates which the company believes are reasonable. The pro forma results do not purport to be indicative of the results that
actually would have been obtained had the acquisitions occurred on January&nbsp;1, 1998, nor are they intended to be a projection of future results. Net income and earnings per share for the nine
months ended September&nbsp;30, 1999 include a non-cash charge of $141&nbsp;million, net of tax, from foreign currency transaction losses.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
June&nbsp;1999, a subsidiary of the Company assumed long-term managerial and voting control of two regional electric distribution companies ("RECs") in Kazakhstan as
part of a settlement of receivables outstanding from the government of Kazakhstan. The contractual rights to control the operations of the RECs received in this transaction were valued at
approximately $26&nbsp;million. The two distribution businesses serve approximately 1.8&nbsp;million people. There can be no assurance that the government of Kazakhstan will abide by the terms or
periods agreed to in the original memorandum of understanding that currently governs the Company's operating control of the RECs.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
May&nbsp;1999, a subsidiary of the Company acquired six electric generating stations from NGE Generation, Incorporated ("NGE") for approximately $953&nbsp;million. These
coal-fired electric generating stations have a total installed capacity of 1,424 MW. Concurrently, the subsidiary sold two of the plants to an
unrelated third party for approximately $670&nbsp;million and simultaneously entered into a leasing arrangement with the unrelated party. The former transaction was accounted for as a purchase while
the latter was accounted for as a sale-leaseback, with operating lease treatment.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
purchase price allocations for recently completed acquisitions have been prepared on a preliminary basis subject to adjustments resulting from additional facts that may come to
light when the engineering, environmental and legal analysis are completed during their respective allocation periods.</FONT></P>

<P><FONT SIZE=2><B>7.&nbsp;Comprehensive Income</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive income (loss) consists of net income and foreign currency translation adjustments. It includes foreign currency translation losses of
$119&nbsp;million and $86&nbsp;million for the quarters ended September&nbsp;30, 1999 and 1998, respectively, and foreign currency translation losses of $971&nbsp;million and
$181&nbsp;million for the nine months ended September&nbsp;30, 1999 and 1998, respectively. Comprehensive loss was $61&nbsp;million and $5&nbsp;million for the quarters ended
September&nbsp;30, 1999 and 1998, respectively. Comprehensive loss was $855&nbsp;million for the nine months ended September&nbsp;30, 1999, and comprehensive income was $36&nbsp;million for
the nine months ended September&nbsp;30, 1998.
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</FONT></P>

<P><FONT SIZE=2><B>8.&nbsp;Segments</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Information about the Company's operations by segment are as follows (in millions):</FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="87%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="60%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Revenue (1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Operating<BR>
Income</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Equity<BR>
Earnings<BR>
/ (Loss)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2><B>Quarter Ended September 30, 1999</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Generation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>529</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>203</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Distribution</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>315</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>34</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(13</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Corporate and services</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>847</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>225</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(3</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2><B>Quarter Ended September 30, 1998</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Generation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>366</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>162</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>6</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Distribution</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>244</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>35</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Corporate and services</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>612</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>200</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>41</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2><B>Nine Months Ended September 30, 1999</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Generation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,320</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>551</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>36</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Distribution</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>791</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>128</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(93</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Corporate and services</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(37</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2,125</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>642</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(57</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2><B>Nine Months Ended September 30, 1998</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Generation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,022</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>410</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>21</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Distribution</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>720</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>149</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>138</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Corporate and services</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(43</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,752</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>516</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>159</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="60%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->
<HR NOSHADE ALIGN=LEFT WIDTH=120>
<DL compact>
<DT><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Intersegment
revenues for the quarter ended September&nbsp;30, 1999 and 1998 were $23&nbsp;million and $24&nbsp;million, respectively, and for nine months ended
September&nbsp;30, 1999 and 1998 were $68&nbsp;million and $49&nbsp;million, respectively.</FONT></DD></DL>
<BR>

<P><FONT SIZE=2><B>9.&nbsp;Subsequent Events</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;1999 a subsidiary of the Company acquired a controlling interest in Tiete (Companhia de Geracao de Energia Eletrica Tiete), a generating
company in Brazil for approximately $498&nbsp;million. AES acquired 61% of the voting stock and 39% of the total capital stock of the company. Approximately $186&nbsp;million of the project
financing was provided by BNDES, the Brazilian national development bank, and AES funded the remaining amount.</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
November&nbsp;1999 the Company sold an additional $250,000,000 of its 9.50% Senior Notes due 2009 at 99.5% plus accrued interest from June&nbsp;11, 1999. The proceeds from this
offering were used to meet short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit support to assist in certain
project refinancings, repaying certain indebtedness and otherwise for general corporate purposes.
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</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
October&nbsp;1999 the Company sold 14,000,000 shares of its common stock for gross proceeds of approximately $801&nbsp;million and simultaneously sold trust convertible
preferred Securities ("Convertibles") for gross proceeds of approximately $450&nbsp;million. The Convertibles were priced to yield 6<SUP>3</SUP>/<SMALL>4</SMALL>%, with a 23% conversion premium. In November
1999 the underwriters exercised their entire overallotment option for the Convertibles in the amount of approximately $68&nbsp;million. The proceeds from these offerings were used to meet
short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit support to assist in certain project refinancings,
repaying certain indebtedness, and otherwise for general corporate purposes.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
October&nbsp;1999 a subsidiary of the Company completed the acquisition of Peoria, Illinois-based CILCORP&nbsp;Inc. (NYSE:CER). AES entered into a definitive agreement in
November&nbsp;1998 to acquire CILCORP for approximately $886&nbsp;million in cash. The purchase price includes $475 million of subordinated debentures issued by the subsidiary formed to acquire
CILCORP. CILCORP is the parent company of Central Illinois Light Company, an electric and gas utility that serves approximately 190,000 electric and 200,000 gas customers in central Illinois.</FONT></P>

<P><FONT SIZE=2>
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</FONT></P>

<!-- Generated by Merrill Corporation (www.merrillcorp.com) -->
<BR>

<P><FONT SIZE=2><B>Item 2. Discussion and Analysis of Financial Condition and Results of Operations.</B></FONT></P>

<P><FONT SIZE=2><B>Introduction</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The AES Corporation (AES or the Company) is a global power company committed to serving the world's needs for electricity in a socially responsible way.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
majority of the Company's revenues represent sales of electricity to customers (generally electric utilities or regional electric companies) for further resale to
end-users. This is referred to as the electricity "generation" business. AES's generation business represented 62% of total revenues for the nine months ended September&nbsp;30, 1999.
Sales by these generation companies are made both under long-term contracts from power plants owned by the Company's subsidiaries and affiliates as well as through direct sales into
regional wholesale electricity markets without a contract. The Company owns plants that it has constructed ("greenfield" plants) as well those that it has purchased.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Because
of the significant complexities associated with building new electric generating plants, construction periods often range from two to five years, depending on the technology
and location. AES currently expects that projects now under construction will reach commercial operation and begin to sell electricity at various dates through the year 2002. The completion of each
plant in a timely manner is generally supported by a guarantee from the plant's construction contractor, although in certain cases, AES has assumed the risk of satisfactory construction completion.
Due to changes in the economic, political, technological, regulatory or logistical circumstances involving each individual plant, however, those commercial operations may be delayed.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;AES
also sells electricity directly to end users such as commercial, industrial, governmental and residential customers. This is referred to as the electricity "distribution"
business. Electricity sales by AES's distribution businesses are generally made pursuant to the provisions of long-term electricity sale concessions granted by governments. In certain
cases, these distribution companies are "integrated", in that they also own electric power plants for the purpose of generating a portion of the electricity they sell. Each distribution company also
purchases electricity from third party wholesale suppliers, which may include other subsidiaries of the Company.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;AES
continues to believe that there is significant demand for more efficiently operated electricity generation and distribution businesses. As a result, and guided by its commitment
to serve the world's needs for electricity, AES is pursuing additional greenfield development projects and acquisitions in many countries. Several of these, if consummated, would require the Company
to obtain substantial additional financing, including both debt and equity financing.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;AES
is also currently in the process of completing several acquisitions, including its agreement to acquire the Drax Power Station, a 4,000 MW coal-fired base load
generating facility. On November&nbsp;9, 1999, the British Secretary of State approved the sale of the Drax Power Station by National Power, Plc. to AES.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Certain
subsidiaries and affiliates of the Company (domestic and non-U.S.) have signed long-term contracts or made similar arrangements for the sale of
electricity and are in various stages of developing the related greenfield power plants. Substantial risks accompany their successful completion, including, but not limited to, those relating to
failures of siting, financing, construction, permitting, governmental approvals or termination of the power sales contract as a result of a failure to meet certain milestones.
As of September&nbsp;30, 1999, capitalized costs for projects under development and in early stage construction were approximately $106&nbsp;million. The Company believes that these costs are
recoverable; however, no assurance can be given that changes in circumstances related to individual projects will not occur or that any of these projects will be completed and reach commercial
operation.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;It
may not always be possible to arrange project financing for specific potential acquisitions. Moreover, acquisitions or the commencement of construction on several greenfield
developments could require
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the Company to obtain substantial additional financing including both debt and equity. In order to enhance its financial capabilities to respond to these more accelerated opportunities, the Company
maintains a $600&nbsp;million revolving line and letter of credit facility (the "Revolver") and a $250&nbsp;million letter of credit facility. AES also maintains a "universal shelf" registration
statement with the SEC, which allows for the public issuance of various additional debt and preferred or common equity securities, either individually or in combination, and which currently represents
approximately $932&nbsp;million in unused potential proceeds from the issuance of public securities.</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
Company wishes to caution readers that there are important factors and areas affecting the Company which involve risk and uncertainty. These factors are set forth in the Company's
Annual Report on Form&nbsp;10-K filed with the Commission for the year ended December&nbsp;31, 1998 under the heading "Cautionary Statement and Risk Factors", and should be considered
when reviewing the Company's business. Such factors are relied upon by AES in issuing any forward-looking statements and could affect AES's actual results and cause such results to differ materially
from those expressed in any forward-looking statements made by, or on behalf of, AES. Some or all of these factors may apply to the Company's business as currently maintained or to be maintained.</FONT></P>


<P><FONT SIZE=2><B>Results of Operations</B></FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Revenues.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Revenues increased $235&nbsp;million, or 38%, to $847&nbsp;million in the third quarter of 1999 from
$612&nbsp;million in the third quarter of 1998. Revenues increased $373&nbsp;million, or 21%, to $2.1&nbsp;billion in the nine months ended September&nbsp;30, 1999 from $1.7&nbsp;billion in
the nine months ended September&nbsp;30, 1998. Revenues increased primarily from the acquisition of new businesses and also from the development of greenfield projects during both the third quarter
of 1999 and the nine months ended September&nbsp;30, 1999. The increase in revenues for the third quarter of 1999 is due primarily to the acquisitions of New Energy in July&nbsp;1999 and the New
York plants in May&nbsp;1999. Other acquisitions that also contributed to the increase in revenues during the nine months ended September&nbsp;30, 1999 include Southland, Edelap, Panama and
Telasi. The start of commercial operations at Barry also contributed to the overall increase in revenues. Several other businesses also experienced modest increases in revenues. Revenues were
negatively impacted at Sul due to the effects of the devaluation of the Brazilian Reais. A few other businesses also experienced modest decreases in revenues.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Gross Margin.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Gross margin, which represents total revenues reduced by cost of sales and services, increased
$33&nbsp;million, or 16%, to $245&nbsp;million in the third quarter of 1999 from $212&nbsp;million in the third quarter of 1998. Gross margin as a percentage of revenues decreased to 29% in the
third quarter of 1999 from 35% in the third quarter of 1998. Gross margin in the third quarter of 1999 was negatively impacted by losses at New Energy which was acquired in July&nbsp;1999, as well
as by a decline at Sul due to the devaluation of the Brazilian Reais. Gross margin increased $123&nbsp;million, or 22%, to $693&nbsp;million for the nine months ended September&nbsp;30, 1999
from $570&nbsp;million for the nine months ended September&nbsp;30, 1998. Gross margin as a percentage of revenues was 32% for the nine months ended September&nbsp;30, 1999 and was 33% for the
nine months ended September&nbsp;30, 1998.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Provision to Reduce Contract Receivables.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company recorded a $7&nbsp;million provision to reduce contract
receivables during the three months ended September&nbsp;30, 1999. This provision relates primarily to Telasi, a distribution company in Tiblisi, Georgia.</FONT></P>


<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Selling, General and Administrative Expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Selling, general and administrative expenses decreased $2&nbsp;million,
or 13%, to $13&nbsp;million for the three months ended September&nbsp;30, 1999 from $15&nbsp;million for the three months ended September&nbsp;30, 1998. Selling, general and administrative
expenses as a percentage of revenues remained fairly consistent at 1% for the three months ended September&nbsp;30, 1999 and 2% for the three months ended September&nbsp;30, 1998. Business
development expenses declined slightly during the three months ended September&nbsp;30, 1999, because more of the Company's resources were focused on completing acquisitions and projects under
construction. Selling, general and administrative expenses increased

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$2&nbsp;million, or 5%, to $44&nbsp;million for the nine months ended September&nbsp;30, 1999 from $42&nbsp;million for the nine months ended September&nbsp;30, 1998. Selling, general and
administrative expenses as a percentage of revenues remained constant at 2% for both the nine months ended September&nbsp;30, 1999 and the nine months ended September&nbsp;30, 1998.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Operating Income.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Operating income increased $25&nbsp;million, or 13%, to $225&nbsp;million for the three months
ended September&nbsp;30, 1999 from $200&nbsp;million for the three months ended September&nbsp;30, 1998. Operating income as a percentage of revenues decreased to 27% for the three months ended
September&nbsp;30, 1999 from 33% for the three months ended September&nbsp;30, 1998. The decrease in operating income as a percentage of revenues for the three months ended September&nbsp;30,
1999 is consistent with the decrease in gross margin as a percentage of revenues for the three months ended September&nbsp;30, 1999. Operating income increased $126&nbsp;million, or 24%, to
$642&nbsp;million for the nine months ended September&nbsp;30, 1999 from $516&nbsp;million for the nine months ended September&nbsp;30, 1998. Operating income as a percentage of revenues
remained constant at 30% for both of the nine months ended September&nbsp;30, 1999 and the nine months ended September&nbsp;30, 1998.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Interest Expense.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Interest expense increased $15&nbsp;million, or 12%, to $141&nbsp;million for the three months
ended September&nbsp;30, 1999 from $126&nbsp;million for the three months ended September&nbsp;30, 1998. Interest expense increased $71&nbsp;million, or 21%, to $417&nbsp;million for the
nine months ended September&nbsp;30, 1999 from $346&nbsp;million for the nine months ended September&nbsp;30, 1998. The overall increase in interest expense is due to interest at new businesses
and additional corporate interest on the senior debt and convertible subordinated debentures issued within the past twelve months to finance new investments, offset by reductions in debt at several
South American businesses and an increase in capitalized interest because of increased construction activity during 1999.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Interest and Other Income.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Interest and other income increased $6&nbsp;million, or 38%, to $22&nbsp;million for the
three months ended September&nbsp;30, 1999 from $16&nbsp;million for the three months ended September&nbsp;30, 1998. Interest and other income increased $8&nbsp;million, or 17%, to
$55&nbsp;million for the nine months ended September&nbsp;30, 1999 from $47&nbsp;million for the nine months ended September&nbsp;30, 1998. The increase in interest and other income is due
primarily to an increase in funds available for investment.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Foreign Currency Transaction Losses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company recorded $7&nbsp;million of foreign currency transaction losses in
businesses which are controlled and consolidated by the Company during the three months ended September&nbsp;30, 1999. For the nine months ended September&nbsp;30, 1999, the Company recorded
$9&nbsp;million of foreign currency transaction losses in businesses which are controlled and consolidated by the Company. The losses relate primarily to a decline in the value of the Pakistani
Rupee. The Company was also impacted by the devaluation of the Brazilian Reais and recorded $54&nbsp;million of foreign currency transaction losses on its investments in affiliates during the three
months ended September&nbsp;30,
1999. For the nine months ended September&nbsp;30, 1999, the Company recorded $198&nbsp;million of foreign currency transaction losses due to the devaluation of the Brazilian Reais on its
investments in affiliates. Equity in earnings of affiliates (before income tax) is presented net of the foreign currency transaction losses on the Consolidated Statements of Operations.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Equity in Earnings (Losses) of Affiliates.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company recorded a $3&nbsp;million loss from its investments in
affiliates for the three months ended September&nbsp;30, 1999. The $3&nbsp;million loss is net of $54&nbsp;million in foreign currency transaction losses. Excluding the foreign currency
transaction losses, equity in earnings of affiliates increased $10&nbsp;million, or 24%, to $51&nbsp;million for the three months ended September&nbsp;30, 1999 from $41&nbsp;million for the
three months ended September&nbsp;30, 1998. The overall increase in equity earnings excluding foreign currency transaction losses is due primarily to increases at Eletropaulo, a subsidiary of Light,
OPGC and Elsta, offset by decreases at CEMIG and AES Northern. The settlement of a gross receipts tax dispute favorably impacted the equity earnings from Eletropaulo. The Company recorded a
$57&nbsp;million loss for the nine months ended September&nbsp;30, 1999. The $57&nbsp;million loss is net of $198&nbsp;million in foreign currency transaction losses. Excluding the foreign
currency transaction losses, equity in earnings
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of affiliates decreased $18&nbsp;million, or 11%, to $141&nbsp;million for the nine months ended September&nbsp;30, 1999 from $159&nbsp;million for the nine months ended September&nbsp;30,
1998. The decrease in equity earnings excluding foreign currency transaction losses is due primarily to decreases in the Brazilian businesses as well as at AES Northern.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company recorded an income tax provision of $27&nbsp;million for the three months ended
September&nbsp;30, 1999 and an income tax provision of $30&nbsp;million for the three months ended September&nbsp;30, 1998. Excluding the foreign currency transaction losses, the income tax
provision would have been $47&nbsp;million for the three months ended September&nbsp;30, 1999. The Company recorded an income tax provision of $55&nbsp;million for the nine months ended
September&nbsp;30, 1999 and an income tax provision of $99&nbsp;million for the nine months ended September&nbsp;30, 1998. Excluding the foreign currency transaction losses, the income tax
provision would have been $121&nbsp;million for the nine months ended September&nbsp;30, 1999. The Company's effective tax rate was 32% in 1999 and 33% in 1998.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Minority Interest.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Minority interest decreased $11&nbsp;million, or 50%, to $11&nbsp;million for the three months
ended September&nbsp;30, 1999 from $22&nbsp;million for the three months ended September&nbsp;30, 1998. Minority interest decreased $19&nbsp;million, or 31%, to $43&nbsp;million for the nine
months ended September&nbsp;30, 1999 from $62&nbsp;million for the nine months ended September&nbsp;30, 1998. The decrease in minority interest for both the three months and the nine months
ended September&nbsp;30, 1999 is due mainly to a lower contribution from certain Brazilian businesses in 1999.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Net Income.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Net income decreased $23&nbsp;million, or 28%, to $58&nbsp;million for the three months ended
September&nbsp;30, 1999 from $81&nbsp;million for the three months ended September&nbsp;30, 1998. Excluding foreign currency transaction losses, net income increased $20&nbsp;million, or 25%,
to $99&nbsp;million for the three months ended September&nbsp;30, 1999 from $79&nbsp;million for the three months ended September&nbsp;30, 1998. Net income excluding foreign currency
transaction losses as a percentage of revenues remained fairly constant at 12% for the three months ended September&nbsp;30, 1999 and 13% for the three months ended September&nbsp;30, 1998. Net
income decreased $101&nbsp;million, or 47%, to $116&nbsp;million for the nine months ended September&nbsp;30, 1999 from $217&nbsp;million for the nine months ended September&nbsp;30, 1998.
Excluding foreign currency transaction losses, net income increased $42&nbsp;million, or 20%, to $257&nbsp;million for the nine months ended September&nbsp;30, 1999 from $215&nbsp;million for
the nine months ended September&nbsp;30, 1998. Net income excluding foreign currency transaction losses as a percentage of revenues remained constant at 12% for both the nine months ended
September&nbsp;30, 1999 and the nine months ended September&nbsp;30, 1998.</FONT></P>


<P><FONT SIZE=2><B>Financial Position, Cash Flows and Foreign Currency Exchange Rates</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;At September&nbsp;30, 1999, cash and cash equivalents totaled approximately $702 million, as compared to $491&nbsp;million at December&nbsp;31, 1998. The
$211 million increase in cash resulted from $1,605 million from financing activities, $343 million from operating activities and the funding of $1,737 million of investing activities. Significant
investing activities included the following acquisitions: EGE Chiriqui and EGE Bayano in Panama; Ecogen in Australia; NewEnergy in California; Ede Este in the Dominican Republic; Eletronet in Brazil;
CESCO in India; the six electric generating stations from NGE and the sale and leaseback of certain of the stations; as well as continued construction activities at various projects. The net source of
cash from financing activities was primarily the result of project finance borrowings of approximately $1,947 million, the issuance of $500&nbsp;million in senior notes which were offset, in part,
by repayment of approximately $706 million of project financing debt. Unrestricted net cash flow of the parent company for the four quarters ended September&nbsp;30, 1999 totaled approximately
$370&nbsp;million.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Through
its equity investments in foreign affiliates and subsidiaries, AES operates in jurisdictions with currencies other than the Company's functional currency, the U.S. dollar.
Such investments and advances were made to fund equity requirements and to provide collateral for contingent obligations. Due primarily to the long-term nature of the investments and
advances, the Company accounts for any adjustments resulting from translation of the financial statements of its foreign investments as a charge or credit
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directly to a separate component of stockholders' equity until such time as the Company realizes such charge or credit. At that time, any differences would be recognized in the statement of operations
as gains or losses.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
addition, certain of the Company's foreign subsidiaries have entered into obligations in currencies other than their own functional currencies or the U.S. dollar. These
subsidiaries have attempted to limit potential foreign exchange exposure by entering into revenue contracts that adjust to changes in the foreign exchange rates. Certain foreign affiliates and
subsidiaries operate in countries where the local inflation rates are greater than U.S. inflation rates. In such cases the foreign currency tends to devalue relative to the U.S. dollar over time. The
Company's subsidiaries and affiliates have entered into revenue contracts which attempt to adjust for these differences, however, there can be no assurance that such adjustments will compensate for
the full effect of currency devaluation, if any. The Company had approximately $1,314 million in cumulative foreign currency translation adjustment losses at September&nbsp;30, 1999.</FONT></P>

<P><FONT SIZE=2><B>Year 2000</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;There are three main elements in the provision of electricity: Generation, transmission and distribution, all of which form&nbsp;a tightly integrated
"supplier chain." In addition, the Company's businesses are also dependent on various industries supplying water, fuel and other utility services. AES, through its subsidiaries and affiliates, is
involved in each aspect of the supplier chain in various countries throughout the world. Set forth below is information regarding AES's efforts to be prepared for the problems associated with the
potential inability of many existing computer programs and/or embedded computer chips to recognize the year 2000, both those in AES's businesses as well as those that AES's businesses depend upon.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Certain
of these statements may constitute forward-looking information as contemplated by the Private Securities Litigation Reform Act of 1995, including those regarding AES's
expected readiness to handle Year 2000 problems, expected capital expenditures in the areas of remediation and testing, the future costs associated with business disruption caused by supplier or
customer Year 2000 problems and the
success of any contingency plans. AES cautions that its predictions of the extent of potential problems and the effectiveness of measures designed to address them are based on numerous assumptions,
like those regarding the accuracy of statements or certifications from critical third parties and vendors, the ability to identify and remediate or replace embedded computer chips in affected
equipment, and resource availability, among other things, and readers should be aware that actual results might differ materially from those discussed below.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;AES's
approach to analyzing Year 2000 issues is to (1)&nbsp;inventory all systems and equipment likely to be affected, (2)&nbsp;perform an inventory assessment, (3)&nbsp;conduct
remediations, (4)&nbsp;test all equipment and systems, and (5)&nbsp;develop contingency plans to aid in business continuity.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;AES's State of Readiness.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;In 1998, AES established a readiness program, led by senior executives and consisting of a
team of AES people with extensive knowledge of AES's businesses and processes, as well as outside consultants experienced in these areas who are being used as advisors to assist with third party
analysis and contingency planning.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Approximately
98% of the Company's businesses have completed a thorough Year 2000 readiness program. The remaining businesses are in the process of completing their contingency
planning and all elements of their readiness plan by December&nbsp;1999. This readiness program has included, where possible, actual Year 2000 simulations as well as off-line tests using
dates occurring after the year 2000, and the development of contingency plans. These tests disclosed no material difficulties with recognizing and processing dates after 1999. The Company is still
evaluating the status of certain newly acquired or to be acquired subsidiaries and assets such as Empresa Distribuidora del Electricidad del Este, S.A., Tiete, and the Drax Power Station.
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</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
Company's generation plants are also significantly dependant on transmission and distribution systems to carry the electricity to the ultimate end users.</FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Due
to the interdependent nature of the supply chain, the Company has extended its evaluation of Year 2000 issues to include key suppliers, transmission companies, customers and
vendors, and has organized meetings and sought written assurance from these parties as to their Year 2000 readiness.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Costs of Addressing Year 2000 Issues.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company has spent approximately $14&nbsp;million to date to achieve full
Year 2000 readiness, and does not expect to spend significant additional funds to achieve full Year 2000 Readiness Company wide. These costs include estimates for the newly acquired CESCO and soon to
be acquired Drax Power Station. These amounts reflect AES's portion of expected costs to make its businesses Year 2000 ready, but not necessarily the cost associated with post-Year 2000
corrective actions or damages, if any. The Company has funded these expenditures through internal sources.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Risks of Year 2000 Failures.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Failures by each of the Company's generation and distribution companies to address Year
2000 issues may lead to numerical errors that, if not addressed or mitigated, may cause system malfunctions resulting in the inability to deliver electricity or the inability to collect data necessary
for proper billing and tariff calculations, among other things.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The
Company's generation business may also be unable to deliver electricity because of the failure of the interconnected distribution companies to receive or transmit the electricity.
Conversely, the Company's distribution companies may not receive sufficient electricity to deliver to their customers because of failures by supplying generators. In such instances of business
interruption due to supplier or customer default, the Company will pursue all contractual remedies available to it to minimize the impact on its results of operations; however, there can be no
assurance that, in all instances, the Company will
be able to legally protect itself from damages arising from third party Year 2000 failures. Because of the significant interdependency of the supplier chain, the Company cannot guarantee that services
will be uninterrupted nor can it adequately predict a reasonably likely worst-case scenario until substantially all of the testing phase is completed.</FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Contingency Plans.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The Company (together with appropriate interested parties like transmission companies, independent
system operators and government agencies) has identified and is testing appropriate contingency plans, addressing emergency operations, disaster recovery, data preservation and business continuation
plans, and intends to continue testing through the fourth quarter of 1999. In addition to our remediation programs, the Company's Year 2000 readiness efforts include evaluation of reasonably likely
worst case scenarios and the development of contingency plans to address how we would respond to problems, should they occur. As a part of the contingency planning process, the Company has addressed
the scenarios recommended in the North American Electric Reliability Council Year 2000 Contingency Planning Guide, as well as additional Company specific scenarios. In September&nbsp;1999, the AES
businesses that are located within the North Americas Reliability Council (NERC) area were issued a Year 2000 ready status from NERC.</FONT></P>

<P><FONT SIZE=2><B>Item 3. Quantitative and Qualitative Disclosures About Market Risk.</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The company believes that there have been no material changes in exposure to market risks during the third quarter of 1999 from those set forth in the
Company's Annual Report filed with the Commission on Form&nbsp;10-K for the year ended December&nbsp;31, 1998.</FONT></P>

<P><FONT SIZE=2>
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</FONT></P>

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<BR>
<P ALIGN="CENTER"><FONT SIZE=2><B>PART II</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>OTHER INFORMATION</B></FONT></P>

<P><FONT SIZE=2><B>Item 1.&nbsp;Legal Proceedings</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;See discussion of litigation in Part&nbsp;I, Notes 5 and 9 to the Consolidated Financial Statements.</FONT></P>

<P><FONT SIZE=2><B>Item 2.&nbsp;Changes in Securities and Use of Proceeds.</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;1999 the Company sold an additional $250,000,000 of its 9.50% Senior Notes due 2009 at 99.5% plus accrued interest from June&nbsp;11,
1999. The proceeds from this offering were used to meet short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit
support to assist in certain project refinancings, repaying certain indebtedness and otherwise for general corporate purposes.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In
October&nbsp;1999 the Company sold 14,000,000 shares of its common stock for gross proceeds of approximately $801&nbsp;million. In October&nbsp;1999 the Company also sold
trust convertible preferred Securities ("Convertibles") for gross proceeds of approximately $450&nbsp;million. The Convertibles were priced to yield 6<SUP>3</SUP>/<SMALL>4</SMALL>%, with a 23% conversion
premium. Also, in November 1999 the underwriters exercised their entire overallotment option for the Convertibles which amounted to approximately $68&nbsp;million. The proceeds from these offerings
were used to meet short-term liquidity needs of the Company related to financing certain acquisitions, providing equity investments or other credit support to assist in certain project
refinancings, repaying certain indebtedness, and otherwise for general corporate purposes.</FONT></P>

<P><FONT SIZE=2><B>Item 6.&nbsp;Exhibits and Reports on Form&nbsp;8-K.</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;</FONT><FONT SIZE=2><I>Exhibits.</I></FONT></P>

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<TABLE WIDTH="78%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>Fifth Amended and Restated Certificate of Incorporation of The AES Corporation is incorporated here in by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June
30, 1998 filed August 14, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
3.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
By-Laws of The AES Corporation, as amended is incorporated here in by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June 30, 1998 filed August 14, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Amended and Restated Declaration of Trust of AES Trust I, among The AES Corporation, The First National Bank of Chicago and First Chicago Delaware, Inc., to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated
herein by reference to Exhibit 4.1 to Annual Report on Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Junior Subordinated Indenture, between The AES Corporation and The First National Bank of Chicago, to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated herein by reference to Exhibit 4.1 to Annual Report on
Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
First Supplemental Indenture to Junior Subordinated Indenture, between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated herein by
reference to Exhibit 4.1 to Annual Report on Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998.
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</FONT>
</TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Guarantee Agreement, between The AES Corporation and The First National Bank of Chicago, as initial guarantee trustee, to provide for the issuance of the $2.6875 Term Convertible Securities, Series A is incorporated herein by reference to Exhibit 4.1
to Annual Report on Form 10-K of the Registrant for the year ended December 31, 1997 filed March 30, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Second Supplemental Indenture dated as of October 13, 1997 between the Company and the First National Bank of Chicago, as trustee, to provide for the issuance from time to time of the 10.25% Senior Subordinated Notes Due 2006, is incorporated herein
by reference to Exhibit 4.2.1 of the Registration Statement on Form S-3/A (Registration No. 333-39857) filed November 19, 1997.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Indenture dated as of October 29, 1997 between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance from time to time of the 8.50% Senior Subordinated Notes due 2007 of the Company and the 8.875% Senior
Subordinated Debentures due 2027, is incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-4 (Registration No. 333-44845) filed January 23, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
First Supplemental Indenture dated as of November 21, 1997 between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance from time to time of the 8.50% Senior Subordinated Notes due 2007 of the Company
and the 8.875% Senior Subordinated Debentures due 2027, is incorporated herein by reference to Exhibit 4.1.2 to the Registration Statement on Form S-4 (Registration No. 333-44845) filed January 23, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Junior Subordinated Debt Trust Securities Indenture dated as of March 1, 1997 between the Company and The First National Bank of Chicago, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by
reference to Exhibit 4.1 to the Registration Statement on Form S-3 (Registration No. 333-46189) filed February 12, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Second Supplemental Indenture dated as of October 29, 1997 between the Company and The First National Bank of Chicago, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit
4.1.1 to the Registration Statement on Form S-3 (Registration No. 333-46189) filed February 12, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Amended and Restated Declaration of Trust of AES Trust II, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-3 (Registration No.
333-46189) filed February 12, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Restated Certificate of Trust of AES Trust II, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.4 to the Registration Statement on Form S-3 (Registration No. 333-46189)
filed February 12, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Form of Preferred Security, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.5 to the Registration Statement on Form S-3 (Registration No. 333-46189) filed February 12,
1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Form of Junior Subordinated Debt Trust Security, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.6 to the Registration Statement on Form S-3 (Registration No. 333-46189)
filed February 12, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Preferred Securities Guarantee with respect to Preferred Securities, to provide for the issuance of the $2.75 Term Convertible Securities, Series B, is incorporated herein by reference to Exhibit 4.7 to the Registration Statement on Form S-3
(Registration No. 333-46189) filed February 12, 1998.

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</FONT>
</TD>
</TR>
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<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Junior Subordinated Indenture dated as of August 10, 1998, between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance of the 4.5% Convertible Junior Subordinated Debentures due 2005 is incorporated
here in by reference to Exhibit 4.15 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June 30, 1998 filed August 14, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
First Supplemental Indenture dated as of August 10. 1998, to the Junior Subordinated Indenture dated as of August 10, 1998, between The AES Corporation and The First National Bank of Chicago, as trustee, to provide for the issuance of the 4.5%
Convertible Junior Subordinated Debentures due 2005 is incorporated here in by reference to Exhibit 4.16 to the Quarterly Report on Form 10-Q of the Registrant for the quarterly period ended June 30, 1998 filed August 14, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Senior Indenture dated December 8, 1998 between the Registrant and the First National Bank of Chicago to provide for the issuance of $200 million of 8% Senior Note due 2008 is incorporated herein by reference to Exhibit 4.01 to the Current Report on
Form 8-K of the Registrant filed December 11, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.18</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
First Supplemental Indenture dated December 8, 1998 to the Senior Indenture between the Registrant and the First National Bank of Chicago to provide for the issuance of $200 million of 8% Senior Note due 2008 is incorporated herein by reference to
Exhibit 4.02 to the Current Report on Form 8-K of the Registrant filed December 11, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
4.19</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Other instruments defining the rights of holders of long-term indebtedness of the Registrant and its consolidated subsidiaries is incorporated here in by reference to Exhibit 4.17 to the Quarterly Report on Form 10-Q of the Registrant for the
quarterly period ended June 30, 1998 filed August 14, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Amended Power Sales Agreement, dated as of December 10, 1985, between Oklahoma Gas and Electric Company and AES Shady Point, Inc. is incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-1 (Registration No. 33-40483)
 .</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
First Amendment to the Amended Power Sales Agreement, dated as of December 19, 1985, between Oklahoma Gas and Electric Company and AES Shady Point, Inc. is incorporated herein by reference to Exhibit 10.45 to the Registration Statement on Form S-1
(Registration No. 33-46011).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Electricity Purchase Agreement, dated as of December 6, 1985, between The Connecticut Light and Power Company and AES Thames, Inc. is incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-1 (Registration No.
33-40483).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Power Purchase Agreement, dated March 25, 1988, between AES Barbers Point, Inc. and Hawaiian Electric Company, Inc., as amended, is incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (Registration No. 33-40483)
 .</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
The AES Corporation Profit Sharing and Stock Ownership Plan is incorporated herein by reference to Exhibit 4(c)(1) to the Registration Statement on Form S-8 (Registration No. 33-49262).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.6</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
The AES Corporation Incentive Stock Option Plan of 1991, as amended, is incorporated herein by reference to Exhibit 10.30 to the Annual Report on Form 10-K of the Registrant for the fiscal year ended December 31, 1995.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Applied Energy Services, Inc. Incentive Stock Option Plan of 1982 is incorporated herein by reference to Exhibit 10.31 to the Registration Statement on Form S-1 (Registration No. 33-40483).

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</TD>
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<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Deferred Compensation Plan for Executive Officers, as amended, is incorporated herein by reference to Exhibit 10.32 to Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 33-40483).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Deferred Compensation Plan for Directors is incorporated herein by reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q of the Registrant for the quarter ended March 31, 1998, filed May 15, 1998.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
The AES Corporation Stock Option Plan for Outside Directors is incorporated herein by reference to Exhibit 10.43 to the Annual Report on Form 10-K of Registrant for the Fiscal Year ended December 31, 1991.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
The AES Corporation Supplemental Retirement Plan is incorporated herein by reference to Exhibit 10.64 to the Annual Report on Form 10-K of the Registrant for the year ended December 31, 1994.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
$600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as
Agent.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Amendment No. 1 dated as of May&nbsp;21, 1999 to the $600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan
Guaranty Trust Company of New York, as Agent.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Amendment No. 2 dated as of July&nbsp;27, 1999 to the $600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan
Guaranty Trust Company of New York, as Agent.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Amendment No. 3 dated as of September&nbsp;28, 1999 to the $600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and
Morgan Guaranty Trust Company of New York, as Agent.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Guaranty dated as of September&nbsp;30, 1999 made by AES Oklahoma Management Co., Inc., AES Hawaii Management Company, Inc., AES Southland Funding LLC, and AES Warrior Run Funding LLC in favor of the Banks and the Fronting Banks party to the Credit
Agreement and Morgan Guaranty Trust Company of New York, as Agent.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
10.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Letter of Credit and Reimbursement Agreement dated as of October&nbsp;19, 1999, among AES, the Several Banks and Financial Institutions parties thereto from time to time, the Letter of Credit Issuing Banks parties thereto from time to time, Union
Bank of California, N.A. as Administrative Agent, Morgan Guaranty Trust Company of New York as Syndication Agent, and Bank of America, N.A. as Documentation Agent.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Statement of computation of earnings per share.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
27</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
Financial Data Schedule (Article 5).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="90%"><FONT SIZE=2>&nbsp;<BR>
&nbsp;</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;</FONT><FONT
SIZE=2><I>Reports on Form 8-K.</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Registrant filed a Current Report on Form&nbsp;8-K dated September&nbsp;30, 1999 containing audited historical financial statements of CILCORP
as of and for the three years ended December&nbsp;31, 1998, interim financial statements of CILCORP as of and for the six months ended June&nbsp;30, 1999, and pro forma financial statements of The
AES Corporation as of and for the six months ended June&nbsp;30, 1999 and for the year ended December&nbsp;31, 1998 which reflect the acquisition of CILCORP.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Registrant
filed a Current Report on Form&nbsp;8-K dated August&nbsp;20, 1999 containing the Registrant's press release about the agreement to acquire the Drax Power
Station from National Power, Plc.</FONT></P>

<P><FONT SIZE=2>
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</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><B>SIGNATURES</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.</FONT></P>

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<TD WIDTH="48%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="50%" COLSPAN=2><FONT SIZE=2>THE AES CORPORATION<BR></FONT><FONT SIZE=2>(Registrant)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>&nbsp;<BR>
Date: November&nbsp;15, 1999</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;<BR>
By:</FONT></TD>
<TD WIDTH="46%"><FONT SIZE=2>&nbsp;<BR>
/s/&nbsp;</FONT><FONT SIZE=2>BARRY J. SHARP</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Name: Barry J. Sharp<BR>
Title: Senior Vice President and<BR>
Chief Financial Officer</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2>
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<P ALIGN="CENTER"><FONT SIZE=2><B>EXHIBIT INDEX</B></FONT></P>

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<TABLE WIDTH="82%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1><B>Exhibit<BR></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="72%" ALIGN="CENTER"><FONT SIZE=1><B>Description of Exhibit</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="16%" ALIGN="CENTER"><FONT SIZE=1><B>Sequentially<BR>
Numbered Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10.12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>$600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The Fronting Banks Listed Therein, and Morgan Guaranty Trust Company
of New York, as Agent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10.13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>Amendment No. 1 dated as of May&nbsp;21, 1999 to the $600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The Fronting
Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as Agent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>Amendment No. 2 dated as of July&nbsp;27, 1999 to the $600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The Fronting
Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as Agent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>Amendment No. 3 dated as of September&nbsp;28, 1999 to the $600,000,000 Credit Agreement dated as of December&nbsp;19, 1997 (amended and restated as of March&nbsp;31, 1999) among AES, The Banks Listed Therein, The
Fronting Banks Listed Therein, and Morgan Guaranty Trust Company of New York, as Agent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>Guaranty dated as of September&nbsp;30, 1999 made by AES Oklahoma Management Co., Inc., AES Hawaii Management Company, Inc., AES Southland Funding LLC, and AES Warrior Run Funding LLC in favor of the Banks and the
Fronting Banks party to the Credit Agreement and Morgan Guaranty Trust Company of New York, as Agent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>10.17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>Letter of Credit and Reimbursement Agreement dated as of October&nbsp;19, 1999, among AES, the Several Banks and Financial Institutions parties thereto from time to time, the Letter of Credit Issuing Banks parties thereto
from time to time, Union Bank of California, N.A. as Administrative Agent, Morgan Guaranty Trust Company of New York as Syndication Agent, and Bank of America, N.A. as Documentation Agent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>11&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>Statement of Computation of Earnings Per Share</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>27&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="72%"><FONT SIZE=2>Financial Data Schedule</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2>
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</FONT></P>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>2
<DESCRIPTION>EXHIBIT 10.12
<TEXT>

<PAGE>

                                                                  Exhibit 10.12


                                                                COMPOSITE COPY

                                          $600,000,000

                                        CREDIT AGREEMENT

                                           dated as of

                                        December 19, 1997
                         (as amended and restated as of March 31, 1999)

                                              among

                                      The AES Corporation,

                                    The Banks Listed Herein,

                                The Fronting Banks Listed Herein,

                                              and

                           Morgan Guaranty Trust Company of New York,
                                            as Agent

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

                                        NationsBank, N.A.
                                 Union Bank of California, N.A.
                                          Co-Arrangers

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

                                          As amended by
                            Amendment No. 1 dated as of May 21, 1999

                                               and

                            Amendment No. 2 dated as of July 27, 1999

                                               and

                         Amendment No. 3 dated as of September 28, 1999

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


<PAGE>



                                        TABLE OF CONTENTS

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

<TABLE>
<CAPTION>
                                                                                             PAGE
                                                                                             ----
<S>                                                                                          <C>
                                            ARTICLE 1
                                           DEFINITIONS

SECTION 1.01.  DEFINITIONS......................................................................1
SECTION 1.02.  ACCOUNTING TERMS AND DETERMINATIONS.............................................21
SECTION 1.03.  TYPES OF BORROWING..............................................................22

                                            ARTICLE 2
                                           THE CREDITS

SECTION 2.01.  COMMITMENTS TO LEND.............................................................22
SECTION 2.02.  NOTICE OF BORROWING.............................................................23
SECTION 2.03.  LETTERS OF CREDIT...............................................................24
SECTION 2.04.  NOTES...........................................................................31
SECTION 2.05.  MATURITY OF LOANS...............................................................31
SECTION 2.06.  INTEREST RATES..................................................................32
SECTION 2.07.  METHOD OF ELECTING INTEREST RATES...............................................33
SECTION 2.08.  COMMITMENT FEES.................................................................35
SECTION 2.09.  TERMINATION OR REDUCTION OF COMMITMENTS.........................................35
SECTION 2.10.  MANDATORY REPAYMENTS OF THE LOANS AND CASH
         COLLATERALIZATION OF LETTERS OF CREDIT................................................36
SECTION 2.11.  OPTIONAL PREPAYMENT OF THE LOANS................................................36
SECTION 2.12.  GENERAL PROVISIONS AS TO PAYMENTS...............................................37
SECTION 2.13.  FUNDING LOSSES..................................................................37
SECTION 2.14.  COMPUTATION OF INTEREST AND FEES................................................38
SECTION 2.15.  CASH COLLATERAL ACCOUNT.........................................................38

                                            ARTICLE 3
                                           CONDITIONS

SECTION 3.01.  CLOSING.........................................................................39
SECTION 3.02.  AES FINANCE SUBSIDIARY ADDITION DATE............................................41
SECTION 3.03.  EXTENSION OF CREDIT.............................................................42

                                            ARTICLE 4
                                 REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  CORPORATE EXISTENCE AND POWER...................................................43



<PAGE>


                                                                                             PAGE
                                                                                             ----
<S>                                                                                          <C>
SECTION 4.02.  CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
         CONTRAVENTION.........................................................................43
SECTION 4.03.  BINDING EFFECT..................................................................43
SECTION 4.04.  FINANCIAL INFORMATION...........................................................43
SECTION 4.05.  LITIGATION......................................................................44
SECTION 4.06.  COMPLIANCE WITH ERISA...........................................................44
SECTION 4.07.  ENVIRONMENTAL MATTERS...........................................................44
SECTION 4.08.  TAXES...........................................................................45
SECTION 4.09.  MATERIAL AES ENTITIES...........................................................45
SECTION 4.10.  NOT AN INVESTMENT COMPANY.......................................................46
SECTION 4.11.  PUBLIC UTILITY HOLDING COMPANY ACT..............................................46
SECTION 4.12.  REPRESENTATIONS IN SUBSIDIARY GUARANTY TRUE AND CORRECT.........................46
SECTION 4.13.  FULL DISCLOSURE.................................................................46
SECTION 4.14.  EXISTING LETTERS OF CREDIT......................................................46
SECTION 4.15.  YEAR 2000 COMPLIANCE............................................................46

                                            ARTICLE 5
                                            COVENANTS

SECTION 5.01.  INFORMATION.....................................................................47
SECTION 5.02.  PAYMENT OF OBLIGATIONS..........................................................50
SECTION 5.03.  MAINTENANCE OF PROPERTY; INSURANCE..............................................50
SECTION 5.04.  CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE................................50
SECTION 5.05.  COMPLIANCE WITH LAWS............................................................51
SECTION 5.06.  INSPECTION OF PROPERTY, BOOKS AND RECORDS.......................................51
SECTION 5.07.  DEBT............................................................................51
SECTION 5.08.  MINIMUM CONSOLIDATED NET WORTH..................................................55
SECTION 5.09.  RESTRICTED PAYMENTS.............................................................56
SECTION 5.10.  SUBORDINATED DEBT AND 8% SENIOR NOTES...........................................56
SECTION 5.11.  LIMITATIONS ON GUARANTEES AND COMMITMENTS.......................................56
SECTION 5.12.  NEGATIVE PLEDGE.................................................................57
SECTION 5.13.  CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.....................................59
SECTION 5.14.  USE OF PROCEEDS; CLEAN-UP PERIODS...............................................60
SECTION 5.15.  CASH FLOW COVERAGE..............................................................60
SECTION 5.16.  CASH FLOW TO TOTAL DEBT RATIO...................................................61
SECTION 5.17.  TRANSACTION WITH AFFILIATES.....................................................61
SECTION 5.18.  LIMITATION ON INVESTMENTS.......................................................61
SECTION 5.19.  ADDITIONAL GUARANTORS...........................................................62


                                               ii


<PAGE>


                                                                                             PAGE
                                                                                             ----
<S>                                                                                          <C>
                                            ARTICLE 6
                                            DEFAULTS

SECTION 6.01.  EVENTS OF DEFAULT...............................................................63
SECTION 6.02.  NOTICE OF DEFAULT...............................................................66
SECTION 6.03.  CASH COLLATERAL.................................................................66

                                            ARTICLE 7
                                            THE AGENT

SECTION 7.01.  APPOINTMENT AND AUTHORIZATION...................................................66
SECTION 7.02.  AGENT AND AFFILIATES............................................................66
SECTION 7.03.  ACTION BY AGENT.................................................................67
SECTION 7.04.  CONSULTATION WITH EXPERTS.......................................................67
SECTION 7.05.  LIABILITY OF AGENT..............................................................67
SECTION 7.06.  INDEMNIFICATION.................................................................67
SECTION 7.07.  CREDIT DECISION.................................................................67
SECTION 7.08.  SUCCESSOR AGENT.................................................................68
SECTION 7.09.  AGENT'S FEE.....................................................................68

                                            ARTICLE 8
                                     CHANGE IN CIRCUMSTANCES

SECTION 8.01.  BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR........................68
SECTION 8.02.  ILLEGALITY......................................................................69
SECTION 8.03.  INCREASED COST AND REDUCED RETURN...............................................69
SECTION 8.04.  TAXES...........................................................................71
SECTION 8.05.  BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURO-DOLLAR
         LOANS.................................................................................73

                                            ARTICLE 9
                                            GUARANTY

SECTION 9.01.  THE GUARANTY....................................................................73
SECTION 9.02.  GUARANTY UNCONDITIONAL..........................................................74
SECTION 9.03.  DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
         CERTAIN CIRCUMSTANCES.................................................................75
SECTION 9.04.  WAIVER BY THE GUARANTORS........................................................75
SECTION 9.05.  SUBROGATION.....................................................................75
SECTION 9.06.  STAY OF ACCELERATION............................................................75
SECTION 9.07.  LIMITATION OF LIABILITY.........................................................76


                                               iii


<PAGE>


                                                                                             PAGE
                                                                                             ----
<S>                                                                                          <C>
                                           ARTICLE 10
                                          MISCELLANEOUS

SECTION 10.01.  NOTICES........................................................................76
SECTION 10.02.  NO WAIVERS.....................................................................76
SECTION 10.03.  EXPENSES; INDEMNIFICATION......................................................76
SECTION 10.04.  SHARING OF SET-OFFS............................................................77
SECTION 10.05.  AMENDMENTS AND WAIVERS.........................................................78
SECTION 10.06.  SUCCESSORS AND ASSIGNS.........................................................78
SECTION 10.07.  COLLATERAL.....................................................................80
SECTION 10.08.  GOVERNING LAW; SUBMISSION TO JURISDICTION......................................80
SECTION 10.09.  COUNTERPARTS; INTEGRATION; EFFECTIVENESS.......................................80
SECTION 10.10.  WAIVER OF JURY TRIAL...........................................................80
SECTION 10.11.  SEVERABILITY; MODIFICATION TO CONFORM TO LAW...................................80
SECTION 10.12.  APPOINTMENT OF AGENT FOR SERVICE OF PROCESS....................................81
SECTION 10.13.  JUDGMENT CURRENCY..............................................................81

</TABLE>

                                               iv


<PAGE>


Appendix

Pricing Schedule

Schedule I-     Existing Agreements with Affiliates

Schedule II -   Existing Letters of Credit

Schedule III -  Non-Conforming Letter of Credit

Exhibit A -     Note

Exhibit B -     Subsidiary Guaranty

Exhibit C -     Closing Date Opinion of the General
                   Counsel of AES

Exhibit D -     Opinion of Davis Polk & Wardwell,
                   Special Counsel for the Agent

Exhibit E -     AES Finance Subsidiary Addition Date Opinion of
                   the General Counsel of AES

Exhibit F -     Opinion of Counsel to an AES Finance Subsidiary in
                   such AES Finance Subsidiary's Jurisdiction of Incorporation

Exhibit G -     Assignment and Assumption Agreement

Exhibit H -     Form of Extension Agreement


                                                v


<PAGE>


                                        CREDIT AGREEMENT
                         (as amended and restated as of March 31, 1999)

         AGREEMENT dated as of December 19, 1997 among THE AES CORPORATION,
the BANKS listed on the signature pages hereof, the FRONTING BANKS listed
herein and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.

         The parties hereto agree as follows:

                                            ARTICLE 1

                                           DEFINITIONS

         SECTION 1.01.  DEFINITIONS.  The following terms, as used herein,
have the following meanings:

         "ADDITIONAL GUARANTORS" means either (i) AES Cilcorp or (ii) both of
AES Southland and AES Warrior Run, as designated by AES by notice to the
Agent on or prior to the earlier of (x) the date of the consummation of the
Cilcorp Acquisition and (y) the date that is six months after the date upon
which the First Amendment and Restatement is effective; PROVIDED that if AES
shall not have so designated the "Additional Guarantors" by such earlier
date, the Agent shall so notify the Banks and the Required Banks shall have
the right to so designate either (i) AES Cilcorp or (ii) both of AES
Southland and AES Warrior Run as the "Additional Guarantors".

         "ADDITIONAL PERMITTED SUBORDINATED DEBT AGREEMENT" means an
indenture or other agreement pursuant to which any Additional Permitted
Subordinated Debt is issued or incurred, as the same may, subject to Section
5.10, be amended, modified or supplemented and in effect from time to time.

         "ADDITIONAL PERMITTED SUBORDINATED DEBT" means Debt of AES (other
than Debt evidenced by the Existing Subordinated Notes and the Existing
Convertible Subordinated Debentures) which does not require any scheduled
payment of principal prior to December 19, 2003 and which has subordination
provisions no less favorable to the Banks than those applicable to the
Existing 8 3/8% Subordinated Notes and other terms and provisions applicable
to AES and its Subsidiaries that are no more restrictive in any material
respect (including, without limitation, covenants and events of default) than
those applicable to the Existing 8 3/8% Subordinated Notes or those otherwise
acceptable to the Required Banks.


<PAGE>


         "ADJUSTED LONDON INTERBANK OFFERED RATE" has the meaning set forth
in Section 2.06(b).

         "ADJUSTED PARENT OPERATING CASH FLOW" means, for any period, (i)
Parent Operating Cash Flow for such period less (ii) the sum of the following
expenses (determined without duplication), in each case to the extent paid by
a Borrower during such period and regardless of whether any such amount was
accrued during such period:

         (A) development expenses;

         (B) income tax expenses of AES and its subsidiaries; and

         (C) corporate overhead expenses.

         "ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent and submitted
to the Agent (with a copy to AES) duly completed by such Bank.

         "AES" means The AES Corporation, a Delaware corporation, and its
successors.

         "AES CEMIG FUNDING" means AES CEMIG Funding Corporation, a Delaware
corporation, and its successors.

         "AES CILCORP" means AES Cilcorp Funding LLC, a Delaware limited
liability company and a Wholly-Owned Consolidated Subsidiary of AES, and its
successors.

         "AES ELECTRIC" means Applied Energy Services Electric Limited, an
English corporation, and its successors.

         "AES FINANCE SUBSIDIARY" means (i) if less than all of the Banks
approve the First Amendment and Restatement, a single Wholly-Owned
Consolidated Subsidiary of AES organized under the laws of The British Virgin
Islands, The Netherlands or The Cayman Islands and designated by AES in
writing as the AES Finance Subsidiary, and the successors of such Subsidiary,
and (ii) if all of the Banks approve the First Amendment and Restatement, any
Wholly-Owned Consolidated Subsidiary of AES organized under the laws of
England, The British Virgin Islands, The Netherlands, the Netherlands
Antilles or The Cayman Islands and designated by AES in writing as an AES
Finance Subsidiary, and the successors of each such Subsidiary.


                                                2


<PAGE>


         "AES FINANCE SUBSIDIARY ADDITION DATE" means, with respect to any
AES Finance Subsidiary, the date on or after the Closing Date on which the
Agent shall have received the documents specified in or pursuant to Section
3.02 with respect to such AES Finance Subsidiary.

         "AESEBA FUNDING" means AESEBA Funding Corporation, a Delaware
corporation, and its successors.

         "AES HAWAII MANAGEMENT" means AES Hawaii Management Company, Inc., a
Delaware corporation and a Subsidiary of AES, and its successors.

         "AES MANAGEMENT GROUP" means (i) individuals who are members of the
board of directors or officers of AES or the president of any Material AES
Entity, (ii) their respective spouses, children, grandchildren, siblings and
parents, (iii) trusts established for the sole or principal benefit of
Persons described in clauses (i) and (ii) above, (iv) heirs, executors,
administrators and personal or legal representatives of Persons described in
clauses (i) and (ii) above, and (v) any corporation or other Person that is
controlled by, and a majority of the equity interests in which are directly
owned by, Persons described in clauses (i) and (ii) above.

         "AES 1996 FORM 10-K" means AES's annual report on Form 10-K for the
year ended December 31, 1996, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.

         "AES OKLAHOMA" means AES Oklahoma Management Co., Inc., a Delaware
corporation and a Subsidiary of AES, and its successors.

         "AES PLACERITA" means AES Placerita, Inc., a Delaware corporation
and an indirect Subsidiary of AES, and its successors.

         "AES SEPTEMBER 1997 FORM 10-Q" means AES's quarterly report on Form
10-Q for the fiscal quarter ended September 30, 1997, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.

         "AES SOUTHLAND" means AES Southland Funding LLC, a Delaware limited
liability company and a Wholly-Owned Consolidated Subsidiary of AES, and its
successors.

         "AES WARRIOR RUN" means AES Warrior Run Funding LLC, a Delaware
limited liability company and a Wholly-Owned Consolidated Subsidiary of AES,
and its successors.


                                           3


<PAGE>


         "AFFILIATE" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls AES (a "Controlling Person") or
(ii) any Person (other than AES or a Subsidiary) which is controlled by or is
under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

         "AGENT" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such
capacity.

         "APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in
the case of its Base Rate Loans, its Domestic Lending Office and (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.

         "ASSET DISPOSITION" has the meaning set forth in the Existing
Subordinated Note Indentures.

         "ASSIGNEE" has the meaning set forth in Section 10.06(c).

         "AUTOMATIC ACCELERATION EVENT" means the occurrence, with respect to
any Borrower, of any of the Events of Default listed in clauses (g) and (h)
of Section 6.01.

         "BANK" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 10.06(c), and their
respective successors.

         "BASE RATE" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.

         "BASE RATE LOAN" means a Loan which bears interest at the Base Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest Rate
Election or the provisions of Section 2.07(a) or Article 8.

         "BENEFIT ARRANGEMENT" means, at any time, an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.

         "BORROWER" means (i) prior to the first AES Finance Subsidiary
Addition Date, AES and (ii) from and after the first AES Finance Subsidiary
Addition Date,


                                           4


<PAGE>


AES or an AES Finance Subsidiary, as the context may require; prior to the
first AES Finance Subsidiary Addition Date, "Borrowers" means AES and from
and after the first AES Finance Subsidiary Addition Date, "Borrowers" means
AES and each AES Finance Subsidiary.

         "BORROWING" means a borrowing hereunder consisting of Loans made to
a single Borrower at the same time by the Banks pursuant to Article II. A
Borrowing is a "Base Rate Borrowing" if such Loans are Base Rate Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans.

         "CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 2.15.

         "CASH FLOW COVERAGE RATIO" means, for any period, the ratio of (i)
Adjusted Parent Operating Cash Flow for such period to (ii) Corporate Charges
for such period.

         "CASH FLOW TO TOTAL DEBT RATIO" means, at any date, the ratio of (i)
Adjusted Parent Operating Cash Flow for the period of four consecutive fiscal
quarters ended on, or most recently prior to, such date to (ii) Debt (other
than Specified Equity-Related Debt, but only to the extent that the sum of
the aggregate principal amount of all Specified Equity-Related Debt plus the
liquidation preference of all preferred stock of AES does not exceed 25% of
the sum (without duplication) of the aggregate principal amount of such
Specified Equity-Related Debt, such preferred stock and Consolidated Net
Worth at such date) of the Borrowers at such date.

         "CILCORP" means Cilcorp Inc., an Illinois corporation.

         "CILCORP ACQUISITION" means the acquisition by AES or any of its
Subsidiaries of any capital stock of Cilcorp.

         "CLOSING DATE" means the date on or after the Effective Date on
which the Agent shall have received the fees and documents specified in or
pursuant to Section 3.01.

         "COMMITMENT" means, with respect to each Bank, the amount set forth
opposite the name of such Bank in the Appendix hereto, as such amount may be
reduced from time to time pursuant to Section 2.09.

         "CONSOLIDATED DEBT" means, at any date, the Debt of AES and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.


                                          5


<PAGE>


         "CONSOLIDATED NET INCOME" means, for any period, the consolidated
net income (or loss) of AES and its Consolidated Subsidiaries for such period.

         "CONSOLIDATED NET WORTH" means, at any date, the consolidated
stockholders' equity of AES and its Consolidated Subsidiaries determined as
of such date without giving effect to any currency translation adjustments
after September 30, 1997.

         "CONSOLIDATED SUBSIDIARY" means, at any date with respect to any
Person, any Subsidiary of such Person or other entity the accounts of which
would be consolidated with those of such Person in its consolidated financial
statements if such statements were prepared as of such date.

         "CORPORATE CHARGES" means, for any period, the sum of the following
amounts (determined without duplication), in each case to the extent paid by
a Borrower during such period and regardless of whether any such amount was
accrued during such period:

          (A) interest expense (including, without limitation, interest
expense in respect of Specified Equity-Related Debt) of any Borrower for such
period;

          (B) rental expense of any Borrower for such period; and

          (C) dividends paid on AES's capital stock during such period.

         "DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v)
all obligations (whether contingent or non-contingent) of such Person to
reimburse any bank or other Person in respect of amounts paid under a letter
of credit, surety or performance bond or similar instrument, (vi) all Debt
secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, and (vii) all Debt of others
Guaranteed by such Person. For purposes hereof, contingent obligations of the
type described in clause (v) of this definition with respect to letters of
credit not issued hereunder shall not be treated as "Debt" hereunder to the
extent that such obligations are cash collateralized or to the extent that
the issuer of any such letter of credit is entitled to draw under a Letter of
Credit issued hereunder which by its terms requires that drawings under such


                                         6


<PAGE>


Letter of Credit be applied only to reimburse such issuer for amounts paid by
such issuer under such letter of credit.

         "DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.

         "DESIGNATED SUBSIDIARY" means each of AES Connecticut Management
Co., Inc., AES Oklahoma Management Co., Inc., AES Hawaii Management Co.,
Inc., AES Thames, Inc., AES Hawaii, Inc., AES Shady Point, Inc. and, from and
after the earlier of (i) the date of the consummation of the Cilcorp
Acquisition and (ii) the date that is six months after the date upon which
the First Amendment and Restatement is effective, each Additional Guarantor,
each Subsidiary of any Additional Guarantor and each Subsidiary of AES that
holds a direct or indirect interest in any Additional Guarantor.

         "DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.

         "DOMESTIC LENDING OFFICE" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Domestic Lending Office) or such
other office as such Bank may hereafter designate as its Domestic Lending
Office by notice to AES and the Agent.

         "EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 10.09.

         "8% SENIOR NOTES" means AES's 8% Senior Notes due 2008 issued
pursuant to the 1998 Senior Note Indenture.

         "ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.


                                       7


<PAGE>


         "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.

         "ERISA GROUP" means AES, its Subsidiaries and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with AES or any of its
Subsidiaries, are treated as a single employer under Section 414 of the
Internal Revenue Code.

         "EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.

         "EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to AES and the Agent.

         "EURO-DOLLAR LOAN" means a Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election.

         "EURO-DOLLAR MARGIN" has the meaning set forth in Section 2.06(b).

         "EURO-DOLLAR RESERVE PERCENTAGE" has the meaning set forth in
Section 2.06(b).

         "EVENT OF DEFAULT" has the meaning set forth in Section 6.01.

         "EXISTING AESEBA FUNDING NON-RECOURSE FACILITY" means the Loan
Agreement dated as of August 28, 1997 among AESEBA Funding, the lenders named
therein and Morgan Guaranty Trust Company of New York, as agent, as amended,
and the Financing Documents (as defined therein).

         "EXISTING AES CEMIG FUNDING NON-RECOURSE FACILITY" means the Loan
Agreement dated as of August 28, 1997 among CEMIG Funding, the lenders named
therein and Morgan Guaranty Trust Company of New York, as agent, as amended,
and the Financing Documents (as defined therein).

         "EXISTING CREDIT FACILITY" means the Credit Agreement dated as of
October 24, 1997 among AES, the banks listed therein, Barclays Bank PLC,
Union Bank of California, N.A., NationsBank, N.A., Australia and New Zealand


                                          8


<PAGE>


Banking Group Limited, BankBoston, N.A. and Morgan Guaranty Trust Company of
New York, as Fronting Banks, and Morgan Guaranty Trust Company of New York,
as Agent, as amended.

         "EXISTING 8 3/8% SUBORDINATED NOTES" means AES's 8 3/8% Senior
Subordinated Notes due 2007 issued pursuant to the Existing 8 3/8%
Subordinated Note Indenture.

         "EXISTING 8 3/8% SUBORDINATED NOTE INDENTURE" means the Indenture
dated as of July 17, 1997 between AES and The Bank of New York, as Trustee,
relating to the Existing 8 3/8% Subordinated Notes, as such Indenture may,
subject to Section 5.10, be amended, modified or supplemented and in effect
from time to time.

         "EXISTING 8.50% SUBORDINATED NOTES" means AES's 8.50% Senior
Subordinated Notes due 2007 issued pursuant to the Existing October 1997
Subordinated Note Indenture.

         "EXISTING 8.875% SUBORDINATED DEBENTURES" means AES's 8.875% Senior
Subordinated Debentures due 2027 issued pursuant to the Existing October 1997
Subordinated Note Indenture.

         "EXISTING LETTER OF CREDIT" means a Letter of Credit (as defined in
the Existing Credit Facility) issued by Barclays Bank PLC, Union Bank of
California, N.A., NationsBank, N.A., Australia and New Zealand Banking Group
Limited, BankBoston, N.A. or Morgan Guaranty Trust Company of New York under
the Existing Credit Facility that is outstanding on the Effective Date.

         "EXISTING OCTOBER 1997 SUBORDINATED NOTE INDENTURE" means the
Indenture dated as of October 29, 1997 between AES and The First National
Bank of Chicago, as Trustee, relating to the Existing 8.50% Subordinated
Notes and the Existing 8.875% Subordinated Debentures, as such Indenture may,
subject to Section 5.10, be amended, modified or supplemented and in effect
from time to time.

         "EXISTING SUBORDINATED NOTES" means (i) the Existing 8 3/8%
Subordinated Notes, (ii) the Existing 10 1/4% Subordinated Notes, (iii) the
Existing 8.50% Subordinated Notes and (iv) the Existing 8.875% Subordinated
Debentures.

         "EXISTING SUBORDINATED NOTE INDENTURES" means (i) the Existing
8 3/8% Subordinated Note Indenture, (ii) the Existing 10 1/4% Subordinated Note
Indenture and (iii) the Existing October 1997 Subordinated Note Indenture.


                                         9


<PAGE>


         "EXISTING 10 1/4% SUBORDINATED NOTES" means AES's 10 1/4% Senior
Subordinated Notes due 2006 issued pursuant to the Existing 10 1/4%
Subordinated Note Indenture.

         "EXISTING 10 1/4% SUBORDINATED NOTE INDENTURE" means the Indenture
dated as of July 1, 1996 between AES and First National Bank of Chicago, as
Trustee, relating to the Existing 10 1/4% Subordinated Notes, as such
Indenture may, subject to Section 5.10, be amended, modified or supplemented
and in effect from time to time.

         "EXTENSION OF CREDIT" means (i) a Borrowing pursuant to Section 2.01
or (ii) the issuance of a Letter of Credit pursuant to Section 2.03.

         "FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business
Day next succeeding such day; PROVIDED that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds
Rate for such day shall be the average rate quoted to Morgan Guaranty Trust
Company of New York on such day on such transactions as determined by the
Agent.

         "FEE LETTER" has the meaning specified in Section 3.01.

         "FINANCING DOCUMENTS" means this Agreement, the Notes and each
Subsidiary Guaranty.

         "FIRST AMENDMENT AND RESTATEMENT" means the First Amendment and
Restatement of Credit Agreement dated as of March 31, 1999 among AES, the
Banks, the Fronting Banks and the Agent.

         "FRONTING BANK" means (i) with respect to the Letters of Credit
deemed to have been issued pursuant to the second sentence of Section
2.03(a), Barclays Bank PLC, Union Bank of California, N.A., NationsBank,
N.A., Australia and New Zealand Banking Group Limited, BankBoston, N.A. or
Morgan Guaranty Trust Company of New York, as the case may be, and (ii) with
respect to all other Letters of Credit, Morgan Guaranty Trust Company of New
York, any other Bank, any affiliate of any Bank (A) a majority of whose
common equity is owned, directly or indirectly, by such Bank, (B) that owns,
directly or indirectly, a


                                         10


<PAGE>


majority of the common equity of such Bank or (C) a majority of whose common
equity is owned, directly or indirectly, by a Person that owns, directly or
indirectly, a majority of the common equity of such Bank and any Subsidiary
of any Bank a majority of whose common equity is owned directly or
indirectly, by such Bank, that shall, in the case of any such Bank, affiliate
or Subsidiary agree to issue letters of credit hereunder with the consent of
the Agent (which consent will be deemed to have been given unless the Agent
shall have notified AES to the contrary within one day of the Agent's receipt
of notice that such Bank, affiliate or Subsidiary is to be a Fronting Bank).

         "GROUP OF LOANS" means, at any time, a group of Loans consisting of
(i) all Loans which are Base Rate Loans at such time or (ii) all Euro-Dollar
Loans having the same Interest Period at such time, PROVIDED that, if a Loan
of any particular Bank is converted to or made as a Base Rate Loan pursuant
to Article VIII, such Loan shall be included in the same Group or Groups of
Loans from time to time as it would have been in if it had not been so
converted or made.

         "GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); PROVIDED that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.

         "GUARANTOR" means, with respect to any Borrower, all other Borrowers.

         "HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.

         "INDEMNITEE" has the meaning set forth in Section 10.03(b).

         "INTEREST PERIOD" means, with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice
of


                                            11


<PAGE>


Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the
applicable Borrower may elect in such notice; PROVIDED that:

              (a) any Interest Period which would otherwise end on a day which
         is not a Euro-Dollar Business Day shall be extended to the next
         succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
         Day falls in another calendar month, in which case such Interest Period
         shall end on the next preceding Euro-Dollar Business Day;

              (b) any Interest Period which begins on the last Euro-Dollar
         Business Day of a calendar month (or on a day for which there is no
         numerically corresponding day in the calendar month at the end of such
         Interest Period) shall, subject to clause (c) below, end on the last
         Euro-Dollar Business Day of a calendar month; and

              (c) any Interest Period that would otherwise end after the
         Termination Date shall end on the Termination Date.

         "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.

         "INVESTMENT" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, Guarantee, time deposit or
otherwise (but not including any demand deposit).

         "INVESTMENT AND GUARANTEE COMMITMENTS" means, without duplication,
(i) all commitments (contingent or otherwise) by a Borrower to make
Investments and (ii) all obligations (contingent or otherwise but excluding
obligations hereunder, whether under Article IX or otherwise) of a Borrower
to make payments under Guarantees; PROVIDED that the obligations of AES or
any of its Subsidiaries to acquire the Kintegh, Milliken, Goudey, Greenidge,
Hickling and Jennison coal-fired electric generating plants from NGE
Generation, Inc., an affiliate of New York State Electric & Gas Corporation,
shall be deemed not to be "Investment and Guarantee Commitments."

         "LETTER OF CREDIT" means a letter of credit issued by a Fronting
Bank pursuant to Section 2.03(a).

         "LETTER OF CREDIT COMMISSION RATE" means a rate per annum determined
in accordance with the annexed Pricing Schedule.


                                            12


<PAGE>


         "LETTER OF CREDIT LIABILITIES" means, at any time and in respect of
any Letter of Credit, the sum, without duplication, of (i) the amount
available for drawing under such Letter of Credit (without regard to whether
any conditions to drawing thereunder can then be met) plus (ii) the aggregate
unpaid amount of all Reimbursement Obligations in respect of previous
drawings made under such Letter of Credit.

         "LEVEL I STATUS" has the meaning set forth in the annexed Pricing
Schedule.

         "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, AES
or any of its Subsidiaries shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.

         "LOAN" means a Base Rate Loan or a Euro-Dollar Loan and "Loans"
means Base Rate Loans or Euro-Dollar Loans or any combination of the
foregoing.

         "LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
2.06(b).

         "MATERIAL AES ENTITY" means (i) any Subsidiary Guarantor, (ii) any
Specified Subsidiary and (iii) any other Person in which AES has a direct or
indirect equity Investment if such Person's contribution to Parent Operating
Cash Flow for the four most recently completed fiscal quarters of AES
constitutes 15% or more of Parent Operating Cash Flow for such period.

         "MATERIAL DEBT" means, with respect to any Person, Debt (other than
the Loans and the Reimbursement Obligations) of such Person arising in one or
more related or unrelated transactions, in an aggregate principal amount
exceeding $15,000,000.

         "MATERIAL PLAN" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $15,000,000.

         "MULTIEMPLOYER PLAN" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions


                                         13


<PAGE>


or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group
during such five year period.

         "NET CASH PROCEEDS" has the meaning set forth in the Existing
Subordinated Note Indentures.

         "1998 SENIOR NOTE INDENTURE" means the Senior Indenture dated as of
December 8, 1998 between AES and The First National Bank of Chicago, as
Trustee, relating to the 8% Senior Notes, as such Indenture may, subject to
Section 5.10, be amended, modified or supplemented and in effect from time to
time.

         "NOTES" means promissory notes of each Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of such Borrower to
repay the Loans made to it, and "Note" means any one of such promissory notes
issued hereunder.

         "NOTICE OF BORROWING" has the meaning set forth in Section 2.02.

         "NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in
Section 2.07(a).

         "NOTICE OF ISSUANCE" has the meaning set forth in Section 2.03(d).

         "OBLIGORS" means the Borrowers and the Subsidiary Guarantors.

         "PARENT" means, with respect to any Bank or Fronting Bank, any
Person controlling such Bank or Fronting Bank, as the case may be.

         "PARENT OPERATING CASH FLOW" means, for any period, the sum of the
following amounts (determined without duplication), but only to the extent
received in cash by a Borrower from a Person other than a Borrower during
such period:

          (A) dividends paid to a Borrower by its Subsidiaries during such
period;

          (B) consulting and management fees paid to a Borrower for such
period;

          (C) tax sharing payments made to a Borrower during such period;


                                          14


<PAGE>


          (D) interest and other distributions paid during such period with
respect to cash and other Temporary Cash Investments of a Borrower (other
than with respect to amounts on deposit in the Cash Collateral Account); and

          (E) other cash payments made to a Borrower by its Subsidiaries
other than (i) returns of invested capital, (ii) payments of the principal of
Debt of any such Subsidiary to such Borrower, (iii) payments in an amount
equal to the aggregate amount released from debt service reserve accounts
upon the issuance of Letters of Credit for the benefit of the beneficiaries
of such accounts.

          For purposes of determining Parent Operating Cash Flow:

          (1) net cash payments received by a Qualified Holding Company
during any period which could have been (without regard for any cash held by
such Qualified Holding Company at the beginning of such period), but were
not, paid as a dividend to AES during such period due to tax or other cash
management considerations may be included in Parent Operating Cash Flow for
such period; PROVIDED that any amounts so included will not be included in
Parent Operating Cash Flow if and when paid to a Borrower in any subsequent
period;

          (2) if at any time there shall exist an event or condition which
permits any holder to accelerate the maturity date of any Debt of, or
terminate its commitment to extend credit to, any Subsidiary, then the
contributions of such Subsidiary to Parent Operating Cash Flow for any period
ending at or prior to such time shall be eliminated and Parent Operating Cash
Flow shall be calculated after giving effect to such elimination;

          (3) if any Subsidiary of a Borrower is sold or otherwise disposed
of (by way of merger, sale of capital stock, sale of assets or otherwise),
(x) the net cash proceeds from such sale or other disposition shall not be
included in Parent Operating Cash Flow for any period and (y) the
contributions of such Subsidiary to Parent Operating Cash Flow for any period
shall be eliminated and Parent Operating Cash Flow shall be calculated after
giving effect to such elimination.; and

          (4) no dividends, fees or payments made to the Borrowers with the
proceeds of any amounts paid to AES or any of its Subsidiaries in connection
with the $525,000,000 additional prepayment made by Connecticut Light & Power
("CL&P") pursuant to the First Amendment to the Electricity Purchase
Agreement between CL&P and AES Thames, Inc., or any amounts paid to AES or
any of its Subsidiaries in connection with any monetization, sale or
securitization of any right to receive any such prepayment, shall be included
in Parent Operating Cash Flow, except to the extent that such proceeds (x)
have been


                                          15


<PAGE>


received by AES in cash in such period or an earlier period and (y) are
included in Consolidated Net Income for such period.

         "PARTICIPANT" has the meaning set forth in Section 10.06(b).

         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         "PERMITTED SENIOR UNSECURED DEBT" means unsecured Debt of AES that
(i) is not guaranteed by any Subsidiary or Affiliate of AES, (ii) that does
not limit (A) the ability of Subsidiaries and Affiliates of AES to guarantee
other senior Debt of AES, (B) the ability of AES to grant Liens on stock of
Subsidiaries or intercompany advances to secure other senior Debt of AES or
(C) the ability of Subsidiaries or Affiliates of AES to grant Liens on their
assets (including stock of Subsidiaries and intercompany advances) to secure
guarantees of other senior Debt (provided that (x) a Permitted Negative
Pledge shall not cause any Debt of AES to fail to be Permitted Senior
Unsecured Debt under this clause (ii) and (y) this clause (ii) shall not
apply if AES shall have received at least $300,000,000 of gross cash proceeds
from the issuance of its common stock after March 1, 1999 and on or prior to
June 30, 1999) and (iii) that is in an aggregate principal amount not
exceeding the lesser of (x) $300,000,000 and (y) $600,000,000 less the
aggregate amount of the Commitments.

         "PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

         "PLAN" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees
of any Person which was at such time a member of the ERISA Group.

         "POWER PROJECT" means an electric power or thermal energy generation
or cogeneration facility or related facilities, and its or their related
electric power transmission, distribution, fuel supply and fuel
transportation facilities, together with its or their related power supply,
thermal energy and fuel contracts as well as other contractual arrangements
with customers, suppliers and contractors.


                                         16


<PAGE>


         "POWER PROJECT DEBT" means Debt of a Subsidiary of AES permitted by
Section 5.07(a)(ii).

         "POWER PROJECT DEFAULT" means any event or condition which results
in the acceleration of the maturity of any Power Project Debt or enables the
holder of such Power Project Debt or any Person acting on such holder's
behalf to then accelerate the maturity thereof, or failure to pay any Power
Project Debt at the final maturity thereof.

         "PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.

         "QUALIFIED HOLDING COMPANY" means any Wholly-Owned Consolidated
Subsidiary of AES that satisfies, and all of whose direct or indirect holding
companies (other than AES) are Wholly-Owned Consolidated Subsidiaries of AES
that satisfy, the following conditions:

               (i) its direct and indirect interest in any Power Project or
         unrelated business shall be limited to the ownership of capital stock
         or Debt obligations of a Person with a direct or indirect interest in
         such Power Project or unrelated business;

              (ii) no consensual encumbrance or restriction of any kind shall
         exist on its ability to make payments, distributions, loans, advances
         or transfers to AES;

             (iii) it shall not have outstanding any Debt other than Guarantees
         of Debt under the Financing Documents and Debt to other Qualified
         Holding Companies; and

              (iv) it shall engage in no business or other activity, shall enter
         into no binding agreements and shall incur no obligations other than
         (A) the holding of the capital stock and Debt obligations permitted
         under clause (i) above, (B) the holding of cash received from its
         Subsidiaries and the investment thereof in Temporary Cash Investments,
         (C) the payment of dividends to AES, (D) ordinary business development
         activities, (E) the making (but not the entering into binding
         obligations to make) of Investments in Power Projects owned by its
         Subsidiaries and (F) in the case of AES Electric, the making of
         Investments in Power Projects owned by NIGEN Limited and Medway Power
         Limited as of the date of this Agreement under any agreement by which
         it is bound as of the date of this Agreement.


                                               17


<PAGE>


         "QUALIFIED PREFERRED EQUITY" means, at any date, equity interests in
a Consolidated Subsidiary of AES (i) that are not (A) required to be redeemed
or redeemable at the option of the holder thereof prior to the fifth
anniversary of the Termination Date or (B) convertible into or exchangeable
for (unless solely at the option of AES) equity interests referred to in
clause (A) above or Debt having a scheduled maturity, or requiring any
repayments or prepayments of principal or any sinking fund or similar
payments in respect of principal or providing for any such repayment,
prepayment, sinking fund or other payment at the option of the holder thereof
prior to the fifth anniversary of the Termination Date and (ii) as to which,
at such date, AES has the right to defer the payment of all dividends and
other distributions in respect thereof for the period of at least 19
consecutive quarters beginning at such date.

         "QUARTERLY PAYMENT DATE" means each January 31, April 30, July 31
and October 31.

         "REFERENCE BANKS" means the respective principal London offices of
Morgan Guaranty Trust Company of New York, NationsBank, N.A. and Barclays
Bank PLC, and "REFERENCE BANK" means any one of such Reference Banks.

         "REFUNDING BORROWING" means a Borrowing which, after application of
the proceeds thereof, results in no net increase in the Total Outstandings of
any Bank.

         "REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

         "REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

         "REIMBURSEMENT OBLIGATIONS" means at any date the obligations then
outstanding of the Borrowers under Section 2.03(f) to reimburse the Fronting
Banks for amounts drawn under Letters of Credit.

         "REQUIRED BANKS" means at any time Banks having at least a majority
of the aggregate Total Exposures at such time.

         "RESTRICTED PAYMENT" means (i) any dividend or other distribution on
any shares of AES's common stock (except dividends payable solely in shares
of its common stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of AES's capital
stock or (b) any option, warrant or other right to acquire shares of AES's
capital stock.


                                        18


<PAGE>


         "REVOLVING CREDIT PERIOD" means the period from and including the
Effective Date to but excluding the Termination Date.

         "SIGNIFICANT AES ENTITY" means (i) any Material AES Entity and (ii)
any other Person in which AES has a direct or indirect equity Investment if
(A) such Person's contribution to Parent Operating Cash Flow for the four
most recently completed fiscal quarters of AES constitutes 10% or more of
Parent Operating Cash Flow for such period, or (B) AES's direct or indirect
interest in the total assets of such Person if such Person is a Consolidated
Subsidiary or in the net assets of such Person in all other cases is at least
equal to 10% of the consolidated assets of AES and its Consolidated
Subsidiaries, taken as a whole, or AES's direct or indirect interest in the
total net income of such Person (for the preceding fiscal quarter) is at
least equal to 10% of the net income of AES and its Consolidated Subsidiaries
(for the preceding fiscal quarter) taken as a whole.

         "SOUTHLAND" means AES Southland Holdings, LLC.

         "SPECIFIED EQUITY-RELATED DEBT" means, at any date, (i) Debt of AES
(A) that is owed to a Consolidated Subsidiary of AES, (B) that is issued in
connection with the issuance by such Consolidated Subsidiary of Qualified
Preferred Equity, (C) that is subordinated to other Debt of AES of at least
the types and to at least the extent as was, on the date of issuance thereof,
the Junior Subordinated Debentures issued by AES in connection with the
issuance by AES Trust II of its $2.75 Term Convertible Securities, Series B,
on October 29, 1996, (D) as to which, at such date, AES has the right to
defer the payment of all interest for the period of at least 19 consecutive
quarters beginning at such date and (E) that does not mature, in whole or in
part, and is not subject to any required repayment or prepayment, any
required sinking fund or similar payment or any repayment or prepayment or
sinking fund or similar payment at the option of the holder thereof, prior to
the fifth anniversary of the Termination Date and (ii) Guarantees by AES of
the obligations of the issuer of any Qualified Preferred Equity in respect of
such Qualified Preferred Equity.

         "SPECIFIED SUBSIDIARY" means each Designated Subsidiary and each
other Subsidiary of AES that holds, directly or indirectly, any interest in
any Designated Subsidiary.

         "SUBORDINATED DEBT" means Debt in respect of the Existing
Subordinated Notes, the Existing Convertible Subordinated Debentures and the
Additional Permitted Subordinated Debt.


                                         19


<PAGE>


         "SUBORDINATED NOTE INDENTURES" means the Existing Subordinated Note
Indentures, the Existing Convertible Subordinated Debenture Indenture and the
Additional Permitted Subordinated Debt Agreements.

         "SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.

         "SUBSIDIARY GUARANTORS" means AES Oklahoma, AES Hawaii Management
and, from and after the earlier of (i) the date of the consummation of the
Cilcorp Acquisition and (ii) the date that is six months after the date upon
which the First Amendment and Restatement is effective, the Additional
Guarantors.

         "SUBSIDIARY GUARANTY" means a Subsidiary Guaranty, substantially in
the form of Exhibit B hereto, given by one or more Subsidiary Guarantors for
the benefit of the Banks, the Fronting Banks and the Agent, as the same may
be amended from time to time.

         "TEMPORARY CASH INVESTMENT" means any Investment in (A)(i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Ratings Services and P-1 by Moody's
Investors Service, Inc., (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any bank or
trust company which is organized or licensed under the laws of the United
States or any state thereof and has capital, surplus and undivided profits
aggregating at least $500,000,000, (iv) medium term notes, asset backed
securities, bonds, notes and letter of credit supported instruments, issued
by any entity organized under the laws of the United States, or any state or
municipality of the United States and rated in any of the three highest rated
categories by Standard & Poor's Ratings Services or Moody's Investors
Service, Inc., (v) repurchase agreements with respect to securities described
in clause (i) above entered into with an office of a bank or trust company
meeting the criteria specified in clause (iii) above, (vi) Euro-Dollar
certificates of deposit issued by any bank or trust company which has capital
and unimpaired surplus of not less than $500,000,000 or (vii) with respect to
a Subsidiary, any category of investment designated as permissible
investments under such Subsidiary's project loan documentation, PROVIDED in
each case (except clause (vii)) that such Investment matures within fifteen
months from the date of acquisition thereof by AES or a Subsidiary and (B)
registered investment companies that are "money market funds" within the
meaning of Rule 2a-7 under the Investment Company Act of 1940.


                                          20


<PAGE>


         "TERMINATION DATE" means December 19, 2000, or such later date to
which the Termination Date shall have been extended pursuant to Section
2.01(b), or, if such day is not a Euro-Dollar Business Day, the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the Termination Date shall be
the next preceding Euro-Dollar Business Day.

         "TOTAL EXPOSURE" means at any time with respect to each Bank, its
Commitment or, if the Commitments shall have terminated, its Total
Outstandings.

         "TOTAL OUTSTANDINGS" means at any time, as to any Bank, the sum of
the aggregate outstanding principal amount of such Bank's Loans and its
participation in the aggregate outstanding Letter of Credit Liabilities.

         "UNFUNDED LIABILITIES" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under
such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
the fair market value of all Plan assets allocable to such liabilities under
Title IV of ERISA (excluding any accrued but unpaid contributions), all
determined as of the then most recent valuation date for such Plan, but only
to the extent that such excess represents a potential liability of a member
of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

         "UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.

         "WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by AES.

         SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with generally accepted accounting principles as in effect from time to time,
applied on a basis consistent (except for changes concurred in by AES's
independent public accountants) with the most recent audited consolidated
financial statements of AES and its Consolidated Subsidiaries delivered to
the Banks; PROVIDED that, if AES notifies the Agent that AES wishes to amend
any covenant in Article V to eliminate the effect of any change in generally
accepted accounting principles on


                                          21


<PAGE>


the operation of such covenant (or if the Agent notifies AES that the
Required Banks wish to amend Article V for such purpose), then AES's
compliance with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the relevant
change in generally accepted accounting principles became effective, until
either such notice is withdrawn or such covenant is amended in a manner
satisfactory to AES and the Required Banks.

         SECTION 1.03. TYPES OF BORROWING. The term "BORROWING" denotes (i) the
aggregation of Loans made or to be made to a Borrower by one or more Banks
pursuant to Article II on the same day, all of which Loans are of the same type
(subject to Article VIII) and, except in the case of Base Rate Loans, have the
same initial Interest Period or (ii) if the context so requires, the borrowing
of such Loans. Borrowings are classified for purposes hereof by reference to the
pricing of Loans comprising such Borrowing (E.G., a "Euro-Dollar Borrowing" is a
Borrowing comprised of Euro-Dollar Loans).

                                       ARTICLE 2

                                      THE CREDITS

         SECTION 2.01.  COMMITMENTS TO LEND.

         (a) Each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make loans to the Borrowers pursuant to this
Section 2.01(a) from time to time during the Revolving Credit Period in
amounts such that the Total Outstandings of such Bank at any time shall not
exceed the amount of its Commitment at such time. Each Borrowing under this
subsection (a) shall be in an aggregate principal amount of $5,000,000 or any
larger multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.03(c)) and shall be
made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, a Borrower may borrow under this
Section 2.01(a), repay, or, to the extent permitted by Section 2.11, prepay
Loans and reborrow at any time during the Revolving Credit Period.

          (b) EXTENSION OF TERMINATION DATE. The Termination Date may be
extended, in the manner set forth in this subsection (b), on December 19,
1999 and on December 19, 2000 (each, an "Extension Date"), in each case for a
period of one year after the Termination Date theretofore in effect. If AES
wishes to request an extension of the Termination Date on any Extension Date,
it shall give written notice to that effect to the Agent not less than 45 nor
more than 90 days prior to such Extension Date, whereupon the Agent shall
notify each of the Banks of such notice. Each Bank will use its best efforts
to respond to such request,

                                        22


<PAGE>


whether affirmatively or negatively, within 30 days. If all Banks respond
affirmatively (any Bank which does not respond being deemed to have responded
negatively), then, subject to receipt by the Agent prior to such Extension
Date of counterparts of an Extension Agreement in substantially the form of
Exhibit H duly completed and signed by all of the parties hereto, the
Termination Date shall be extended, effective on such Extension Date, for a
period of one year to the date stated in such Extension Agreement.

         SECTION 2.02. NOTICE OF BORROWING. (a) The relevant Borrower shall
give the Agent notice (a "Notice of Borrowing") not later than 11:00 A.M.
(New York City time) on (x) the date of each Base Rate Borrowing and (y) the
third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:

               (i) the date of such Borrowing, which shall be a Domestic
         Business Day in the case of a Base Rate Borrowing or a Euro-Dollar
         Business Day in the case of a Euro-Dollar Borrowing,

              (ii) the aggregate amount of such Borrowing,

             (iii) whether the Loans comprising such Borrowing are to bear
         interest initially at the Base Rate or a Euro-Dollar Rate, and

              (iv) in the case of a Euro-Dollar Borrowing, the duration of the
         initial Interest Period applicable thereto, subject to the provisions
         of the definition of Interest Period.

          (b) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's ratable share of
such Borrowing and such Notice of Borrowing shall not thereafter be revocable
by any Borrower.

          (c) Not later than 2:00 P.M. (New York City time) on the date of
each Borrowing, each Bank shall (except as provided in subsection (d) of this
Section) make available its ratable share of such Borrowing, in Federal or
other funds immediately available in New York City, to the Agent at its
address referred to in Section 10.01. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the
Agent will make the funds so received from the Banks available to the
Borrower requesting such Borrowing at the Agent's aforesaid address.

          (d) If any Bank makes a new Loan hereunder to any Borrower on a day
on which such Borrower is to repay all or any part of an outstanding Loan from
such Bank, such Bank shall apply the proceeds of its new Loan to make such


                                         23


<PAGE>


repayment and only an amount equal to the difference (if any) between the
amount being borrowed and the amount being repaid shall be made available by
such Bank to the Agent as provided in subsection (c), or remitted by such
Borrower to the Agent as provided in Section 2.12, as the case may be.

          (e) Unless the Agent shall have received notice from a Bank prior
to the date of any Borrowing that such Bank will not make available to the
Agent such Bank's share of such Borrowing, the Agent may assume that such
Bank has made such share available to the Agent on the date of such Borrowing
in accordance with subsections (c) and (d) of this Section 2.02 and the Agent
may, in reliance upon such assumption, make available to the Borrower
requesting such Borrowing on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such share available to the
Agent, such Bank and such Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to such Borrower
until the date such amount is repaid to the Agent, at (i) in the case of such
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and
the interest rate applicable thereto pursuant to Section 2.06 and (ii) in the
case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan included in such Borrowing for purposes of this Agreement.

         SECTION 2.03. LETTERS OF CREDIT. (a) ISSUANCE OF LETTERS OF CREDIT.
Subject to the terms and conditions hereof, each Fronting Bank referred to in
clause (ii) of the definition of "FRONTING BANK" in Section 1.01 agrees to
issue letters of credit under this Section 2.03(a), upon any Borrower's
request and for such requesting Borrower's account or the account of any of
AES's other Subsidiaries, from time to time during the Revolving Credit
Period. In addition, and notwithstanding any reference in any Existing Letter
of Credit to the Existing Credit Facility, on and as of the Effective Date,
each Existing Letter of Credit shall be deemed to be a Letter of Credit and
to have been issued on the Effective Date (by the Fronting Bank that issued
or was deemed to have issued such Existing Letter of Credit under the
Existing Credit Facility) pursuant to this Section 2.03(a); PROVIDED HOWEVER,
that nothing in this Section 2.03(a) shall extend, modify or otherwise affect
the existing expiry date under any such Existing Letter of Credit.

          (b) PARTICIPATIONS IN LETTERS OF CREDIT. Upon the issuance (or
deemed issuance) of each Letter of Credit by a Fronting Bank under Section
2.03(a), such Fronting Bank shall be deemed, without further action by any
party hereto, to have sold to each Bank (other than such Fronting Bank) and
each such Bank shall be deemed, without further action by any party hereto,
to have purchased from such Fronting Bank, a participation in such Letter of
Credit and the related Letter of

                                            24


<PAGE>


Credit Liabilities, in the amount required so that the participations of the
Banks (including such Fronting Bank's retained participation) therein shall
be in proportion to their respective Commitments.

          (c) REQUIRED TERMS. Each Letter of Credit (other than the Letter of
Credit identified on Schedule III) issued hereunder shall:

               (i) by its terms expire (x) no earlier than 30 days after its
         date of issue and (y) no later than the earlier of (1) five Domestic
         Business Days prior to the Termination Date and (2) eighteen months
         after its date of issue;

              (ii) be in a face amount of (x) not less than $300,000 and (y) not
         more than the amount that would, after giving effect to the issuance
         thereof (and the related purchase and sale of participations therein
         pursuant to Section 2.03(b)) cause the Total Outstandings of any Bank
         to equal its Commitment; and

             (iii) be in a form acceptable to the Fronting Bank.

          (d) NOTICE OF ISSUANCE. Except in the case of Letters of Credit
deemed, pursuant to the second sentence of subsection (a) above, to be issued
on the Effective Date, a Borrower may request that a Letter of Credit be
issued by giving the Agent and the Fronting Bank for such Letter of Credit a
notice (a "Notice of Issuance") at least two Domestic Business Days before
such Letter of Credit is to be issued, specifying:

                (i)   the date of issuance of such Letter of Credit;

               (ii) the expiry date of such Letter of Credit (which shall
         comply with the requirements of Section 2.03(c)(i));

              (iii) the proposed terms of such Letter of Credit, including the
         face amount thereof (which shall comply with the requirements of
         Section 2.03(c)(ii));

               (iv) the transaction that is to be supported or financed with
         such Letter of Credit, including identification of the Power Project,
         if any, to which such transaction relates; and

                (v) the identity of the Fronting Bank for such Letter of Credit,
         which shall comply with the definition of Fronting Bank.


                                           25


<PAGE>


         Upon the receipt of a Notice of Issuance, the Agent shall promptly
notify each Bank of the contents thereof and of the amount of such Bank's
participation in such Letter of Credit and such Notice of Issuance shall not
thereafter be revocable by the Borrower giving such Notice.

          (e) DRAWINGS UNDER LETTERS OF CREDIT.

               (i) Upon receipt from the beneficiary of any Letter of Credit of
         demand for payment under such Letter of Credit, the Fronting Bank shall
         determine in accordance with the terms of such Letter of Credit whether
         such request for payment should be honored.

               (ii) If the Fronting Bank determines that a demand for payment by
         the beneficiary of a Letter of Credit should be honored, the Fronting
         Bank shall make available to the beneficiary in accordance with the
         terms of such Letter of Credit the amount of the drawing under such
         Letter of Credit. The Fronting Bank shall thereupon promptly notify the
         relevant Borrower and each Bank of the amount of such drawing paid by
         it and the amount of each Bank's participation therein.

          (f) REIMBURSEMENT AND OTHER PAYMENTS BY THE BORROWERS.

               (i) If any amount is drawn under any Letter of Credit issued at
         the request of or for the account of a Borrower, such Borrower
         irrevocably and unconditionally agrees to reimburse the applicable
         Fronting Bank for all amounts paid by such Fronting Bank upon such
         drawing, together with any and all reasonable charges and expenses
         which any Bank or Fronting Bank may pay or incur relative to such
         drawing, and all such amounts due from such Borrower shall bear
         interest, payable on the date upon which such amounts shall be due and
         payable, on the amount drawn for each day from and including the date
         such amount is drawn to but excluding the date such reimbursement
         payment is due and payable at a rate per annum equal to the rate
         applicable to Base Rate Loans for such day. Such reimbursement payment
         shall be due and payable not later than 10:00 A.M. (New York City time)
         on the second Domestic Business Day succeeding the date the applicable
         Fronting Bank notifies the relevant Borrower of such drawing, together
         with interest thereon for each day until the date of payment at a rate
         per annum equal to the rate applicable to Base Rate Loans for each such
         day. Any overdue reimbursement payment, or overdue interest thereon,
         shall bear interest, payable on demand, for each day until paid at a
         rate per annum equal to the sum of the rate applicable to Base Rate
         Loans for such day plus 2%.


                                       26


<PAGE>


               (ii) Each payment to be made by a Borrower pursuant to this
         Section shall be made, in Federal or other funds immediately available,
         to the applicable Fronting Bank at its address referred to in Section
         10.01.

               (iii) The obligations of each Borrower to reimburse the Fronting
         Banks under this Section 2.03(f) shall be absolute, unconditional and
         irrevocable, and shall be performed strictly in accordance with the
         terms of this Agreement, under all circumstances whatsoever, including
         without limitation the following circumstances:

                     (1) any lack of validity or enforceability of any
               Financing Document;

                     (2) any amendment or waiver of or any consent to
               departure from any Financing Document (except, in the case of
               an effective amendment to, waiver of or consent to a departure
               from any provision of this Agreement, to the extent specified
               herein);

                     (3) the existence of any claim, set-off, defense or other
               right which any Borrower may have at any time against the
               beneficiary of any Letter of Credit (or any Person or entity
               for whom such beneficiary may be acting), the Agent, any
               Fronting Bank or any Bank or any other Person or entity,
               whether in connection with this Agreement, any other Financing
               Document or any unrelated transaction;

                     (4) any statement or any other document presented under
               any Letter of Credit proving to be forged, fraudulent, invalid
               or insufficient in any respect or any statement therein being
               untrue or inaccurate in any respect whatsoever;

                     (5) payment by a Fronting Bank under any Letter of Credit
               against presentation of a draft or document which does not
               comply with the terms of such Letter of Credit; or

                     (6) to the extent permitted under applicable law, any
               other circumstance or happening whatsoever, whether or not
               similar to any of the foregoing.

          (g) PAYMENTS BY BANKS WITH RESPECT TO LETTERS OF CREDIT.

               (i) Each Bank shall make available an amount equal to its ratable
         share of any drawing under a Letter of Credit, in Federal or other


                                       27


<PAGE>


         funds immediately available in New York City, to the applicable
         Fronting Bank by 3:00 P.M. (New York City time) on the second Domestic
         Business Day following such drawing, together with interest on such
         amount for the period from and including the date of such drawing to
         but excluding the date upon which such amount is to be made available
         at the Federal Funds Rate on the date of such drawing, at such Fronting
         Bank's address referred to in Section 10.01; provided that each Bank's
         obligation shall be reduced by its pro rata share of any reimbursement
         theretofore paid by the relevant Borrower in respect of such drawing
         pursuant to Section 2.03(f)(i). The applicable Fronting Bank shall
         notify each Bank of the amount of such Bank's obligation in respect of
         any drawing under a Letter of Credit not later than 1:30 P.M. (New York
         City time) on the day such payment by such Bank is due. Each Bank shall
         be subrogated to the rights of the applicable Fronting Bank against the
         applicable Borrower to the extent such payment due from such Bank to
         such Fronting Bank is paid, plus interest thereon, from and including
         the day such amount is due from such Bank to such Fronting Bank to but
         excluding the day such Borrower makes payment to such Fronting Bank
         pursuant to Section 2.03(f)(i), whether before or after judgment, at a
         rate per annum equal to the sum of 2% plus the rate applicable to Base
         Rate Loans for such day.

               (ii) If any Bank fails to pay any amount required pursuant to
         subsection (i) of this Section 2.03(g) on the date on which such
         payment is due, interest, payable on demand, shall accrue on such
         Bank's obligation to make such payment, for each day from and including
         the date such payment becomes due to but excluding the date such Bank
         makes such payment at a rate per annum equal to the Federal Funds Rate.
         Any payment made by any Bank after 3:00 P.M. (New York City time) on
         any Domestic Business Day shall be deemed for purposes of the preceding
         sentence to have been made on the next succeeding Domestic Business
         Day.

               (iii) If the relevant Borrower shall reimburse a Fronting Bank
         for any drawing under a Letter of Credit after the Banks shall have
         made funds available to such Fronting Bank with respect to such drawing
         in accordance with subsection (i) of this Section 2.03(g), such
         Fronting Bank shall promptly upon receipt of such reimbursement
         distribute to each Bank its pro rata share thereof, including interest,
         to the extent received by such Fronting Bank.

               (iv) The several obligations of the Banks to the Fronting Banks
         hereunder shall be absolute, irrevocable and unconditional under any
         and all circumstances whatsoever and shall not be affected by any
         circum-

                                       28


<PAGE>


         stance, including, without limitation, (1) any set-off, counterclaim,
         recoupment, defense or other right which any such Bank or any other
         Person may have against the Agent, any Fronting Bank or any other
         Person for any reason whatsoever; (2) the occurrence or continuance of
         a Default or an Event of Default or the termination of the Commitments
         or any Letter of Credit; (3) any adverse change in the condition
         (financial or otherwise) of any Obligor or any other Person; (4) any
         breach of any Financing Document by any party thereto; (5) the fact
         that any condition precedent to the issuance of, or the making of any
         payment under, any Letter of Credit was not in fact met; (6) any
         violation or asserted violation of law by any Bank or any affiliate
         thereof; or (7) to the extent permitted under applicable law, any other
         circumstance, happening or event whatsoever, whether or not similar to
         any of the foregoing. Each payment by each Bank to a Fronting Bank for
         its own account shall be made without any offset, abatement,
         withholding or reduction whatsoever. If a Fronting Bank is required at
         any time (whether before or after the Termination Date) to return to a
         Borrower or to a trustee, receiver, liquidator, custodian or other
         similar official any portion of the payments made by such Borrower to
         such Fronting Bank in payment of any Reimbursement Obligation or
         interest thereon upon the insolvency of such Borrower, or the
         commencement of any case or proceeding under any bankruptcy, insolvency
         or other similar law with respect to such Borrower, each Bank shall, on
         demand of such Fronting Bank, forthwith return to such Fronting Bank
         any amounts transferred to such Bank by such Fronting Bank in respect
         thereof pursuant to this subsection plus such Bank's pro rata share of
         any interest on such payments required to be paid to the Person
         recovering such payments plus interest on the amount so demanded from
         the day such demand is made, if such demand is made by 2:00 p.m. (New
         York City time), or from the next following Domestic Business Day, if
         such demand is made after 2:00 p.m., to but not including the day such
         amounts are returned by such Bank to such Fronting Bank at a rate per
         annum for each day equal to (A) the Federal Funds Rate for the day of
         such demand and (B) the Base Rate plus 1% for each day thereafter.

          (h)   LETTER OF CREDIT COMMISSION; ISSUANCE FEE

               (i) LETTER OF CREDIT COMMISSION. Each Borrower agrees to pay to
         the Agent a letter of credit commission with respect to each Letter of
         Credit issued at its request or for its account, computed for each day
         from and including the date of issuance of such Letter of Credit to but
         excluding the last day a drawing is available under such Letter of
         Credit (the "Letter of Credit Termination Date"), at the Letter of
         Credit Commission Rate on the aggregate amount available for drawing
         under such Letter of Credit


                                       29


<PAGE>


         from time to time (whether or not any conditions to drawing can then be
         met), such fee to be for the account of the Banks ratably in proportion
         to their Total Exposures. Such fee shall be payable quarterly in
         arrears on the last Domestic Business Day of each January, April, July
         and October and upon the Termination Date.

               (ii) ISSUANCE FEE. Each Borrower shall pay to each Fronting Bank
         for its own account such fees with respect to each Letter of Credit
         issued by such Fronting Bank for the account of such Borrower as shall
         have been agreed between such Borrower and such Fronting Bank.

               (iii) LIMITED LIABILITY OF THE FRONTING BANK. As between a
         Fronting Bank, on the one hand, and a Borrower, on the other, such
         Borrower assumes all risks of any acts or omissions of the beneficiary
         and any transferee of any Letter of Credit with respect to its use of
         such Letter of Credit. Neither Fronting Bank nor any of their
         respective employees, officers or directors shall be liable or
         responsible for: (a) the use which may be made of any Letter of Credit
         or for any acts or omissions of any beneficiary or transferee in
         connection therewith, (b) the validity, sufficiency or genuineness of
         documents, or of any endorsement(s) thereon, even if such documents
         should in fact prove to be in any or all respects invalid,
         insufficient, fraudulent or forged, (c) payment by the Fronting Bank
         against presentation of documents which do not comply with the terms of
         any Letter of Credit, including failure of any documents to bear any
         reference or adequate reference to such Letter of Credit, or (d) any
         other circumstance whatsoever in making or failing to make payment
         under any Letter of Credit; provided that such Borrower shall have a
         claim against the applicable Fronting Bank, and such Fronting Bank
         shall be liable to such Borrower, to the extent, but only to the
         extent, of any direct, as opposed to consequential or special, damages
         suffered by such Borrower which are found in a final, unappealable
         judgment of a court of competent jurisdiction to have been caused by
         (i) such Fronting Bank's willful misconduct or gross negligence in
         determining whether documents presented under any Letter of Credit
         comply with the terms thereof or (ii) such Fronting Bank's willful
         failure to pay, or gross negligence resulting in a failure to pay, any
         drawing after the presentation to it by the beneficiary (or any
         transferee of the Letter of Credit) of a draft and other required
         documentation strictly complying with the terms and conditions of the
         Letter of Credit. In furtherance and not in limitation of the
         foregoing, a Fronting Bank may accept documents that appear on their
         face to be in order, without responsibility for further investigation.


                                       30


<PAGE>


               (iv) FRONTING BANKS AND AFFILIATES. Each Fronting Bank shall have
         the same rights and powers under the Financing Documents as any other
         Bank and may exercise or refrain from exercising the same as though
         they were not Fronting Banks (in each case to the extent such Fronting
         Bank is also a Bank), and the Fronting Banks and their respective
         affiliates may accept deposits from, lend money to, and generally
         engage in any kind of business with AES or any Subsidiary or affiliate
         of AES as if they were not Fronting Banks hereunder.

         SECTION 2.04. NOTES. (a) The Loans of each Bank to each Borrower shall
be evidenced by a single Note payable to the order of such Bank for the account
of its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans to such Borrower.

          (b) Each Bank may, by notice to a Borrower and the Agent, request that
its Loans to such Borrower of a particular type be evidenced by a separate Note
of such Borrower in an amount equal to the aggregate unpaid principal amount of
such Loans. Each such Note shall be in substantially the form of Exhibit A
hereto with appropriate modifications to reflect the fact that it evidences
solely Loans of the relevant type. Each reference in this Agreement to a "Note"
or the "Notes" of such Bank shall be deemed to refer to and include any or all
of such Notes, as the context may require.

          (c) Upon receipt of each Bank's Notes pursuant to Section 3.01(b) and
3.02(a), the Agent shall forward such Notes to such Bank. Each Bank shall record
the date, amount, type and maturity of each Loan made by it to each Borrower and
the date and amount of each payment of principal made with respect thereto, and
may, if such Bank so elects in connection with any transfer or enforcement of
its Note of any Borrower, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
such Loan to such Borrower then outstanding; provided that the failure of any
Bank to make any such recordation or endorsement shall not affect the
obligations of any Obligor under the Financing Documents. Each Bank is hereby
irrevocably authorized by each Borrower so to endorse its Notes and to attach to
and make a part of any Note a continuation of any such schedule as and when
required.

         SECTION 2.05. MATURITY OF LOANS. Each Loan shall mature, and the
principal amount thereof shall be due and payable (together with interest
accrued thereon), on the Termination Date.

         SECTION 2.06. INTEREST RATES. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such


                                       31


<PAGE>


day. Such interest shall be payable quarterly in arrears on each Quarterly
Payment Date. Any overdue principal of or interest on any Base Rate Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the sum of 2% plus the rate otherwise applicable to Base Rate Loans for
such day.

         (b) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such
day plus the Adjusted London Interbank Offered Rate applicable to such Interest
Period. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than three months, at intervals
of three months after the first day thereof.

         "EURO-DOLLAR MARGIN" means a rate per annum determined in accordance
with the annexed Pricing Schedule.

         The "ADJUSTED LONDON INTERBANK OFFERED RATE" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage.

         The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16th of
1%) of the respective rates per annum at which deposits in dollars are offered
to each of the Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Business Days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.

         "EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.


                                       32


<PAGE>


         (c) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the higher of (i) the sum of 2% plus the Euro-Dollar Margin
for such day plus the Adjusted London Interbank Offered Rate applicable to such
Loan and (ii) the sum of 2% plus the Euro-Dollar Margin for such day plus the
quotient obtained (rounded upward, if necessary, to the next higher 1/100th of
1%) by dividing (x) the average (rounded upward, if necessary, to the next
higher 1/16th of 1%) of the respective rates per annum at which one day (or, if
such amount due remains unpaid more than three Euro-Dollar Business Days, then
for such other period of time not longer than three months as the Agent may
select) deposits in dollars in an amount approximately equal to such overdue
payment due to each of the Reference Banks are offered to such Reference Bank in
the London interbank market for the applicable period determined as provided
above by (y) 1.00 minus the Euro-Dollar Reserve Percentage (or, if the
circumstances described in clause (a) or (b) of Section 8.01 shall exist, at a
rate per annum equal to the sum of 2% plus the rate applicable to Base Rate
Loans for such day).

         (d) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the applicable Borrower
and the participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.

         (e) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.

         SECTION 2.07. METHOD OF ELECTING INTEREST RATES. (a) The Loans included
in each Borrowing shall bear interest initially at the type of rate specified by
the applicable Borrower in the applicable Notice of Borrowing. Thereafter, the
applicable Borrower may from time to time elect to change or continue the type
of interest rate borne by each Group of Loans (subject to Section 2.07(d) and
the provisions of Article VIII), as follows:

               (i) if such Loans are Base Rate Loans, the applicable Borrower
         may elect to convert such Loans to Euro-Dollar Loans as of any
         Euro-Dollar Business Day;

               (ii) if such Loans are Euro-Dollar Loans, the applicable Borrower
         may elect to convert such Loans to Base Rate Loans as of any Domestic
         Business Day or elect to continue such Loans as Euro-Dollar Loans for
         an


                                       33


<PAGE>


         additional Interest Period, subject to Section 2.13 if any such
         conversion is effective on any day other than the last day of an
         Interest Period applicable to such Loans.

         Each such election shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent not later than 11:00 A.M. (New York City
time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective (unless the relevant
Loans are to be converted from Euro-Dollar Loans to Base Rate Loans, in which
case such notice shall be delivered to the Agent not later than 11:00 A.M. (New
York City time) on the date such conversion is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant Group of Loans; provided that (i)
such portion is allocated ratably among the Loans comprising such Group and (ii)
the portion to which such Notice applies, and the remaining portion to which it
does not apply, are each at least $5,000,000 (unless such portion is comprised
of Base Rate Loans). If no such notice is timely received before the end of an
Interest Period for any Group of Euro-Dollar Loans, the applicable Borrower
shall be deemed to have elected that such Group of Loans be converted to Base
Rate Loans at the end of such Interest Period.

         (b)   Each Notice of Interest Rate Election shall specify:

               (i) the Group of Loans (or portion thereof) to which such notice
         applies;

               (ii) the date on which the conversion or continuation selected in
         such notice is to be effective, which shall comply with the applicable
         clause of Section 2.07(a) above;

               (iii) if the Loans comprising such Group are to be converted, the
         new type of Loans and, if the Loans resulting from such conversion are
         to be Euro-Dollar Loans, the duration of the next succeeding Interest
         Period applicable thereto; and

               (iv) if such Loans are to be continued as Euro-Dollar Loans for
         an additional Interest Period, the duration of such additional Interest
         Period.

         Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.

         (c) Promptly after receiving a Notice of Interest Rate Election from a
Borrower pursuant to Section 2.07(a) above, the Agent shall notify each Bank of


                                       34


<PAGE>


the contents thereof and such notice shall not thereafter be revocable by any
Borrower.

         (d) A Borrower shall not be entitled to elect to convert any Loans to,
or continue any Loans for an additional Interest Period as, Euro-Dollar Loans if
(i) the aggregate principal amount of any Group of Euro-Dollar Loans created or
continued as a result of such election would be less than $5,000,000 or (ii) a
Default shall have occurred and be continuing when the Borrower delivers notice
of such election to the Agent.

         (e) If any Loan is converted to a different type of Loan, the
applicable Borrower shall pay, on the date of such conversion, the interest
accrued to such date on the principal amount being converted.

         SECTION 2.08. COMMITMENT FEES. AES shall pay to the Agent, for the
account of the Banks ratably in proportion to their Commitments, a commitment
fee at the Commitment Fee Rate on the daily amount by which the aggregate amount
of the Commitments exceeds the aggregate Total Outstandings. Such commitment fee
shall accrue from and including the Effective Date to but excluding the
Termination Date (or earlier date of termination of the Commitments in their
entirety). Accrued commitment fees under this Section 2.08 shall be payable
quarterly on each January 31, April 30, July 31 and October 31 and upon the date
of termination of the Commitments in their entirety. For this purpose,
"Commitment Fee Rate" means a rate per annum determined in accordance with the
annexed Pricing Schedule.

         SECTION 2.09.  TERMINATION OR REDUCTION OF COMMITMENTS.

         (a) OPTIONAL. AES may, upon at least three Domestic Business Days'
notice to the Agent, (i) terminate the Commitments in their entirety at any
time, if no Loans or Letters of Credit are outstanding at such time or (ii)
ratably reduce from time to time by an aggregate amount of $5,000,000 or any
larger multiple thereof, the aggregate amount of the Commitments in excess of
the aggregate Total Outstandings.

         (b) MANDATORY. (i) Scheduled Termination. The Commitments shall
terminate on the Termination Date, and any Loans and Reimbursement Obligations
then outstanding (together with accrued interest thereon) shall be due and
payable on such date.

               (ii) NET CASH PROCEEDS OF ASSET DISPOSITIONS. In the event that
AES or any of its Subsidiaries shall at any time, or from time to time, receive
any Net Cash Proceeds of any Asset Disposition, the Commitments of the Banks
shall, unless the Required Banks otherwise agree, be ratably reduced by such
amounts


                                       35


<PAGE>


and at such times as may be required to avoid any requirement that all or any
portion of such Net Cash Proceeds be applied to repay, prepay, repurchase or
defease any Subordinated Debt.

         (c) REDUCTIONS PERMANENT. All reductions of the Commitments pursuant to
this Section 2.09 shall be permanent.

         SECTION 2.10. MANDATORY REPAYMENTS OF THE LOANS AND CASH
COLLATERALIZATION OF LETTERS OF CREDIT. If on any date, after giving effect to
the reductions in the Commitments pursuant to Section 2.09, the aggregate Total
Outstandings exceed the aggregate Commitments, the Borrowers shall be jointly
and severally obligated to apply an amount equal to such excess to prepay the
Loans or cash collateralize Letters of Credit, or both. Amounts to be applied
pursuant to the preceding sentence shall be applied first to repay the principal
amount of the Borrowings then outstanding until all such Borrowings shall have
been repaid in full, and if any excess then remains such excess shall be
deposited with the Agent in the Cash Collateral Account to be held, applied or
released for application as provided in Section 2.15. The particular Borrowings
to be repaid shall be as designated by AES (or, failing such designation, as the
Agent may determine). Each repayment shall be applied to repay ratably the Loans
of the several Banks included in such Borrowings. Each payment of principal
shall be made together with interest accrued on the amount repaid to the date of
payment.

         SECTION 2.11. OPTIONAL PREPAYMENT OF THE LOANS. (a) Subject in the case
of any Euro-Dollar Borrowing to Section 2.13, the Borrowers may, upon at least
one Domestic Business Day's notice to the Agent, prepay any Group of Base Rate
Loans or upon at least three Euro-Dollar Business Days' notice to the Agent,
prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or
from time to time in part in amounts aggregating $5,000,000 or any larger
multiple of $1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Group of Loans.

         (b) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment and such notice shall not thereafter be
revocable by any Borrower.

         SECTION 2.12. General Provisions as to Payments. (a) The Borrowers
shall make each payment of principal of, and interest on, the Loans and
Reimbursement Obligations and of fees hereunder, not later than 12:00 Noon (New
York City time) on the date when due, in Federal or other funds


                                       36


<PAGE>


immediately available in New York City, without set-off, counterclaim or other
deduction, to the Agent at its address referred to in Section 10.01. The Agent
will promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Base Rate Loans or Reimbursement Obligations
or of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.

         (b) Unless the Agent shall have received notice from a Borrower prior
to the date on which any payment is due from such Borrower to the Banks
hereunder that such Borrower will not make such payment in full, the Agent may
assume that such Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that such Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate.

         SECTION 2.13. FUNDING LOSSES. If a Borrower makes any payment of
principal with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a Base Rate Loan (pursuant to Article II, VI or VIII or otherwise)
on any day other than the last day of an Interest Period applicable thereto, or
the last day of an applicable period fixed pursuant to Section 2.06(c), or if a
Borrower fails to borrow, prepay, convert or continue any Euro-Dollar Loans
after notice has been given to any Bank in accordance with Section 2.02(b),
2.07(c) or 2.11(b), such Borrower shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after such payment or
conversion or failure to borrow, prepay, convert or continue; provided that such
Bank shall have delivered to such Borrower a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in the absence of
manifest error.


                                       37


<PAGE>


         SECTION 2.14. COMPUTATION OF INTEREST AND FEES. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).

         SECTION 2.15. CASH COLLATERAL ACCOUNT. (a) All amounts required to be
deposited as cash collateral with the Agent pursuant to Section 2.10 or Section
6.03 shall be deposited in a cash collateral account (the "Cash Collateral
Account") established by the Borrowers with the Agent, to be held, applied or
released for application as provided in this Section 2.15.

         (b) If and when any portion of the Letter of Credit Liabilities on
which any deposit of cash collateral was based (the "Relevant Contingent
Exposure") shall become fixed (a "Direct Exposure") as a result of the payment
by a Fronting Bank of a draft presented under any relevant Letter of Credit, the
amount of such Direct Exposure (but not more than the amount in the Cash
Collateral Account at the time) shall be withdrawn by the Agent from the Cash
Collateral Account and shall be paid to the relevant Fronting Bank to be applied
against such Direct Exposure and the Relevant Contingent Exposure shall
thereupon be reduced by such amount. If at any time the amount in the Cash
Collateral Account exceeds the Relevant Contingent Exposure, the excess amount
shall, so long as no Default shall have occurred and be continuing, be withdrawn
by the Agent and paid to such Borrower as AES may direct. If a Default shall
have occurred and be continuing, such excess amount shall be retained in the
Cash Collateral Account and, if and when requested by the Required Banks, shall
be withdrawn by the Agent and applied first to repay the Loans, Reimbursement
Obligations and other due and unpaid amounts required to be paid by the
Borrowers hereunder and second any remaining excess shall be paid to such
Borrower as AES may direct. If at any time the amount in the Cash Collateral
Account is less than the Relevant Contingent Exposure, AES shall promptly
deposit in the Cash Collateral Account additional cash collateral in the amount
of such shortfall.

         (c) Interest and other payments and distributions made on or with
respect to the cash collateral held by the Agent shall be for the account of the
Borrowers and shall constitute cash collateral to be held by the Agent or
returned to the Borrowers in accordance with subsection (b) of this Section
2.15; provided that the Agent shall have no obligation to invest any cash
collateral on behalf of the Borrowers or any other Person. Beyond the exercise
of reasonable care in the custody thereof, the Agent shall have no duty as to
any cash collateral in its possession or control or in the possession or control
of any agent or bailee or any income thereon or as to the preservation of rights
against prior parties or any other


                                       38


<PAGE>


rights pertaining thereto. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the cash collateral in its
possession if the cash collateral is accorded treatment substantially equal
to that which it accords its own property, and shall not be liable or
responsible for any loss or damage to any of the cash collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
agent or bailee selected by the Agent in good faith. All expenses and
liabilities incurred by the Agent in connection with taking, holding and
disposing of any cash collateral (including customary custody and similar
fees with respect to any cash collateral held directly by the Agent) shall be
paid by AES from time to time upon demand. Upon a Default, the Agent shall be
entitled to apply (and, at the request of the Required Banks but subject to
applicable law, shall apply) cash collateral or the proceeds thereof to
payment of any such expenses, liabilities and fees.

                                    ARTICLE 3

                                   Conditions

         SECTION 3.01.  Closing.  The closing hereunder shall occur when all the
following conditions have been satisfied:

         (a) The Agent shall have received the fees for the account of each
Bank in the amounts previously agreed to by AES and as set forth in the letter
agreement (the "FEE LETTER") between AES and Morgan Guaranty Trust Company of
New York dated October 21, 1997;

         (b) The Agent shall have received duly executed Notes of AES for the
account of each Bank dated on or before the Closing Date complying with the
provisions of Section 2.04;

         (c) The Agent shall have received the Subsidiary Guaranty dated the
Closing Date, duly executed by AES Oklahoma and AES Hawaii Management;

         (d) The Agent shall have received an opinion of the General Counsel of
AES, substantially in the form of Exhibit C hereto, dated the Closing Date and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;

         (e) The Agent shall have received an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit D hereto,
dated the Closing Date and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably request;


                                       39


<PAGE>


         (f) The Agent shall have received evidence satisfactory to it that (i)
all amounts outstanding under the Existing Credit Facility have been paid in
full, (ii) all commitments thereunder have been terminated and (iii) all
principal, interest, fees, reimbursement obligations and other amounts owing
thereunder shall have been paid in full;

         (g) The Agent shall have received evidence, satisfactory to it, in the
form of pro forma calculations, that the making of Borrowings and the issuance
of, and drawings under, Letters of Credit under this Agreement are permitted
under the terms of the Subordinated Note Indentures;

         (h) The Agent shall have received copies of the resolutions of the
Board of Directors of each Obligor authorizing the execution, delivery and
performance by such Obligor of the Financing Documents to which it is a party,
certified by a duly authorized officer of such Obligor (which certificate shall
state that such resolutions are in full force and effect on the Closing Date);

         (i) The Agent shall have received certified copies of all approvals,
authorizations or consents of, or notices to or registrations with, any
governmental body or agency required for each Obligor, if necessary, to enter
into the Financing Documents to which it is a party;

         (j) The Agent shall have received a certificate of a duly authorized
officer of each Obligor certifying the names and true signatures of the officers
of such Obligor authorized to sign the Financing Documents to which it is a
party and the other documents to be delivered by such Obligor hereunder;

         (k) The Agent shall have received payment of all reasonable fees and
other amounts then payable (including, without limitation, all fees and expenses
of counsel to the Agent payable pursuant to Section 10.03);

         (l) The Agent shall have received a certificate signed by a duly
authorized officer of AES dated the Closing Date, to the effect that: (i) the
representations and warranties contained in Article IV hereof are true and
correct on and as of the Closing Date as though made on and as of such date; and
(ii) no Default has occurred and is continuing or would result from the issuance
of the Letters of Credit requested by AES to be issued on such date (including,
without limitation, the deemed issuance of the initial Letters of Credit
pursuant to the second sentence of Section 2.03(a)) and the Borrowings requested
by AES to be made on such date; and


                                       40


<PAGE>


         (m) The Agent shall have received all documents it may reasonably
request relating to the existence of the Obligors, the corporate authority for
and the validity of this Agreement and the other Financing Documents, and any
other matters relevant hereto, all in form and substance satisfactory to the
Agent.

         The Agent shall promptly notify the Borrowers and the Banks of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto.

         SECTION 3.02. AES FINANCE SUBSIDIARY ADDITION DATE. An AES Finance
Subsidiary Addition Date shall occur with respect to any AES Finance Subsidiary
on the date upon which the Agent shall have received:

         (a) duly executed Notes of such AES Finance Subsidiary for the account
of each Bank dated on or before such AES Finance Subsidiary Addition Date
complying with the provisions of Section 2.04;

         (b) a counterpart hereof signed by such AES Finance Subsidiary;

         (c) an opinion of the General Counsel of AES substantially in the form
of Exhibit E hereto with respect to such AES Finance Subsidiary and covering
such additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;

         (d) an opinion of counsel to such AES Finance Subsidiary from the
jurisdiction of incorporation of such AES Finance Subsidiary, substantially in
the form of Exhibit F hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required Banks may reasonably
request; and

         (e) all documents that the Agent may reasonably request relating to
the existence of such AES Finance Subsidiary, the corporate authority for and
the validity of this Agreement and its Notes as agreements and obligations of
such AES Finance Subsidiary, and any other matters relevant hereto, all in
form and substance reasonably satisfactory to the Agent.

         The Agent shall promptly notify the Borrowers and the Banks of any AES
Finance Subsidiary Addition Date, and such notice shall be conclusive and
binding on all parties hereto.

         SECTION 3.03. EXTENSION OF CREDIT. The obligation of each Bank to make
a Loan on the occasion of each Borrowing and the obligation of a Fronting Bank
to issue a Letter of Credit (including the deemed issuance of the initial
Letters of


                                       41


<PAGE>


Credit pursuant to the second sentence of Section 2.03(a)) on the occasion of
each request therefor by a Borrower shall in each case be subject to the
satisfaction of the following conditions:

         (a) the fact that the Closing Date shall have occurred on or prior to
December 31, 1997;

         (b) receipt by the Agent of a Notice of Borrowing or (except in the
case of the deemed issuance of the initial Letters of Credit pursuant to the
second sentence of Section 2.03(a)) a Notice of Issuance as required by Section
2.02 or 2.03, as the case may be;

         (c) the fact that, immediately after such Extension of Credit, after
giving effect to all direct and indirect applications of the proceeds of such
Extension of Credit made substantially simultaneously with the extension
thereof, the aggre gate Total Outstandings of any Bank will not exceed its
Commitment;

         (d) the fact that, immediately before and after such Extension of
Credit, no Default shall have occurred and be continuing; and

         (e) the fact that the representations and warranties of the Obligors
contained in the Financing Documents (except, in the case of a Refunding
Borrowing, the representations and warranties set forth in Sections 4.04(c) and
4.05 as to any matter which has theretofore been disclosed in writing by AES to
the Banks) shall be true on and as of the date of such Extension of Credit.

         Each Extension of Credit hereunder shall be deemed to be a
representation and warranty by the Borrowers on the date of such Extension of
Credit as to the facts specified in clauses (c), (d) and (e) of this Section.

                                    ARTICLE 4

                         Representations and Warranties

         AES represents and warrants that:

         SECTION 4.01. CORPORATE EXISTENCE AND POWER. Each Obligor is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware (or, in the case of any AES Finance Subsidiary,
its jurisdiction of incorporation), and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.


                                       42


<PAGE>


         SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by each Obligor of the
Financing Documents to which it is a party are within such Obligor's corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of such Obligor or of any agreement, judgment, injunction, order, decree or
other instrument binding upon AES or any of its Subsidiaries or result in the
creation or imposition of any Lien on any asset of AES or of any Material AES
Entity.

         SECTION 4.03. BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of each Borrower and each other Financing Document, when
executed and delivered in accordance with this Agreement, will constitute a
valid and binding obligation of each Obligor that is a party thereto, in each
case enforceable in accordance with its terms.

         SECTION 4.04.  FINANCIAL INFORMATION.

         (a) The consolidated balance sheet of AES and its Consolidated
Subsidiaries as of December 31, 1996 and the related consolidated statements of
operations and cash flows for the fiscal year then ended, reported on by
Deloitte & Touche and set forth in the AES 1996 Form 10-K, a copy of which has
been delivered to each of the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position of
AES and its Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year.

         (b) The unaudited consolidated balance sheet of AES and its
Consolidated Subsidiaries as of September 30, 1997 and the related unaudited
consolidated statements of operations and cash flows for the fiscal quarter and
the portion of AES's fiscal year then ended, set forth in the AES September 1997
Form 10-Q, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with generally accepted accounting principles applied on
a basis consistent with the financial statements referred to in subsection (a)
of this Section, the consolidated financial position of AES and its Consolidated
Subsidiaries as of such date and their consolidated results of operations and
cash flows for such fiscal quarter and portion of such fiscal year (subject to
normal year-end adjustments).

         (c) Since September 30, 1997 there has been no material adverse change
in the business, financial position, results of operations or prospects of AES
and its Consolidated Subsidiaries, considered as a whole.


                                       43


<PAGE>


         SECTION 4.05. LITIGATION. Except as disclosed in the AES September 1997
Form 10-Q, there is no action, suit or proceeding pending against, or to the
knowledge of AES threatened against or affecting, AES or any of its Subsidiaries
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated financial position or
consolidated results of operations of AES and its Consolidated Subsidiaries or
which in any manner draws into question the validity of any Financing Document.

         SECTION 4.06. COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability in excess of $100,000 under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.

         SECTION 4.07. ENVIRONMENTAL MATTERS. In the ordinary course of its
business, each of AES and its Subsidiaries conducts an ongoing review of the
effect of Environmental Laws on the business, operations and properties of AES
or such Subsidiary, in the course of which it identifies and evaluates
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Substances by AES or its Subsidiaries, and any actual or
potential liabilities to third parties, including employees, and any related
costs and expenses). On the basis of this review, AES has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of AES and its
Consolidated Subsidiaries, considered as a whole.


                                       44


<PAGE>


         SECTION 4.08. TAXES. United States Federal income tax returns of AES
and its Subsidiaries have been examined and closed through the fiscal year ended
December 31, 1986. AES and its Subsidiaries have filed all United States Federal
income tax returns and AES and all Material AES Entities have filed all other
material tax returns which are required to be filed by them and have paid all
taxes due as indicated on such returns or pursuant to any assessment received by
AES or any Subsidiary or any Material AES Entity other than any such taxes that
are being diligently contested in good faith through appropriate proceedings and
for which adequate reserves have been established in accordance with generally
accepted accounting principals. The charges, accruals and reserves on the books
of AES, its Subsidiaries and all Material AES Entities in respect of taxes or
other governmental charges are, in the opinion of AES, adequate.

         SECTION 4.09. MATERIAL AES ENTITIES. Each Material AES Entity is a
corporation duly incorporated, validly existing and (other than any Material AES
Entity that is not incorporated under the laws of the United States or any
political subdivision thereof) in good standing under the laws of its
jurisdiction of incorporation. Each Material AES Entity has all corporate powers
and all material governmental licenses, authorization, consents and approvals
required to carry on its business as proposed to be conducted and has all
governmental licenses, authorizations, consents and approvals required to have
been obtained prior to the date hereof and which are material to the operation
of its business as proposed to be conducted, except to the extent that the
failure to obtain any such license, authorization, consent or approval,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect upon the business, financial condition, operations,
property and prospects of AES and its Consolidated Subsidiaries, taken as a
whole.

         SECTION 4.10. NOT AN INVESTMENT COMPANY.  None of the Obligors is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.

         SECTION 4.11. PUBLIC UTILITY HOLDING COMPANY ACT. Neither AES nor any
of its Subsidiaries is subject to regulation as a "holding company" or a
"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 the Public
Utility Holding Company Act of 1935, as amended ("PUHCA"), except that AES 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
Securities and Exchange Commission.

         SECTION 4.12. REPRESENTATIONS IN SUBSIDIARY GUARANTY TRUE AND CORRECT.
Unless the Subsidiary Guaranty shall have ceased to be a Financing Document,


                                       45


<PAGE>


each of the representations and warranties of any Obligor contained in the
Subsidiary Guaranty is true and correct.

         SECTION 4.13. FULL DISCLOSURE. All information heretofore furnished by
any Borrower to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by any Borrower to the Agent or any Bank will be, true and
accurate in all material respects on the date as of which such information is
stated or certified. AES has disclosed to the Banks in writing any and all facts
which materially and adversely affect or may affect (to the extent any Borrower
can now reasonably foresee), the business, operations or financial condition of
AES and its Consolidated Subsidiaries, taken as a whole, or the ability of any
Obligor to perform its obligations under the Financing Documents.

         SECTION 4.14. EXISTING LETTERS OF CREDIT.  Schedule II hereto
identifies each Existing Letter of Credit outstanding as of the date hereof
and as of the Effective Date.

         SECTION 4.15. YEAR 2000 COMPLIANCE. AES has (i) initiated a review and
assessment of all areas within the business and operations of AES and its
Subsidiaries (including those areas affected by suppliers and vendors) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by them (or their respective suppliers and vendors)
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (ii)
developed a plan and timeline for addressing the Year 2000 Problem on a timely
basis and (iii) to date, implemented such plan in accordance with such
timetable, except to the extent that the failure to do so could not reasonably
be expected to have a material adverse effect upon the business, financial
position or results of operations of AES and its Consolidated Subsidiaries,
taken as a whole. AES reasonably believes that all computer applications
(including those of suppliers and vendors) that are material to the business or
operations of AES and its Subsidiaries will on a timely basis be able to perform
properly date-sensitive functions for all dates before and from and after
January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent that
the failure to do so could not reasonably be expected to have a material adverse
effect upon the business, financial position or results of operations of AES and
its Consolidated Subsidiaries, taken as a whole.


                                       46


<PAGE>


                                    ARTICLE 5

                                    Covenants

         AES agrees that, so long as any Bank has any Commitment hereunder or
any amount payable under any Note remains unpaid or any Letter of Credit or
Reimbursement Obligation remains outstanding:

         SECTION 5.01. INFORMATION.  AES will deliver to each of the Banks:

         (a) as soon as available and in any event within 120 days after the
end of each fiscal year of AES, a consolidated and consolidating balance sheet
of each Obligor as of the end of such fiscal year, an unconsolidated balance
sheet of AES as of the end of such fiscal year, the related consolidated,
consolidating and unconsolidated (as applicable) statements of operations for
such fiscal year, the related consolidated and unconsolidated statements of cash
flows for such fiscal year and a statement of the cash flow to AES of each
Subsidiary of AES for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, said consolidated
financial statements to be reported on, in a manner acceptable to the Securities
and Exchange Commission, by Deloitte & Touche or other independent public
accountants of nationally recognized standing and such consolidating and
unconsolidated financial statements to be certified as to fairness of
presentation, generally accepted accounting principles (other than failure to
consolidate) and consistency by the chief executive officer, president, chief
financial officer or chief accounting officer of AES;

         (b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of AES, a consolidated
balance sheet of each Obligor as of the end of such quarter and an
unconsolidated balance sheet of AES as of the end of such fiscal quarter and the
related consolidated and unconsolidated statements of operations for such
quarter and for the portion of such Obligor's fiscal year ended at the end of
such quarter and the related consolidated and unconsolidated statements of cash
flows for the portion of such Obligor's fiscal year ended at the end of such
quarter, and a statement of the cash flow to AES of each Subsidiary of AES for
such quarter and for the portion of AES's fiscal year ended at the end of such
quarter, setting forth in the case of such consolidated statements of operations
and cash flows, in comparative form the figures for the corresponding quarter
and the corresponding portion of such Obligor's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief executive officer, president, chief financial officer or chief accounting
officer of AES;


                                       47


<PAGE>


         (c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
executive officer, president, chief financial officer or chief accounting
officer of AES (i) setting forth in reasonable detail the calculations required
to establish whether AES was in compliance with the requirements of Sections
5.07, 5.08, 5.09, 5.11, 5.13, 5.15, 5.16 and 5.18 on the date of such financial
statements, (ii) stating to the knowledge of AES whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which AES is taking or proposes to take with
respect thereto and (iii) accompanied by a schedule setting forth in reasonable
detail a description, including, where applicable, the expected and maximum
dollar amounts thereof, of all material contingent liabilities not disclosed in
such financial statements;

         (d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i) whether
anything has come to their attention as a result of their audit (which was not
directed primarily toward obtaining knowledge of noncompliance) to cause them to
believe that AES has failed to comply with the terms, covenants, provisions or
conditions as they relate to accounting of financial matters addressed in
Sections 5.07 to 5.17, inclusive, and (ii) confirming the calculations set forth
in the officer's certificate delivered simultaneously therewith pursuant to
clause (c) above;

         (e) within five days after any officer of AES obtains knowledge of any
Default, if such Default is then continuing, a certificate of the chief
executive officer, president, executive vice-president or chief financial
officer of AES setting forth the details thereof and the action which AES is
taking or proposes to take with respect thereto;

         (f) promptly upon the mailing thereof to the shareholders of AES
generally, copies of all financial statements, reports and proxy statements so
mailed;

         (g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which AES shall have filed with the Securities and Exchange
Commission;

         (h) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such


                                       48


<PAGE>


reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief executive officer, president, chief financial officer
or chief accounting officer of AES setting forth details as to such occurrence
and the action, if any, which AES or the applicable member of the ERISA Group is
required or proposes to take;

         (i) not less than 10 days prior to the anticipated receipt by AES or
any Subsidiary of AES of Net Cash Proceeds from any Asset Disposition, a
certificate of the chief executive officer, president, chief financial officer
or chief accounting officer of AES setting forth a description of the
transaction giving rise to such Net Cash Proceeds, the date or dates upon which
such Net Cash Proceeds are anticipated to be received by AES or such Subsidiary
and the amount of Net Cash Proceeds anticipated to be received on such date or
each of such dates;

         (j) promptly after receipt by AES or any Subsidiary of AES or any
Material AES Entity, a copy of each complaint, order, citation, notice or other
written communication from any Person with respect to the existence or alleged
existence of a material violation of any applicable Environmental Law or the
incurrence of any liability, obligation, loss, damage, cost, expense, fine,
penalty or sanction or the requirement to commence any remedial action resulting
from or in connection with any air emission, water discharge, noise emission,
Hazardous Substance or any other environmental, health or safety matter at,
upon, under or within any of the properties now or previously owned, leased or
operated by AES, any of its Subsidiaries or any Material AES Entity, or due to
the operations or activities of AES, any Subsidiary of AES, any Material AES
Entity or any other Person on or in connection with any such property or any
part thereof; and


                                       49


<PAGE>


         (k) from time to time such additional information regarding the
financial position or business of AES and its Subsidiaries as the Agent, at the
request of any Bank, may reasonably request.

         SECTION 5.02. Payment of Obligations. Each Borrower will pay and
discharge all its material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested in good
faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary of AES to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.

         SECTION 5.03. Maintenance of Property; Insurance. (a) AES will keep,
and will cause each Subsidiary of AES to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.

         (b) AES will, and will cause each of its Subsidiaries to, maintain
(either in the name of AES or in such Subsidiary's own name) with financially
sound and responsible insurance companies, insurance of such types, in at least
such amounts and against at least such risks (and with such risk retention) as
are usually insured against in similar circumstances in the same general area by
companies of established repute engaged in the same or a similar business; and
will furnish to each Bank upon request information presented in reasonable
detail as to the insurance so carried.

         SECTION 5.04. Conduct of Business and Maintenance of Existence. AES (a)
will continue, and will cause each Material AES Entity and each other Borrower,
if any, to continue, to engage in business of the same general type as now
conducted by AES and its Subsidiaries, (b) will continue, and will cause each
Material AES Entity and each other Borrower, if any, to continue, to operate
their respective businesses on a basis substantially consistent with the
policies and standards of AES, such Material AES Entity or such Borrower, if
any, as in effect on the date hereof and (c) will preserve, renew and keep in
full force and effect, and will cause each Material AES Entity and each other
Borrower, if any, to preserve, renew and keep in full force and effect their
respective corporate existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; provided
that nothing in this Section 5.04 shall prohibit (i) the merger of a Subsidiary
into AES or the merger or consolidation of a Subsidiary (other than a Borrower)
with or into another Person if the corporation surviving such consolidation or
merger is a Subsidiary and if, in each case, after giving effect thereto, (x) no
Default shall have occurred and be continuing and (y) no Borrower or Subsidiary
Guarantor shall be liable for any Debt of such Subsidiary except to the extent
that it was liable for such Debt prior


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<PAGE>


to giving effect to such merger or (ii) the termination of the corporate
existence of any Subsidiary (other than a Borrower or a Subsidiary Guarantor) if
AES in good faith determines that such termination is in the best interest of
AES and is not materially disadvantageous to the Banks.

         SECTION 5.05. COMPLIANCE WITH LAWS. AES will comply, and cause each
Subsidiary of AES to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) (a) except for such non-compliance as would result
solely in the payment of monetary compensation by AES or such Subsidiary in an
amount not to exceed $200,000 for each such non-compliance and (b) except where
the necessity of compliance therewith is contested in good faith by appropriate
proceedings.

         SECTION 5.06. INSPECTION OF PROPERTY, BOOKS AND RECORDS. AES will keep,
and will cause each Subsidiary of AES to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities; and will permit,
and will cause each Significant AES Entity and each other Borrower, if any, to
permit, representatives of any Bank at such Bank's expense to visit and inspect
any of their respective properties, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants, all at such reasonable times and as often as may reasonably
be desired.

         SECTION 5.07. DEBT. (a) AES shall not, and shall not permit any
Subsidiary of AES to, incur, assume, create or suffer to exist any Debt
(including any Guarantees of Debt, surety bonds and obligations in respect of
letters of credit), except for:

               (i) Debt under the Financing Documents (subject to Section 5.14);

               (ii) Debt incurred by a Subsidiary (A) (1) to finance the
         development, acquisition, construction, operation, maintenance or
         working capital requirements of a Power Project or any unrelated
         business operated or managed (including on a joint basis with others),
         directly or indirectly, by AES and in which such Subsidiary has a
         direct or indirect interest or (2) in respect of any letter of credit
         issued in replacement of funds on deposit in any debt service reserve
         or other similar account of a Power Project in which such Subsidiary
         has a direct or indirect interest (up to a maximum


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<PAGE>



         aggregate stated amount of all such letters of credit of all
         Subsidiaries equal to $100,000,000) to the extent that such funds so
         replaced are received by AES as a result of such funds being used to
         pay dividends or make distributions on the capital stock of such
         Subsidiary and any other Subsidiary in the chain of ownership between
         AES and such Subsidiary and (B) that is not also the Debt of, or
         Guaranteed by, any other Subsidiary with an interest in any other Power
         Project or unrelated business (except for Debt incurred or assumed by
         Subsidiaries of AES (other than Specified Subsidiaries) which, at the
         time such Debt was incurred or assumed, in the aggregate, represent
         less than 50% of the Parent Operating Cash Flow (other than Parent
         Operating Cash Flow attributable to Specified Subsidiaries) for the
         immediately preceding four fiscal quarters);

               (iii) Debt existing on the date hereof;

               (iv) Debt owing to AES or a Consolidated Subsidiary of AES;

               (v) Debt of AES or its Subsidiaries representing a refinancing,
         replacement or refunding of Debt permitted by clauses (ii) and (iii)
         above; provided that (A) the aggregate principal amount of such Debt
         outstanding or available will not be increased at the time of such
         refinancing, replacement or refunding (other than (1) in the case of
         Debt ("Hawaii Refinancing Debt") refinancing, replacing or refunding
         Debt of AES Hawaii, Inc. outstanding on May 15, 1997 ("Replaced Hawaii
         Debt") (so long as such Hawaii Refinancing Debt has no scheduled
         principal repayments, or principal payments at the option of the holder
         thereof in the absence of the occurrence of specified events, in any
         such case in excess of those required under the Required Hawaii Debt,
         prior to June 1, 2004) an increase of up to $300,000,000 in excess of
         the aggregate principal amount of Debt that is being refinanced,
         replaced or refunded to the extent that proceeds in at least the amount
         of such increase are received by AES as a result of such proceeds being
         used to pay dividends or make distributions on the capital stock of
         such Subsidiary and any other Subsidiary in the chain of ownership
         between AES and such Subsidiary, (2) in the case of Debt refinancing,
         replacing or refunding Debt of the corporations or other entities that
         hold AES's interest in the Tiszai II and Tiszaipalkonya Power Projects
         (including, without limitation, Debt of a Subsidiary of AES that does
         not have a direct or indirect interest in any other Power Project, the
         proceeds of which are used to refinance such Debt of such corporations
         or other entities and to pay dividends to AES) outstanding on October
         21, 1997, an increase of up to $85,000,000 in excess of the aggregate
         principal amount of Debt that is being refinanced, replaced or refunded
         to the extent that proceeds of at least $45,000,000 are received by AES
         as a result of


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<PAGE>


         such proceeds being used to pay dividends or make distributions on the
         capital stock of such Subsidiary and any other Subsidiary in the chain
         of ownership between AES and such Subsidiary and (3) in the case of
         Debt refinancing, replacing or refunding Debt of Dominican Power
         Partners, LDC ("DPP") outstanding on October 21, 1997 (including,
         without limitation, Debt of AES Los Mina Finance Company the proceeds
         of which are used to refinance such Debt of DPP and to pay dividends to
         AES), an increase of up to $100,000,000 in excess of the aggregate
         principal amount of Debt that is being refinanced, replaced or refunded
         to the extent that proceeds of at least $80,000,000 are received by AES
         as a result of such proceeds being used to pay dividends or make
         distributions on the capital stock of such Subsidiary and any other
         Subsidiary in the chain of ownership between AES and such Subsidiary),
         (B) no obligor shall be liable for any such Debt except to the extent
         that it was liable for the Debt so refinanced, replaced or refunded
         (except that (I) AES Los Mina Finance Company may incur Debt the
         proceeds of which are used to refinance Debt of DPP and pay dividends
         to AES, (II) a Subsidiary of AES that does not have a direct or
         indirect interest in any other Power Project may incur Debt the
         proceeds of which are used to refinance Debt of the corporations or
         other entities that hold AES's interest in the Tiszai II and
         Tiszaipalkonya Power Projects and pay dividends to AES, (III) a
         Subsidiary of AES that does not have a direct or indirect interest in
         any Power Project other than AES Sul Distribudora Gaucha de Energia
         S.A. ("AES Sul") may incur Debt the proceeds of which are used to
         refinance Debt of AES Sul and (IV) a Subsidiary of AES (the
         "Refinancing Subsidiary") that has a direct or indirect interest in a
         Power Project may incur Debt the proceeds of which are used to
         refinance Debt of another Subsidiary of AES (the "Refinanced
         Subsidiary") that has a direct or indirect interest in such Power
         Project, provided that the Refinancing Subsidiary has no direct or
         indirect interest in any Power Project other than Power Projects in
         which the Refinanced Subsidiary has a direct or indirect interest.) and
         (C) if any Debt being refinanced, replaced or refunded is subordinated
         to the Debt of any Borrower hereunder or of any Subsidiary under any
         Guarantee thereof, such Debt shall be subordinated at least to the same
         extent;

               (vi) Guarantees by AES of (x) Debt permitted by clause (ii)(A)(1)
         above, (y) Debt permitted by clause (ii)(A)(2) above in respect of
         letters of credit issued in replacement of debt service reserve or
         other similar accounts related to the AES Hawaii (formerly known as
         Barbers Point), Shady Point or Thames Power Projects and (z) to the
         extent that the same constitutes a refinancing of Debt referred to in
         subclause (x) or (y) above, Debt permitted under clause (v) above;


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               (vii) Additional Permitted Subordinated Debt;

               (viii) Permitted Senior Unsecured Debt;

               (ix) surety bonds in respect of performance obligations of AES
         and letters of credit, in an aggregate principal amount at any time
         outstanding not to exceed $400,000,000;

               (x) 8% Senior Notes in an aggregate principal amount not
         exceeding $200,000,000; and

               (xi) other Debt not described in clauses (i) through (x) above in
         an aggregate principal amount at any time outstanding not to exceed
         $10,000,000.

         (b) AES shall not issue any Additional Permitted Subordinated Debt or
Permitted Senior Unsecured Debt unless (i) both before and after giving effect
to such issuance no Default shall have occurred and be continuing and (ii) on a
pro forma basis after giving effect to such issuance and the application of the
proceeds thereof (but without increasing or decreasing Parent Operating Cash
Flow on account of acquisitions for periods prior to such acquisitions), AES
would have been in compliance with Section 5.16 and (unless AES shall have
received net cash proceeds of not less than $500,000,000 from the issuance,
after September 1, 1999 and on or before the earlier of the date upon which such
Additional Permitted Subordinated Debt or Permitted Senior Unsecured Debt, as
applicable, is issued and December 31, 1999, of its common stock to Persons
other than Subsidiaries or affiliates of AES) 5.15 as of the last day of the
fiscal quarter ended on, or most recently ended prior to, the date of such
issuance (assuming for this purpose that (x) such Additional Permitted
Subordinated Debt or Permitted Senior Unsecured Debt, as applicable, (and any
other Debt or preferred stock of AES outstanding on the date of issuance of such
Additional Permitted Subordinated Debt or Permitted Senior Unsecured Debt, as
applicable, and issued after the first day of the period of four consecutive
fiscal quarters ended on such last day) was issued and the proceeds applied on
the first day of the period of four consecutive fiscal quarters ended on such
last day and (y) all Debt and preferred stock of AES repaid or redeemed prior to
or simultaneously with the issuance of such Additional Permitted Subordinated
Debt or Permitted Senior Unsecured Debt, as applicable, was repaid or redeemed
on the day prior to the first day of such period).

         (c) In addition to the Debt permitted by subsections (a) and (b)
above, AES shall be permitted to incur, assume, create and suffer to exist up to
an aggregate principal amount, not to exceed the sum of (1) $600,000,000 PLUS
(2) an


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<PAGE>


amount equal to 50% of the aggregate net proceeds received by AES from
issuances and sales (other than sales to AES or any of its Subsidiaries or
Affiliates) of its common stock after September 1, 1999, of unsecured senior
and/or subordinated Debt issued and sold by way of (i) a registered public
offering, (ii) an offering made to qualified institutional buyers pursuant to
Rule 144A under the Securities Act and/or (iii) in the form of term loans from
banks or other institutional lenders or investors, in each case having terms and
provisions applicable to AES and its Subsidiaries that are no more restrictive
in any material respect (including, without limitation, covenants and events of
default) than those included in existing outstanding public Debt of AES or
otherwise acceptable to the Required Banks (except that limitations on (I) the
ability of Subsidiaries and Affiliates of AES to guarantee other senior Debt of
AES, (II) the ability of AES to grant Liens on stock of Subsidiaries or
intercompany advances to secure other senior Debt of AES or (III) the ability of
Subsidiaries or Affiliates of AES to grant Liens on their assets (including
stock of Subsidiaries and intercompany advances) to secure guarantees of other
senior Debt of AES shall be permitted); provided that (A) both before and after
giving effect to such issuance no Default shall have occurred and be continuing,
(B) on a pro forma basis after giving effect to such issuance and the
application of the proceeds thereof (but without increasing or decreasing Parent
Operating Cash Flow on account of acquisitions for periods prior to such
acquisitions) AES would have been in compliance with Section 5.16 and (unless
AES shall have received net cash proceeds of not less than $500,000,000 from the
issuance, after September 1, 1999 and on or before the earlier of the date upon
which such Debt is issued and December 31, 1999 of its common stock to Persons
other than Subsidiaries or affiliates of AES) 5.15 as of the last day of the
fiscal quarter ended on, or most recently ended prior to, the date of such
issuance (assuming for this purpose that (x) such Debt (and any other
Debt or preferred stock of AES outstanding on the date of issuance of such Debt
and issued after the first day of the period of four consecutive fiscal quarters
ended on such last day) was issued and the proceeds applied on the first day of
the period of four consecutive fiscal quarters ended on such last day and (y)
all Debt and preferred stock of AES repaid or redeemed prior to or
simultaneously with the issuance of such Debt was repaid or redeemed on the day
prior to the first day of such period) and (C) such Debt (x) is not guaranteed
by any Subsidiary or Affiliate of AES and (y) does not require any scheduled
payment of principal prior to July 14, 2003.

         SECTION 5.08. MINIMUM CONSOLIDATED NET WORTH. Consolidated Net Worth
will at no time be less than the sum of (i) $1,160,000,000 plus (ii) for each
fiscal quarter of AES ended after the Closing Date and at or prior to such time
for which Consolidated Net Income is a positive number, an amount equal to 50%
of Consolidated Net Income for such fiscal quarter plus (iii) an amount equal to
75% of the cumulative net proceeds to AES from issuances of equity securities
made by AES from and after the Closing Date.


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<PAGE>


         SECTION 5.09. RESTRICTED PAYMENTS. Neither AES nor any Subsidiary will
declare or make any Restricted Payment unless, after giving effect thereto, the
aggregate of all Restricted Payments declared or made subsequent to June 30,
1995 does not exceed the sum of $5 million plus 5% (or, if such amount is a
loss, minus 100%) of Consolidated Net Income of AES and its Consolidated
Subsidiaries for the period from June 30, 1995 through the last day of the
fiscal quarter of AES then most recently ended (treated for this purpose as a
single accounting period). Nothing in this Section shall prohibit the payment of
any dividend or distribution within 45 days after the declaration thereof if
such declaration was not prohibited by this Section.

         SECTION 5.10. SUBORDINATED DEBT AND 8% SENIOR NOTES. (a) AES will not,
and will not permit any of its Subsidiaries to, consent to or solicit any
amendment, supplement, waiver or other modification of any Subordinated Note
Indenture or any other agreement or instrument evidencing or governing any
Subordinated Debt that would (i) increase the interest rate applicable thereto,
(ii) shorten the time or increase the amount of any principal payment
thereunder, (iii) change, in any manner, the subordination provisions thereof or
(iv) change any of the covenants, events of default or other provisions thereof
in any manner that could make any such covenant, event of default or other
provision more restrictive or that could otherwise be disadvantageous to AES or
the Banks, without the express prior written consent of the Required Banks.

         (b) AES will not, and will not permit any of its Subsidiaries to,
consent to or solicit any amendment, supplement, waiver or other modification of
the 1998 Senior Note Indenture or any other agreement or instrument evidencing
or governing any 8% Senior Notes that (i) would increase the interest rate
applicable thereto, (ii) shorten the time or increase the amount of any
principal payment thereunder or (iii) change any of the covenants, events of
default or other provisions thereof in any manner that could make any such
covenant, event of default or other provision more limiting or that could
otherwise be disadvantageous to AES or the Banks, without the express prior
written consent of the Required Banks.

         SECTION 5.11.  LIMITATIONS ON GUARANTEES AND COMMITMENTS.  (i) The
aggregate amount of Investment and Guarantee Commitments shall not at any
time exceed an amount equal to the sum of:

         (x) the product of (A) Parent Operating Cash Flow for the period of
four consecutive fiscal quarters then most recently ended multiplied by (B) four
(4), PLUS


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         (y) the excess, if any, of (A) the aggregate amount of net cash
proceeds received by AES from the issuance of equity securities and from the
disposition of Material AES Entities during the period from the Closing Date to
such time (to the extent not used to prepay Subordinated Debt or to permanently
retire any other Debt) over (B) the aggregate amount of cash Investments (other
than Temporary Cash Investments) and cash payments made by AES under Guarantees
during such period PLUS $430,000,000;

         provided, that for purposes of determining compliance with this clause
(i), the aggregate amount of Investment and Guarantee Commitments at any time
shall be reduced to the extent collateralized with cash and cash equivalents and
any deposit or other posting by AES of cash or cash equivalents as collateral
for any Investment and Guarantee Commitment shall be treated as a cash
Investment for purposes of subclause (y)(B) of this clause (i).

         (ii) AES shall not make or enter into any Investment and Guarantee
Commitments at any time that AES's senior unsecured Debt is rated less than BB-
by Standard & Poor's Ratings Services or less than Ba3 by Moody's Investors
Service, Inc.

         SECTION 5.12. NEGATIVE PLEDGE. Neither AES nor any Subsidiary of AES
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:

         (a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement;

         (b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Subsidiary of AES and not created in contemplation of such
event;

         (c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring such asset,
provided that such Lien attaches to such asset concurrently with or within 90
days after the acquisition thereof;

         (d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into AES or a Subsidiary of AES
and not created in contemplation of such event;

         (e) any Lien existing on any asset prior to the acquisition thereof by
AES or a Subsidiary of AES and not created in contemplation of such acquisition;


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         (f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses or clause (l) of this Section; PROVIDED that such Debt is not increased
and is not secured by any additional assets (other than, in the case of Debt
permitted under Section 5.07(a)(v), Liens on assets of any Subsidiary permitted
under such Section 5.07(a)(v) to be obligated on such Debt);

         (g) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in any amount exceeding
$25,000,000 and (iii) do not in the aggregate materially detract from the value
of its assets or materially impair the use thereof in the operation of its
business;

         (h) Liens in connection with worker's compensation, social security
obligations, taxes, assessments, statutory obligations or other similar charges,
good faith deposits in connection with tenders, contracts or leases to which AES
or any of its Subsidiaries is a party or other deposits required to be made in
the ordinary course of business and not in connection with borrowing money or
obtaining advances or credit, PROVIDED in each case that the obligation or
liability arises in the ordinary course of business and if overdue is being
contested in good faith by appropriate proceedings;

         (i) inchoate materialmen's, mechanics', workmen's, repairmen's,
employees', carriers', warehousemen's, or other like Liens arising in the
ordinary course of business of AES or its Subsidiaries;

         (j) with respect to real property, easements, rights of way,
reservations and other minor defects or irregularities in title which do not
materially impair the use thereof for the purposes for which it is held by AES
or its Subsidiaries;

         (k) Liens on cash collateral securing Investment and Guarantee
Commitments; and

         (l) Liens securing Power Project Debt or utility obligations or other
customer, supplier or contractor obligations associated with a Power Project
that are limited to the assets and revenues of the related Power Project and the
capital stock or other assets (including contract rights) of Subsidiaries of AES
having a direct or indirect interest in such Power Project.

         SECTION 5.13. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. (a) No
Borrower will consolidate or merge with or into any other Person; provided that
a Borrower may merge with another Person if (i) such Borrower is the corporation
surviving such merger or the corporation surviving such merger assumes all
obligations of such Borrower under the Financing Documents and


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<PAGE>


(ii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing.

         (b) AES will not sell, lease or otherwise transfer, directly or
indirectly, all or any substantial part of the assets of AES and its
Subsidiaries, taken as a whole, to any other Person.

         (c) AES will not sell or otherwise transfer, or permit to be sold or
otherwise transferred, directly or indirectly, any shares of capital stock of
any AES Finance Subsidiary or any Material AES Entity which are owned, directly
or indirectly, by AES; provided that AES may transfer, or permit the transfer
of, shares of capital stock of a Material AES Entity owned, directly or
indirectly, by AES if:

               (i) after giving effect to such transfer, AES will continue to
         own, directly or indirectly, at least 80% of the outstanding capital
         stock of each Material AES Entity;

               (ii) the consideration received by AES or a Subsidiary of AES for
         such transfer (A) has a value, as determined by AES, at least equal to
         the fair market value of the shares of capital stock transferred and
         (B) is in the form of cash or capital stock or partnership or other
         similar equity interests of a Person the principal assets of which
         consist of direct or indirect interests in one or more Power Projects,
         or a combination of the foregoing;

               (iii) after giving effect to such transfer, no Default shall have
         occurred and be continuing;

               (iv) on a pro forma basis after giving effect to such transfer,
         the Cash Flow Coverage Ratio for the four consecutive fiscal quarters
         then most recently ended is at least 1.75 to 1.00 (assuming for this
         purpose that such transfer occurred on the first day of such period of
         four consecutive fiscal quarters);

               (v) AES Hawaii, Inc. shall at all times remain a direct
         Subsidiary of AES Hawaii Management and AES Shady Point, Inc. shall at
         all times remain a direct Subsidiary of AES Oklahoma;

               (vi) if AES Cilcorp shall be a Subsidiary Guarantor, Cilcorp and
         Subsidiaries of Cilcorp holding substantially all of the assets of
         Cilcorp and its Subsidiaries as of March 4, 1999 shall at all times
         remain Subsidiaries of AES Cilcorp;


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              (vii) if AES Warrior Run shall be a Subsidiary Guarantor, AES
         Western Maryland Management, Inc., AES Mexico Farms Inc. and AES
         Warrior Run Limited Partnership shall at all times remain Subsidiaries
         of AES Warrior Run and shall hold, directly or indirectly,
         substantially all of the assets held by them on March 4, 1999; and

             (viii) if AES Southland shall be a Subsidiary Guarantor, Southland
         and Subsidiaries of Southland holding substantially all of the assets
         of Southland and its Subsidiaries as of March 4, 1999 shall at all
         times remain Subsidiaries of AES Southland.

         SECTION 5.14. USE OF PROCEEDS; CLEAN-UP PERIODS. (a) The proceeds of
the Loans made and Letters of Credit issued under this Agreement will be used
by the Borrowers for working capital and other general corporate purposes.
None of such proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any "margin
stock" within the meaning of Regulation U or Regulation G.

          (b) For at least one period of 30 consecutive days in each twelve
month period, the sum of (i) the aggregate stated amount of all Letters of
Credit used to support debt service reserves then outstanding and (ii) the
aggregate principal amount of all Loans then outstanding shall not exceed
$225,000,000.

         SECTION 5.15. CASH FLOW COVERAGE. The Cash Flow Coverage Ratio for
any period of four consecutive fiscal quarters of AES ending after the date
hereof (including any pro forma calculation under subsection (b) or (c) of
Section 5.07 made by reference to such period) shall not be less than (i) in
the case of any period ending after December 31, 1998 and on or prior to
March 31, 1999, 1.30 to 1.00, (ii) in the case of any period ending after
March 31, 1999 and on or prior to September 30, 1999, 1.40 to 1.00, (iii) in
the case of any period ending after September 30, 1999 and on or prior to
September 30, 2000, 1.50 to 1.00 and (iv) in all other cases, 1.75 to 1.00.

         SECTION 5.16. CASH FLOW TO TOTAL DEBT RATIO. The Cash Flow to Total
Debt Ratio for any period ending on or after March 31, 1998 shall not be less
than (i) 0.10 to 1.00 at any time on or prior to December 31, 1999, (ii)
0.105 to 1.00 at any time after December 31, 1999 and on or prior to March
31, 2000, (iii) 0.125 to 1.00 at any time after March 31, 2000 and on or
prior to September 30, 2000 and (iv) 0.15 to 1.00 at any time thereafter.

         SECTION 5.17. TRANSACTION WITH AFFILIATES. Except pursuant to
agreements existing on the date hereof and listed on Schedule I attached
hereto, AES will not, and will not permit any Subsidiary of AES to, directly
or indirectly, in any transaction involving aggregate consideration in excess
of $1,000,000, pay any


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<PAGE>


funds to or for the account of, make any investment (whether by acquisition
of stock or indebtedness, by loan, advance, transfer of property, guarantee
or other agreement to pay, purchase or service, directly or indirectly, any
Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any
assets, tangible or intangible, to, or participate in, or effect any
transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate; PROVIDED, HOWEVER, that the foregoing
provisions of this Section shall not prohibit (a) AES from declaring or
paying any lawful dividend so long as, after giving effect thereto, no
Default shall have occurred and be continuing, (b) AES or any Subsidiary of
AES from making sales to or purchases from any Affiliate and, in connection
therewith, extending credit or making payments, or from making payments for
services rendered by any Affiliate, if such sales or purchases are made or
such services are rendered in the ordinary course of business and on terms
and conditions at least as favorable to AES or such Subsidiary as the terms
and condi tions which would apply in a similar transaction with a Person not
an Affiliate, (c) AES or any Subsidiary of AES from making payments of
principal, interest and premium on any Debt of AES or such Subsidiary held by
an Affiliate if the terms of such Debt are substantially as favorable to AES
or such Subsidiary as the terms which could have been obtained at the time of
the creation of such Debt from a lender which was not an Affiliate and (d)
AES or any Subsidiary of AES from participating in, or effecting any
transaction in connection with, any joint enterprise or other joint
arrangement with any Affiliate if AES or such Subsidiary participates in the
ordinary course of its business and on a basis no less advantageous than the
basis on which such Affiliate participates. The provisions of this Section
5.17 shall not apply to (i) transactions between AES or any of its
Subsidiaries, on the one hand, and any employee of AES or any of its
Subsidiaries, on the other hand, that are approved by the Board of Directors
of AES or any committee of the Board of Directors consisting of AES's
independent directors and (ii) the payment of reasonable and customary
regular fees to directors of AES or a Subsidiary of AES.

         SECTION 5.18. LIMITATION ON INVESTMENTS. (a) AES will not permit any
Specified Subsidiary to make any Investment in, or to consolidate or merge
with, any other Person with a direct or indirect interest in any Power
Project or unrelated business other than the Power Project or unrelated
business in which such Specified Subsidiary has a direct or indirect interest
prior to the making of such Investment or the consummation of such
consolidation or merger.

          (b) AES will not permit any Subsidiary of AES with any direct or
indirect interest in (i) a Power Project to make any Investment in, or
consolidate or merge with, any other Person with a direct or indirect
interest in any other Power Project or any unrelated business or (ii) any
unrelated business to make any Investment in, or to consolidate or merge
with, any other Person with a direct or


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indirect interest in any Power Project; PROVIDED that (A) one or more
Subsidiaries of AES (each, an "INTERMEDIATE HOLDING COMPANY") may serve as
holding companies for any or all of AES's direct and indirect interests in
Power Projects and unrelated businesses, so long as:

         (I) each such Intermediate Holding Company's direct and indirect
interest in any Power Project or unrelated business shall be limited to the
ownership of capital stock or Debt obligations of a Person with a direct or
indirect interest in such Power Project or unrelated business;

         (II) no Lien shall exist upon any asset of any Intermediate Holding
Company (other than Liens on the capital stock of AES or a Subsidiary of an
Intermediate Holding Company securing Debt of such Intermediate Holding
Company or such Subsidiary and Liens securing Debt permitted under clause
(ii) of Section 5.07(a)); and

        (III) no Intermediate Holding Company shall incur, assume, create or
suffer to exist any Debt (including any Guarantee of Debt) other than Debt
owing to AES or any Intermediate Holding Company and Debt permitted by
clauses (i) and (ii) of Section 5.07(a) or (to the extent that such Debt
represents a refinancing or replacement of Debt permitted by clause (ii) of
Section 5.07(a)) clause (v) of Section 5.07(a) (without giving effect to
subsubclauses (I) through (IV) of subclause (B) thereof); and

              (B) AES Electric may make Investments in Power Projects owned by
         NIGEN Limited and Medway Power Limited as of the date of this
         Agreement under any agreement by which it is bound as of the date of
         this Agreement.

         SECTION 5.19. ADDITIONAL GUARANTORS. On or prior to the earlier of
(x) the date of the consummation of the Cilcorp Acquisition and (y) the date
that is six months after the date upon which the First Amendment and
Restatement is effective, (i) each Additional Guarantor shall execute and
deliver to the Agent a Subsidiary Guaranty, (ii) each Additional Guarantor
shall provide to the Agent (A) copies of the bylaws of such Additional
Guarantor and of resolutions of the Board of Directors or equivalent
governing body of such Additional Guarantor authorizing the execution,
delivery and performance by such Additional Guarantor of such Subsidiary
Guaranty, certified by a duly authorized officer of such Additional Guarantor
(which certificate shall state that such bylaws and resolutions are in full
force and effect on the date of such Additional Guarantor's execution and
delivery of such Subsidiary Guaranty), (B) copies of all approvals,
authorizations or consents of, or notices to or registrations with, any
governmental body or agency, if any, required for such Additional Guarantor
to enter into such


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Subsidiary Guaranty, (C) a certificate of a duly authorized officer of such
Additional Guarantor certifying the names and true signatures of the officers
of such Additional Guarantor authorized to sign such Subsidiary Guaranty and
(D) a copy of the certificate or articles of incorporation of such Additional
Guarantor, and all amendments thereto, certified by the Secretary of State of
the state of incorporation or other constitutive documents of such Additional
Guarantor and (iii) the General Counsel of AES shall have provided to the
Agent a legal opinion, dated the date on which each Additional Guarantor
shall have executed and delivered a Subsidiary Guaranty, covering such
matters relating to its existence and good standing and its entry into and
performance of such Subsidiary Guaranty and such other matters relating
thereto as the Agent shall reasonably request.

                                         ARTICLE 6

                                         DEFAULTS

         SECTION 6.01.  EVENTS OF DEFAULT.

         If one or more of the following events ("EVENTS OF DEFAULT") shall
have occurred and be continuing:

         (a) any Obligor shall fail to pay when due any principal of any Loan
or any Reimbursement Obligation, or shall fail to pay within three days of
the date when due any interest, fees or other amounts payable under any
Financing Document;

         (b) AES shall fail to observe or perform any covenant contained in
Sections 5.07 to 5.19, inclusive, or except in accordance with the terms
hereof and thereof, the Subsidiary Guaranty or the guarantees in Article IX
shall cease to be in full force and effect;

         (c) any Obligor shall fail to observe or perform any covenant or
agreement contained in any Financing Document (other than those covered by
clause (a) or (b) above) for 20 days after written notice thereof has been
given to AES by the Agent at the request of any Bank;

         (d) any representation, warranty, certification or statement made by
any Obligor in any Financing Document or in any certificate, financial
statement or other document delivered pursuant to any Financing Document
shall prove to have been incorrect in any material respect when made (or
deemed made);

         (e) any Borrower shall fail to make any payment in respect of any
Material Debt when due or within any applicable grace period;


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         (f) any event or condition shall occur which (i) prior to May 28,
1999, results in the acceleration of the maturity of any Material Debt of AES
or any Subsidiary of AES (except AES Placerrita and Central Termica San
Nicholas S.A.), (ii) on or after May 28, 1999, results in the acceleration of
the maturity of any Material Debt of AES or of any Material Debt of any
Subsidiary or Subsidiaries of AES (except AES Placerita and Central Termica
San Nicolas S.A.) that, individually or in the aggregate (in each case
together with any Person in which such Subsidiary has a direct or indirect
equity Investment), contributed 15% or more to Parent Operating Cash Flow for
the four most recently completed fiscal quarters of AES, (iii) results in the
termination of any commitment to provide financing in an amount in excess of
$15,000,000 to AES or any Material AES Entity or (iv) in the case of any
Borrower, enables (or, with the giving of notice or lapse of time or both,
would enable) the holder of any Material Debt of such Borrower or any Person
acting on such holder's behalf to accelerate the maturity thereof;

         (g) a Borrower or any Significant AES Entity shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;

         (h) an involuntary case or other proceeding shall be commenced
against a Borrower or any Significant AES Entity seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against a Borrower or any Significant AES Entity under the federal bankruptcy
laws as now or hereafter in effect;

         (i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $15,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose

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liability (other than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer any Material Plan; or
a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a default, within
the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA Group
to incur a current payment obligation in excess of $15,000,000;

         (j) a judgment or order for the payment of money in excess of
$15,000,000 shall be rendered against AES or any Subsidiary of AES, and such
judgment or order shall continue unsatisfied and unstayed for a period of 10
days; or

         (k) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) other than a member
of the AES Management Group shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 20% or more of the outstanding shares of common
stock of AES; during any period of twelve consecutive calendar months,
individuals who were directors of AES on the first day of such period (or who
were appointed or nominated for election as directors of AES by at least a
majority of the individuals who were directors on the first day of such
period) shall cease to constitute a majority of the board of directors of
AES; or any AES Finance Subsidiary shall fail, at any time, to be a
Wholly-Owned Consolidated Subsidiary of AES;

         then, and in every such event, the Agent shall (i) if requested by
Banks having more than 50% in aggregate amount of the Total Exposures, by
notice to the Borrowers terminate the Commitments and they shall thereupon
terminate, and (ii) if requested by Banks having more than 50% of the Total
Exposures, by notice to the Borrowers declare the Notes (together with
accrued interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrowers; PROVIDED
that in the case of any Automatic Acceleration Event, without any notice to
the Borrowers or any other act by the Agent or the Banks, the Commitments
shall thereupon terminate and the Notes (together with accrued interest
thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived
by the Borrowers.

         SECTION 6.02. NOTICE OF DEFAULT. The Agent shall give notice to AES
under Section 6.01(c) promptly upon being requested to do so by any Bank and
shall thereupon notify all the Banks thereof.


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         SECTION 6.03. CASH COLLATERAL. If any Automatic Acceleration Event
shall occur or the Loans of the Banks shall have otherwise been accelerated
or the Commitments terminated pursuant to Section 6.01, then without any
request or the taking of any other action by the Agent or any of the Banks,
the Borrowers shall be jointly and severally obligated forthwith to pay to
the Agent an amount in immediately available funds equal to the then
aggregate amount available for drawings (regardless of whether any conditions
to any such drawing can then be met) under all Letters of Credit at the time
outstanding, to be held by the Agent as cash collateral as provided in
Section 2.15.

                                        ARTICLE 7

                                        THE AGENT

         SECTION 7.01. APPOINTMENT AND AUTHORIZATION. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Financing Documents as are delegated to
the Agent by the terms thereof, together with all such powers as are
reasonably incidental thereto.

         SECTION 7.02. AGENT AND AFFILIATES. Morgan Guaranty Trust Company of
New York shall have the same rights and powers under the Financing Documents
as any other Bank and may exercise or refrain from exercising the same as
though it were not the Agent, and Morgan Guaranty Trust Company of New York
and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with AES or any Subsidiary or affiliate of AES
as if it were not the Agent under the Financing Documents.

         SECTION 7.03. ACTION BY AGENT. The obligations of the Agent under
the Financing Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Default, except as expressly provided in
Article VI.

         SECTION 7.04. CONSULTATION WITH EXPERTS. The Agent may consult with
legal counsel (who may be counsel for any Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.

         SECTION 7.05. LIABILITY OF AGENT. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its affiliates


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<PAGE>


nor any of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with the Financing
Documents or any Extension of Credit hereunder; (ii) the performance or
observance of any of the covenants or agreements of any Obligor; (iii) the
satisfaction of any condition specified in Article III, except receipt of
items required to be delivered to the Agent; or (iv) the validity,
effectiveness or genuineness of the Financing Documents or any other
instrument or writing furnished in connection therewith. The Agent shall not
incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) believed by it to be genuine or to
be signed by the proper party or parties.

         SECTION 7.06. INDEMNIFICATION. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, and each Fronting Bank,
each of their respective affiliates and the respective directors, officers,
agents and employees of any of them (to the extent not reimbursed by the
Obligors) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that
such indemnitees may suffer or incur in connection with the Financing
Documents or any action taken or omitted by such indemnitees thereunder.

         SECTION 7.07. CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent, any Fronting Bank or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent, any Fronting Bank or any other Bank, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under this Agreement.

         SECTION 7.08. SUCCESSOR AGENT. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrowers. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required
Banks, and shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial
bank organized or licensed under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$100,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall


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<PAGE>


thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.

         SECTION 7.09. AGENT'S FEE. AES shall pay to the Agent for its own
account fees in the amounts and at the times previously agreed upon between
AES and the Agent.

                                         ARTICLE 8

                                  CHANGE IN CIRCUMSTANCES

         SECTION 8.01.  BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR. If on or prior to the first day of any Interest Period for any
Euro-Dollar Borrowing:

          (a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or

          (b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted London Interbank Offered Rate
as determined by the Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period,

          the Agent shall forthwith give notice thereof to the Borrowers and
the Banks, whereupon until the Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make Euro-Dollar Loans, or to continue or convert
outstanding Loans as or into Euro-Dollar Loans, shall be suspended and (ii)
each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on
the last day of the then current Interest Period applicable thereto. Unless a
Borrower notifies the Agent at least two Domestic Business Days before the
date of any Euro-Dollar Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date such
Borrowing shall instead be made as a Base Rate Borrowing.

         SECTION 8.02. ILLEGALITY. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or


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<PAGE>


not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans
to any Borrower and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and AES, whereupon until
such Bank notifies AES and the Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans to such Borrower, or to convert outstanding Loans into
Euro-Dollar Loans or continue outstanding Loans as Euro-Dollar Loans, shall
be suspended. Before giving any notice to the Agent pursuant to this Section,
such Bank shall designate a different Euro-Dollar Lending Office if such
designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such
notice is given, each Euro-Dollar Loan of such Bank then outstanding shall be
converted to a Base Rate Loan either (i) on the last day of the then current
Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully
continue to maintain and fund such Loan as a Euro-Dollar Loan to such day or
(ii) immediately if such Bank shall determine that it may not lawfully
continue to maintain and fund such Loan as a Euro-Dollar Loan to such day.
Interest and principal on any such Base Rate Loan shall be payable on the
same dates as, and on a pro rata basis with, the interest and principal
payable on the related Euro-Dollar Loans of the other Banks.

         SECTION 8.03. INCREASED COST AND REDUCED RETURN. (a) If on or after
the date hereof, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) or any Fronting Bank (any Bank (or its Applicable Lending Office) and
any Fronting Bank being referred to in this Section 8.03 as a "Credit Party")
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System,
but excluding with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage), special deposit,
insurance assessment or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Credit Party or shall
impose on any Credit Party or on the London interbank market any other
condition affecting its Euro-Dollar Loans, its Note or Notes, the Letters of
Credit or its participation therein or its obligation to make Euro-Dollar
Loans or to issue Letters of Credit or to participate therein and the result
of any of the foregoing is to increase the cost to such Credit Party of
making or maintaining any Euro- Dollar Loan or issuing any Letter of Credit
or participating therein, or to reduce the amount of any sum received or
receivable by such Credit Party under this


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<PAGE>


Agreement or under its Note or Notes with respect thereto, by an amount
deemed by such Credit Party to be material, then, within 15 days after demand
by such Credit Party (with a copy to the Agent), AES shall pay to such Credit
Party such additional amount or amounts as will compensate such Credit Party
for such increased cost or reduction.

          (b) If any Credit Party shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in any such law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Credit Party (or its Parent) as a
consequence of such Credit Party's obligations hereunder to a level below
that which such Credit Party (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such Credit
Party to be material, then from time to time, within 15 days after demand by
such Credit Party (with a copy to the Agent), AES shall pay to such Credit
Party such additional amount or amounts as will compensate such Credit Party
(or its Parent) for such reduction.

          (c) Each Credit Party will promptly notify AES and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Credit Party to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not,
in the judgment of such Credit Party, be otherwise disadvantageous to such
Credit Party. A certificate of any Credit Party claiming compensation under
this Section and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Credit Party may use any reasonable averaging
and attribution methods.

         SECTION 8.04. TAXES. (a) Any and all payments by any Borrower to or
for the account of any Bank, any Fronting Bank or the Agent hereunder or
under any other Financing Document shall be made free and clear of and
without deduction for any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, EXCLUDING, in the case of each Bank, each Fronting Bank and
the Agent, taxes imposed on its income (including branch profit taxes),
franchise and similar taxes and other taxes imposed on it that, in any such
case, would not have been imposed but for a material connection between such
Bank, such Fronting Bank or the Agent (as the


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case may be) and the jurisdiction imposing such taxes (other than a material
connection arising by reason of this Agreement or any other Financing
Document or the receipt of payments made hereunder or thereunder) (all such
non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If
any Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any other Financing Document to any
Bank, any Fronting Bank or the Agent, (i) the sum payable shall be increased
as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 8.04)
such Bank, such Fronting Bank or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions, (iii) such Borrower
shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) such Borrower
shall furnish to the Agent, at its address referred to in Section 10.01, the
original or a certified copy of a receipt evidencing payment thereof.

          (b) In addition, each Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges
or similar levies which arise from any payment made by it hereunder or under
any Note or from the execution or delivery of, or otherwise with respect to,
this Agreement or any other Financing Document (hereinafter referred to as
"Other Taxes").

          (c) Each Borrower agrees to indemnify each Bank, each Fronting Bank
and the Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction
on amounts payable under this Section 8.04) paid by such Bank, such Fronting
Bank or the Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 15 days from the date such Bank,
such Fronting Bank or the Agent (as the case may be) makes demand therefor.

          (d) Each Bank organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each
other Bank, and from time to time thereafter if requested in writing by AES
(but only so long as such Bank remains lawfully able to do so), shall provide
AES with two duly completed and accurate copies of Internal Revenue Service
form 1001 or 4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Bank is entitled to benefits
under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying
that the income receivable pursuant to this


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<PAGE>


Agreement is effectively connected with the conduct of a trade or business in
the United States. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from "Taxes" as defined in Section 8.04(a).

          (e) For any period with respect to which a Bank has failed to
provide AES with the appropriate form pursuant to Section 8.04(d) (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be
provided), such Bank shall not be entitled to indemnification under Section
8.04(a) with respect to Taxes imposed by the United States; PROVIDED,
HOWEVER, that should a Bank, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrowers shall take such
steps as such Bank shall reasonably request to assist such Bank to recover
such Taxes.

          (f) If any Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.04, then such Bank will
change the jurisdiction of its Applicable Lending Office so as to eliminate
or reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Bank, is not otherwise disadvantageous to
such Bank.

          (g) Each Bank, each Fronting Bank and the Agent agrees that it will
promptly (within 30 days) after receiving notice thereof from any taxing
authority, notify AES of the assertion of any liability by such taxing
authority with respect to Taxes or Other Taxes; PROVIDED, that the failure to
give such notice shall not relieve AES of its obligations under this Section
8.04 except to the extent that AES has been prejudiced by such failure and
except that AES shall not be liable for penalties, interest or expenses
accruing after such 30 day period until such time as it receives the notice
contemplated above, after which time it shall be liable for interest,
penalties and expenses accruing after such receipt.

          (h) If any Bank, a Fronting Bank or the Agent shall receive a
credit or refund from a taxing authority (as a result of any error in the
imposition of Tax or Other Tax by such taxing authority) with respect to and
actually resulting from an amount of such Taxes or Other Taxes paid by a
Borrower pursuant to subsection (a) or (c) above, such Bank, such Fronting
Bank or the Agent shall promptly pay to AES the amount so received (without
interest thereon, whether or not received).

         SECTION 8.05. BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURO-DOLLAR
LOANS. If (i) the obligation of any Bank to make, or to continue or to
convert outstanding Loans as or to, Euro-Dollar Loans to any Borrower has
been


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<PAGE>


suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03 or 8.04 with respect to its Euro-Dollar Loans to any
Borrower and such Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Agent, have elected that the provisions
of this Section shall apply to such Bank, then, unless and until such Bank
notifies AES that the circumstances giving rise to such suspension or demand
for compensation no longer exist, all Loans to such Borrower which would
otherwise be made by such Bank as (or continued or converted to) Euro-Dollar
Loans shall be made instead as Base Rate Loans (on which interest and
principal shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks). If such Bank notifies such Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist, the principal amount of each such Base Rate Loan shall be
converted into a Euro-Dollar Loan on the first day of the next succeeding
Interest Period applicable to the related Euro-Dollar Loans of the other
Banks.

                                      ARTICLE 9

                                      GUARANTY

         SECTION 9.01. THE GUARANTY. Subject, in the case of any AES Finance
Subsidiary, to the provisions of Section 9.07, each Guarantor hereby
unconditionally guarantees the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Note issued by the applicable Borrower pursuant to this Agreement, and
the full and punctual payment of all other amounts payable by such Borrower
under this Agreement. Upon failure by a Borrower to pay punctually any such
amount, the applicable Guarantor shall, subject, in the case of any AES
Finance Subsidiary, to the provisions of Section 9.07, forthwith on demand
pay the amount not so paid at the place and in the manner specified in this
Agreement. Without limiting the generality of the foregoing, each Guarantor's
liability hereunder shall extend to all amounts which constitute part of the
obligations guaranteed by it hereunder and would be owed by a Borrower
hereunder but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding
involving such Borrower.

         SECTION 9.02. GUARANTY UNCONDITIONAL. The obligations of each
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or
otherwise affected by:

              (i) any extension, renewal, settlement, compromise, waiver or
         release in respect of any obligation of any other Obligor under any
         Financing Document, by operation of law or otherwise;


                                       73


<PAGE>


             (ii) any modification or amendment of or supplement to any
         Financing Document;

            (iii) any release, impairment, non-perfection or invalidity of any
         direct or indirect security for any obligation of any other Obligor
         under any Financing Document;

             (iv) any change in the corporate existence, structure or ownership
         of any Obligor, or any insolvency, bankruptcy, reorganization or other
         similar proceeding affecting any other Obligor or its assets or any
         resulting release or discharge of any obligation of any other Obligor
         contained in any Financing Document;

              (v) the existence of any claim, set-off or other rights which such
         Guarantor may have at any time against any other Obligor, the Agent,
         any Fronting Bank, any Bank or any other Person, whether in connection
         herewith or with any unrelated transactions, provided that nothing
         herein shall prevent the assertion of any such claim by separate suit
         or compulsory counterclaim;

             (vi) any invalidity or unenforceability relating to or against any
         other Obligor for any reason of any Financing Document, or any
         provision of applicable law or regulation purporting to prohibit the
         payment by any other Obligor of the principal of or interest on any
         Note or any other amount payable by it under any Financing Document;
         or

            (vii) any other act or omission to act or delay of any kind by any
         Obligor, the Agent, any Fronting Bank, any Bank or any other Person or
         any other circumstance whatsoever which might, but for the provisions
         of this paragraph, constitute a legal or equitable discharge of or
         defense to a Guarantor's obligations hereunder.

         SECTION 9.03. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. Each Guarantor's obligations hereunder shall remain in
full force and effect until the Commitments shall have terminated, the
principal of and interest on the Notes and all other amounts payable by any
Obligor under any Financing Document shall have been paid in full and all
Letters of Credit shall have expired or been terminated. If at any time any
payment of principal of or interest on any Note or any other amount payable
by any Borrower under any Financing Document is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of such Borrower or otherwise, the applicable Guarantor's
obligations hereunder with respect to such payment shall


                                     74


<PAGE>


be reinstated at such time as though such payment had been due but not made
at such time.

         SECTION 9.04. WAIVER BY THE GUARANTORS. Each Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any action
be taken by any Person against the applicable Borrower or any other Person.

         SECTION 9.05.  SUBROGATION. Upon making any payment with respect to
a Borrower under this Article IX, the applicable Guarantor shall be
subrogated to the rights of the payee against such Borrower with respect to
such payment; PROVIDED that neither Guarantor shall enforce any payment by
way of subrogation until all amounts of principal of and interest on the
Notes and all other amounts payable by any Borrower under any Financing
Document shall have been paid in full.

         SECTION 9.06. STAY OF ACCELERATION. In the event that acceleration
of the time for payment of any amount payable by a Borrower under any
Financing Document is stayed upon insolvency, bankruptcy or reorganization of
such Borrower, all such amounts otherwise subject to acceleration under the
terms of this Agreement shall nonetheless be payable by the applicable
Guarantor hereunder forthwith on demand by the Agent made at the request of
the requisite proportion of the Banks specified in Article VI of this
Agreement.

         SECTION 9.07. LIMITATION OF LIABILITY. The obligations of any AES
Finance Subsidiary under this Article IX shall be limited to an aggregate
amount equal to the largest amount that would not render its obligations
under this Article IX subject to avoidance under Section 548 of the
Bankruptcy Code or any comparable provisions of any applicable state law.

                                       ARTICLE 10

                                     MISCELLANEOUS

         SECTION 10.01. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, facsimile transmission or similar writing) and shall be given to
such party: (w) in the case of AES, any Fronting Bank or the Agent, at its
address or telex or facsimile transmission number set forth on the signature
pages hereof, (x) in the case of any AES Finance Subsidiary, in care of AES
at the address or telex or facsimile transmission number of AES set forth on
the signature pages hereof, (y) in the case of any Bank, at its address or
telex or facsimile transmission number set forth in its Administrative
Questionnaire or (z) in the case of any party, at such other address or telex
or facsimile transmission number as such party may hereafter


                                    75


<PAGE>


specify for the purpose by notice to the Agent, the Fronting Banks and AES.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified
in or pursuant to this Section and the appropriate answerback is received,
(ii) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iii) if
given by any other means, when delivered at the address specified in or
pursuant to this Section; PROVIDED that notices to the Agent or a Fronting
Bank under Article II or Article VIII shall not be effective until received.

         SECTION 10.02. NO WAIVERS. No failure or delay by the Agent, any
Fronting Bank or any Bank in exercising any right, power or privilege
hereunder or under any other Financing Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

         SECTION 10.03. EXPENSES; INDEMNIFICATION. (a) AES shall pay (i) all
out-of-pocket expenses of the Agent, including reasonable fees and
disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement and the other Financing
Documents, any waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (ii) if an Event of Default occurs,
all out-of-pocket expenses incurred by the Agent, each Fronting Bank and each
Bank, including (without duplication) the fees and disbursements of outside
counsel and the allocated cost of inside counsel, in connection with such
Event of Default and collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.

          (b) AES agrees to indemnify the Agent, each Fronting Bank and each
Bank, their respective affiliates and the respective directors, officers,
agents and employees of the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connec tion with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party
thereto) brought or threatened relating to or arising out of this Agreement
or any actual or proposed use of proceeds of Loans or Letters of Credit
hereunder or the issuance or deemed issuance of any Letter of Credit
hereunder; PROVIDED that no Indemnitee shall have the right to be indemnified
hereunder for such Indemnitee's own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.


                                      76


<PAGE>


         SECTION 10.04. SHARING OF SET-OFFS. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount due with respect to
the Total Outstandings of such Bank which is greater than the proportion
received by any other Bank in respect of the aggregate amount due with
respect to the Total Outstandings of such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Total Outstandings of the other Banks, and such other adjustments shall be
made, as may be required so that all such payments with respect to the Total
Outstandings of the Banks shall be shared by the Banks pro rata; PROVIDED
that nothing in this Section shall impair the right of any Bank to exercise
any right of set-off or counterclaim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of a Borrower other
than its indebtedness in respect of the Total Outstandings of any Bank. Each
Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note or in any Letter
of Credit Liability, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a
participation were a direct creditor of such Borrower in the amount of such
participation.

         SECTION 10.05. AMENDMENTS AND WAIVERS. Any provision of this
Agreement or any other Financing Document may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by each
Borrower, each Fronting Bank and the Required Banks (and, if the rights or
duties of the Agent are affected thereby, by the Agent); PROVIDED that no
such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable decrease in
Commitments of all Banks) or subject any Bank to any additional obligation,
(ii) reduce the principal of or rate of interest on any Loan or Reimbursement
Obligation or any fees hereunder, (iii) postpone the date fixed for any
payment of principal of or interest on any Loan or Reimbursement Obligation
or any fees hereunder or for any reduction or termination of any Commitment,
(iv) change the percentage of the Commitments or of the Total Exposures, or
the number of Banks, which shall be required for the Banks or any of them to
take any action under this Section or any other provision of this Agreement
or any other Financing Document, or (v) release either Subsidiary Guarantor
from its obligations under Section 2 of the Subsidiary Guaranty or any
Guarantor from its obligations under Article IX hereof.

         SECTION 10.06. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that no Borrower
may assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.


                                       77


<PAGE>


          (b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment
or any or all of its Loans or participating interests in Letter of Credit
Liabilities. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notice to the Borrowers, the
Fronting Banks and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrowers, the Fronting
Bank and the Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrowers hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement or any other
Financing Document; PROVIDED that such participation agreement may provide
that such Bank will not agree to any modification, amendment or waiver of
this Agreement described in clause (i), (ii), (iii) or (v) of Section 10.05
without the consent of the Participant. The Borrowers agree that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article VIII with respect to its participating
interest. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).

          (c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (equivalent to
an initial Commitment of not less than $5,000,000) of all, of its rights and
obligations under this Agreement and the other Financing Documents, and such
Assignee shall assume such rights and obligations, pursuant to an Assignment
and Assumption Agreement in substantially the form of Exhibit G hereto
executed by such Assignee and such transferor Bank, with (and subject to) the
subscribed consent of AES (which shall not be unreasonably withheld), the
Fronting Banks and the Agent; PROVIDED that if an Assignee is an affiliate of
such transferor Bank, no such consent shall be required. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank with a Commitment as
set forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Agent and the Borrowers shall make appropriate
arrangements so that, if required, new Notes are issued to the Assignee. In
connection with any such assignment, the transferor Bank shall


                                    78


<PAGE>


pay to the Agent an administrative fee for processing such assignment in the
amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to AES and the
Agent certification as to exemption from deduction or withholding of any
United States federal income taxes in accordance with Section 8.04.

          (d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and the other Financing Documents to a Federal
Reserve Bank. No such assignment shall release the transferor Bank from its
obligations hereunder.

          (e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with AES's prior written
consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.

         SECTION 10.07.  COLLATERAL.  Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U or Regulation G) as collateral
in the extension or maintenance of the credit provided for in this Agreement.

         SECTION 10.08. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement and the other Financing Documents shall be governed by and
construed in accordance with the laws of the State of New York. Each Borrower
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York State court
sitting in New York City for purposes of all legal proceedings arising out of
or relating to this Agreement and the other Financing Documents or the
transactions contemplated hereby. Each Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

         SECTION 10.09. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement and the other Financing
Documents constitute the entire agreement and understanding among the parties
hereto and supersede any and all prior agreements and understandings, oral or
written,


                                    79


<PAGE>


relating to the subject matter hereof. This Agreement shall become effective
upon receipt by the Agent of counterparts hereof signed by each of the
parties hereto, other than any AES Finance Subsidiary (or, in the case of any
such party as to which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic, telex,
facsimile transmission or other written confirmation from such party of
execution of a counterpart hereof by such party).

         SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS, THE
FRONTING BANKS, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE OTHER FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

         SECTION 10.11. SEVERABILITY; MODIFICATION TO CONFORM TO LAW. It is
the intention of the parties that this Agreement be enforceable to the
fullest extent permissible under applicable law, but that the
unenforceability (or modification to conform to such law) of any provision or
provisions hereof shall not render unenforceable, or impair, the remainder
hereof. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, this Agreement shall,
as to such jurisdiction, be deemed amended to modify or delete, as necessary,
the offending provision or provisions and to alter the bounds thereof in
order to render it or them valid and enforceable to the maximum extent
permitted by applicable law, without in any manner affecting the validity or
enforceability of such provision or provisions in any other jurisdiction or
the remaining provisions hereof in any jurisdiction.

         SECTION 10.12. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. (a) Each
AES Finance Subsidiary hereby irrevocably designates, appoints, authorizes
and empowers as its agent for service of process CT Corporation System, at
its offices currently located at 1633 Broadway, New York, New York 10019, to
accept and acknowledge for and on behalf of such AES Finance Subsidiary
service of any and all process, notices or other documents that may be served
in any suit, action or proceeding relating to any Financing Document in any
New York State or Federal court sitting in The State of New York.

         SECTION 10.13. JUDGMENT CURRENCY. If for the purposes of enforcing
the obligations of any Borrower hereunder it is necessary to convert a sum
due from such Person in U.S. dollars ("dollars") into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with
normal banking procedures the Agent, the Fronting Banks and the Banks could
purchase dollars

                                         80


<PAGE>


with such currency at or about 11:00 A.M. (New York City time) on the
Domestic Business Day preceding that on which final judgment is given. The
obligations in respect of any sum due to the Agent, the Fronting Banks and
the Banks hereunder shall, notwithstanding any adjudication expressed in a
currency other than dollars, be discharged only to the extent that on the
Domestic Business Day following receipt by the Agent, the Fronting Banks and
the Banks of any sum adjudged to be so due in such other currency the Agent,
the Fronting Banks and the Banks may in accordance with normal banking
procedures purchase dollars with such other currency; if the amount of
dollars so purchased is less than the sum originally due to the Agent, the
Fronting Banks and the Banks in dollars, each Borrower agrees, to the fullest
extent that it may effectively do so, as a separate obligation and
notwithstanding any such adjudication, to indemnify the Agent, the Fronting
Banks and the Banks against such loss, and if the amount of dollars so
purchased exceeds the sum originally due to the Agent, the Fronting Banks and
the Banks, it shall remit such excess to the applicable Borrower.


                                        81


<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.

                                        THE AES CORPORATION

                                        By____________________________________
                                          Title:

                                               1001 North 19th Street
                                               Arlington, VA 22209
                                               Telecopy no.: (703) 528-4510

BANKS
-----

                                        MORGAN GUARANTY TRUST
                                        COMPANY OF NEW YORK


                                        By____________________________________
                                          Title:


                                        NATIONSBANK, N.A.


                                        By____________________________________
                                          Title:


                                           82


<PAGE>


                                        UNION BANK OF CALIFORNIA, N.A.


                                        By____________________________________
                                          Title:


                                        By____________________________________
                                          Title:


                                        BARCLAYS BANK PLC


                                        By____________________________________
                                          Title:


                                        AUSTRALIA AND NEW ZEALAND
                                        BANKING GROUP LIMITED


                                        By____________________________________
                                          Title:


                                        THE BANK OF NOVA SCOTIA


                                        By____________________________________
                                          Title:


                                           83


<PAGE>


                                        BANKBOSTON, N.A.


                                        By____________________________________
                                          Title:


                                        DRESDNER BANK AG, NEW YORK
                                        AND GRAND CAYMAN BRANCHES


                                        By____________________________________
                                          Title:


                                        By____________________________________
                                          Title:


                                        THE FIRST NATIONAL BANK OF
                                        CHICAGO


                                        By____________________________________
                                          Title:


                                        THE INDUSTRIAL BANK OF JAPAN,
                                        LIMITED, NEW YORK BRANCH


                                        By____________________________________
                                          Title:


                                          84


<PAGE>


                                        TORONTO DOMINION (TEXAS), INC.


                                        By____________________________________
                                          Title:


                                        SOCIETE GENERALE


                                        By____________________________________
                                          Title:


                                        CREDIT LYONNAIS NEW YORK
                                        BRANCH


                                        By____________________________________
                                          Title:


                                        BAYERISCHE HYPO- UND
                                        VEREINSBANK AG,
                                        NEW YORK BRANCH


                                        By____________________________________
                                          Title:


                                        By____________________________________
                                          Title:


                                             85


<PAGE>


                                        BANQUE NATIONALE DE PARIS


                                        By____________________________________
                                          Title:


                                        By____________________________________
                                          Title:


                                        CIBC INC.


                                        By____________________________________
                                          Title:


                                        COMMERZBANK AG, NEW YORK
                                        BRANCH


                                        By____________________________________
                                          Title:


                                        WESTDEUTSCHE LANDESBANK
                                        GIROZENTRALE


                                        By____________________________________
                                          Title:


                                        By____________________________________
                                          Title:



                                          86


<PAGE>



                                        CREDIT LOCAL DE FRANCE, NEW
                                        YORK AGENCY


                                        By____________________________________
                                          Title:


                                        By____________________________________
                                          Title:


                                        FIRST HAWAIIAN BANK


                                        By____________________________________
                                          Title:


                                        RIGGS BANK N.A.


                                        By____________________________________
                                          Title:


                                        THE SANWA BANK, LIMITED
                                        NEW YORK BRANCH


                                        By____________________________________
                                          Title:



                                           87


<PAGE>



                                        SUNTRUST BANK, CENTRAL
                                        FLORIDA, N.A.


                                        By____________________________________
                                          Title:


                                        ARAB BANK PLC


                                        By____________________________________
                                          Title:


FRONTING BANKS
--------------

                                        BARCLAYS BANK PLC, as Fronting Bank


                                        By____________________________________
                                          Title:
                                          Address: 222 Broadway
                                                   New York, NY 10038

                                          Attention: Sydney G. Dennis


                                        UNION BANK OF CALIFORNIA, N.A.,
                                        as Fronting Bank


                                        By____________________________________
                                          Title:
                                          Address:

                                          Attention:



                                            88


<PAGE>



                                         NATIONSBANK, N.A., as Fronting Bank


                                         By___________________________________
                                           Title:
                                           Address: 6610 Rockedge Dr. 6th Floor
                                                    Bethesda, MD 20817

                                           Attention: Paula Z. Kramp


                                        AUSTRALIA AND NEW ZEALAND
                                        BANKING GROUP LIMITED, as Fronting
                                        Bank


                                        By____________________________________
                                          Title:
                                          Address: 1177 Avenue of the Americas
                                                   New York, New York 10036-2798

                                          Attention: Beth Waters


                                        MORGAN GUARANTY TRUST
                                        COMPANY OF NEW YORK, as Fronting
                                        Bank

                                        By____________________________________
                                          Title:
                                          60 Wall Street
                                          New York, New York 10260
                                          Attention:


                                             89


<PAGE>


AGENT
-----
                                        MORGAN GUARANTY TRUST
                                        COMPANY OF NEW YORK, as Agent


                                        By____________________________________
                                          Title:
                                          60 Wall Street
                                          New York, New York 10260
                                          Attention:


                                           90



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>3
<DESCRIPTION>EXHIBIT 10.13
<TEXT>


<PAGE>
                                                                   Exhibit 10.13

                               AMENDMENT NO. 1 TO
                      AMENDED AND RESTATED CREDIT AGREEMENT

         AMENDMENT dated as of May 21, 1999 to the Credit Agreement dated as of
December 19, 1997 (as amended and restated as of March 31, 1999, the "CREDIT
AGREEMENT") among THE AES CORPORATION ("AES"), the BANKS party thereto, the
FRONTING BANKS party thereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent (the "AGENT").

                                   WITNESSETH:

         WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;

         NOW, THEREFORE, the parties hereto agree as follows:

         SECTION . DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.

         SECTION .  AMENDMENT TO DEBT COVENANT.  Section 5.07(c) of the Credit
Agreement is hereby amended to read in its entirety as follows:

         "(c) In addition to the Debt permitted by subsections (a) and (b)
above, AES shall be permitted to incur, assume, create and suffer to exist up to
$600,000,000 aggregate principal amount of unsecured senior and/or subordinated
Debt issued and sold by way of (i) a registered public offering, (ii) an
offering made to qualified institutional buyers pursuant to Rule 144A under the
Securities Act and/or (iii) in the form of term loans from banks or other
institutional lenders or investors, in each case having terms and provisions
applicable to AES and its Subsidiaries that are no more restrictive in any
material respect (including, without limitation, covenants and events of default
but excluding limitations of the type referred to in clauses (C)(y)(I), (II) and
(III) below that are permitted under clause (C)(y) below) than those included in
existing outstanding public Debt of AES or otherwise acceptable to the Required
Banks; PROVIDED that (A) both before and after giving effect to such issuance no
Default shall have occurred and be continuing, (B) on a PRO FORMA basis after
giving effect to such issuance

                                     1
<PAGE>


and the application of the proceeds thereof (but without increasing or
decreasing Parent Operating Cash Flow on account of acquisitions for periods
prior to such acquisitions), AES would have been in compliance with Section 5.15
and 5.16 as of the last day of the fiscal quarter ended on, or most recently
ended prior to, the date of such issuance (assuming for this purpose that such
Debt (and any other Debt of AES outstanding on the date of issuance of such Debt
and issued after the first day of the period of four consecutive fiscal quarters
ended on such last day) was issued and the proceeds applied on the first day of
the period of four consecutive fiscal quarters ended on such last day (but
without increasing or decreasing Parent Operating Cash Flow on account of
acquisitions for periods prior to such acquisitions)), and (C) such Debt (x) is
not guaranteed by any Subsidiary or Affiliate of AES, (y) does not limit (I) the
ability of Subsidiaries and Affiliates of AES to guarantee other senior Debt of
AES, (II) the ability of AES to grant Liens on stock of Subsidiaries or
intercompany advances to secure other senior Debt of AES or (III) the ability of
Subsidiaries or Affiliates of AES to grant Liens on their assets (including
stock of Subsidiaries and intercompany advances) to secure guarantees of other
senior Debt of AES (provided that (aa) a Permitted Negative Pledge shall not be
prohibited by this clause (y) and (bb) this clause (y) shall not apply if AES
shall have received at least $300,000,000 of gross cash proceeds from the
issuance of its common stock after March 1, 1999 and on or prior to June 30,
1999) and (z) does not require any scheduled payment of principal prior to July
14, 2003."

         SECTION 3. REPRESENTATIONS OF BORROWER. AES represents and warrants
that (i) the representations and warranties of AES set forth in Article 4 of the
Credit Agreement will be true on and as of the Amendment Effective Date and (ii)
no Default will have occurred and be continuing on such date.

         SECTION 4. GOVERNING LAW.  This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

         SECTION 5. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         SECTION 6. EFFECTIVENESS. This Amendment shall become effective on the
date (the "AMENDMENT EFFECTIVE DATE") upon which the Agent shall have received
from each of AES, each Guarantor and the Required Banks a counterpart hereof
signed by such party or facsimile or other written confirmation (in form
satisfactory to the Agent) that such party has signed a counterpart hereof.

                                     2

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.

                                      THE AES CORPORATION

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

                                      MORGAN GUARANTY TRUST COMPANY OF NEW YORK

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

                                      NATIONSBANK, N.A.

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

                                      UNION BANK OF CALIFORNIA, N.A.

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

                                     3

<PAGE>


                                            BARCLAYS BANK PLC

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

                                            AUSTRALIA AND NEW ZEALAND
                                             BANKING GROUP LIMITED

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

                                            THE BANK OF NOVA SCOTIA

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

                                            BANKBOSTON, N.A.

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

                                            DRESDNER BANK AG, NEW YORK
                                              AND GRAND CAYMAN BRANCHES

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

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

                                     4

<PAGE>


                                            THE FIRST NATIONAL BANK OF
                                               CHICAGO

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

                                            THE INDUSTRIAL BANK OF JAPAN,
                                               LIMITED, NEW YORK BRANCH

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

                                            TORONTO DOMINION (TEXAS), INC.

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

                                            SOCIETE GENERALE

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

                                            CREDIT LYONNAIS NEW YORK
                                               BRANCH

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

                                     5

<PAGE>


                                            BAYERISCHE HYPO- UND
                                               VEREINSBANK AG,
                                               NEW YORK BRANCH

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

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

                                            BANQUE NATIONALE DE PARIS

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

                                            CIBC INC.

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

                                            COMMERZBANK AG, NEW YORK
                                               BRANCH

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

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

                                     6

<PAGE>


                                            WESTDEUTSCHE LANDESBANK
                                               GIROZENTRALE

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

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



                                            CREDIT LOCAL DE FRANCE, NEW
                                               YORK AGENCY

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

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

                                            FIRST HAWAIIAN BANK

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

                                     7

<PAGE>


                                            RIGGS BANK N.A.

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

                                            THE SANWA BANK, LIMITED
                                               NEW YORK BRANCH

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



                                            SUNTRUST BANK, CENTRAL
                                               FLORIDA, N.A.

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

                                            ARAB BANK PLC

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

                                     8

<PAGE>


                                            MORGAN GUARANTY TRUST
                                               COMPANY OF NEW YORK, as Agent

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

The undersigned Guarantors hereby
consent to the foregoing Amendment
No. 1 to Amended and Restated
Credit Agreement:

AES HAWAII MANAGEMENT
   COMPANY, INC.

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

AES OKLAHOMA MANAGEMENT
   CO., INC.

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

                                     9
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>4
<DESCRIPTION>EXHIBIT 10.14
<TEXT>


<PAGE>

                                                                   Exhibit 10.14

                                                       EXECUTION COPY

                               AMENDMENT NO. 2 TO
                      AMENDED AND RESTATED CREDIT AGREEMENT

         AMENDMENT dated as of July 27, 1999 to the Credit Agreement dated as of
December 19, 1997 (as amended and restated as of March 31, 1999 and as further
amended prior to the date hereof, the "CREDIT AGREEMENT") among THE AES
CORPORATION ("AES"), the BANKS party thereto, the FRONTING BANKS party thereto
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "AGENT").

                                  WITNESSETH:

         WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;

         NOW, THEREFORE, the parties hereto agree as follows:

         SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.

         SECTION 2. AMENDMENT TO DEBT COVENANT.  Section 5.07(a) of the Credit
Agreement is hereby amended by amending clause (ix) thereof to read in its
entirety as follows:

                           "(ix) surety bonds in respect of performance
                  obligations of AES and letters of credit, in an aggregate
                  principal amount at any time outstanding not to exceed
                  $300,000,000;".

         SECTION 3. REPRESENTATIONS OF BORROWER. AES represents and warrants
that (i) the representations and warranties of AES set forth in Article 4 of the
Credit Agreement will be true on and as of the Amendment Effective Date and (ii)
no Default will have occurred and be continuing on such date.

         SECTION 4. GOVERNING LAW.  This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

         SECTION 5. COUNTERPARTS. This Amendment may be signed in any number

                                     1

<PAGE>


of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

         SECTION 6. EFFECTIVENESS. This Amendment shall become effective on the
date (the "AMENDMENT EFFECTIVE DATE") upon which the Agent shall have received
from each of AES, each Guarantor and the Required Banks a counterpart hereof
signed by such party or facsimile or other written confirmation (in form
satisfactory to the Agent) that such party has signed a counterpart hereof.

                                     2

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.

                                            THE AES CORPORATION

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

                                            MORGAN GUARANTY TRUST
                                                COMPANY OF NEW YORK

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

                                            NATIONSBANK, N.A.

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

                                            UNION BANK OF CALIFORNIA, N.A.

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

                                     3

<PAGE>


                                             BARCLAYS BANK PLC

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

                                            AUSTRALIA AND NEW ZEALAND
                                               BANKING GROUP LIMITED

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

                                            THE BANK OF NOVA SCOTIA

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

                                            BANKBOSTON, N.A.

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

                                            DRESDNER BANK AG, NEW YORK
                                              AND GRAND CAYMAN BRANCHES

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

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

                                     4

<PAGE>


                                            THE FIRST NATIONAL BANK OF
                                               CHICAGO

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

                                            THE INDUSTRIAL BANK OF JAPAN,
                                               LIMITED, NEW YORK BRANCH

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

                                            TORONTO DOMINION (TEXAS), INC.

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

                                            SOCIETE GENERALE

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

                                            CREDIT LYONNAIS NEW YORK
                                               BRANCH

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

                                     5

<PAGE>


                                            BAYERISCHE HYPO- UND
                                               VEREINSBANK AG,
                                               NEW YORK BRANCH

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

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

                                            BANQUE NATIONALE DE PARIS

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

                                            CIBC INC.

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

                                            COMMERZBANK AG, NEW YORK
                                               BRANCH

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

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

                                     6

<PAGE>


                                            WESTDEUTSCHE LANDESBANK
                                               GIROZENTRALE

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

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



                                            CREDIT LOCAL DE FRANCE,
                                               NEW YORK AGENCY

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

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

                                            FIRST HAWAIIAN BANK

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

                                     7

<PAGE>


                                            RIGGS BANK N.A.

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

                                            THE SANWA BANK, LIMITED
                                               NEW YORK BRANCH

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


                                            SUNTRUST BANK, CENTRAL
                                               FLORIDA, N.A.

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

                                            ARAB BANK PLC

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

                                            BARCLAYS BANK PLC, as Fronting Bank

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

                                     8

<PAGE>


                                            UNION BANK OF CALIFORNIA, N.A.,
                                               as Fronting Bank

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

                                            NATIONSBANK, N.A., as Fronting Bank

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

                                            AUSTRALIA AND NEW ZEALAND
                                            BANKING GROUP LIMITED, as Fronting
                                            Bank

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

                                            MORGAN GUARANTY TRUST
                                            COMPANY OF NEW YORK, as Fronting
                                            Bank

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

                                     9

<PAGE>


                                            MORGAN GUARANTY TRUST
                                               COMPANY OF NEW YORK, as Agent

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

The undersigned Guarantors hereby
consent to the foregoing Amendment
No. 2 to Amended and Restated
Credit Agreement:

AES HAWAII MANAGEMENT
   COMPANY, INC.

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

AES OKLAHOMA MANAGEMENT
   CO., INC.

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

                                     10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>5
<DESCRIPTION>EXHIBIT 10.15
<TEXT>


<PAGE>
                                                                   Exhibit 10.15

                                                            EXECUTION COPY

                               AMENDMENT NO. 3 TO
                      AMENDED AND RESTATED CREDIT AGREEMENT

         AMENDMENT dated as of September 28, 1999 to the Credit Agreement dated
as of December 19, 1997 (as amended and restated as of March 31, 1999 and as
further amended prior to the date hereof, the "CREDIT AGREEMENT") among THE AES
CORPORATION ("AES"), the BANKS party thereto, the FRONTING BANKS party thereto
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "AGENT").

                                WITNESSETH:

         WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;

         NOW, THEREFORE, the parties hereto agree as follows:

         SECTION 1. DEFINED TERMS; REFERENCES. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"HEREOF", "HEREUNDER", "HEREIN" and "HEREBY" and each other similar reference
and each reference to "THIS AGREEMENT" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.

         SECTION 2.  AMENDMENT TO DEFINITIONS.  Section 1.01 of the Credit
Agreement is hereby amended by:

               (a) deleting the definitions of "PERMITTED NEGATIVE PLEDGE" and
"SPECIFIED REVOLVER DEBT" appearing therein; and

               (b) amending the definition of "PARENT OPERATING CASH FLOW"
contained therein in by:

               (i) deleting the word "and" at the end of clause (2) thereof;

               (ii)replacing the period at the end of clause (3) thereof with ";
               and"; and

               (iii)adding a new clause (4) at the end thereof, to read in its
               entirety as follows:

                           "(4) no dividends, fees or payments made to the
                                       Borrowers with the proceeds of
                                 any amounts paid to AES or any of its
                                 Subsidiaries in connection with the
                                 $525,000,000 additional prepayment made by
                                 Connecticut Light & Power ("CL&P") pursuant

                                     1

<PAGE>


                                 to the First Amendment to the Electricity
                                 Purchase Agreement between CL&P and AES Thames,
                                 Inc., or any amounts paid to AES or any of its
                                 Subsidiaries in connection with any
                                 monetization, sale or securitization of any
                                 right to receive any such prepayment, shall be
                                 included in Parent Operating Cash Flow, except
                                 to the extent that such proceeds (x) have been
                                 received by AES in cash in such period or an
                                 earlier period and (y) are included in
                                 Consolidated Net Income for such period.".

         SECTION 3.  AMENDMENT TO DEBT COVENANT.  Section 5.07 of the Credit
Agreement is hereby amended by:

         (a) amending clause (ix) of Saection 5.07(a) thereof to read in its
entirety as follows:

                           "(ix) surety bonds in respect of performance
                  obligations of AES and letters of credit, in an aggregate
                  principal amount at any time outstanding not to exceed
                  $400,000,000;"; and

         (b) amending sections 5.07(b) and 5.07(c) to read in their entirety as
follows:

        "(b) AES shall not issue any Additional Permitted Subordinated Debt
or Permitted Senior Unsecured Debt unless (i) both before and after giving
effect to such issuance no Default shall have occurred and be continuing and
(ii) on a PRO FORMA basis after giving effect to such issuance and the
application of the proceeds thereof (but without increasing or decreasing
Parent Operating Cash Flow on account of acquisitions for periods prior to
such acquisitions), AES would have been in compliance with Section 5.16 and
(unless AES shall have received net cash proceeds of not less than
$500,000,000 from the issuance, after September 1, 1999 and on or before the
earlier of the date upon which such Additional Permitted Subordinated Debt or
Permitted Senior Unsecured Debt, as applicable, is issued and December 31,
1999, of its common stock to Persons other than Subsidiaries or affiliates of
AES) 5.15 as of the last day of the fiscal quarter ended on, or most recently
ended prior to, the date of such issuance (assuming for this purpose that (x)
such Additional Permitted Subordinated Debt or Permitted Senior Unsecured
Debt, as applicable, (and any other Debt or preferred stock of AES
outstanding on the date of issuance of such Additional Permitted Subordinated
Debt or Permitted Senior Unsecured Debt, as applicable, and issued after the
first day of the period of four consecutive fiscal quarters ended on such
last day) was issued and the proceeds applied on the first day of the period
of four consecutive fiscal quarters ended on such last day and (y) all Debt
and preferred stock of AES repaid or redeemed prior to or simultaneously with
the issuance of such

                                     2

<PAGE>

Additional Permitted Subordinated Debt or Permitted Senior Unsecured Debt, as
applicable, was repaid or redeemed on the day prior to the first day of such
period).

         (c) In addition to the Debt permitted by subsections (a) and (b) above,
AES shall be permitted to incur, assume, create and suffer to exist up to an
aggregate principal amount, not to exceed the sum of (1) $600,000,000 PLUS (2)an
amount equal to 50% of the aggregate net proceeds received by AES from issuances
and sales (other than sales to AES or any of its Subsidiaries or Affiliates) of
its common stock after September 1, 1999, of unsecured senior and/or
subordinated Debt issued and sold by way of (i) a registered public offering,
(ii) an offering made to qualified institutional buyers pursuant to Rule 144A
under the Securities Act and/or (iii) in the form of term loans from banks or
other institutional lenders or investors, in each case having terms and
provisions applicable to AES and its Subsidiaries that are no more restrictive
in any material respect (including, without limitation, covenants and events of
default) than those included in existing outstanding public Debt of AES or
otherwise acceptable to the Required Banks (except that limitations on (I) the
ability of Subsidiaries and Affiliates of AES to guarantee other senior Debt of
AES, (II) the ability of AES to grant Liens on stock of Subsidiaries or
intercompany advances to secure other senior Debt of AES or (III) the ability of
Subsidiaries or Affiliates of AES to grant Liens on their assets (including
stock of Subsidiaries and intercompany advances) to secure guarantees of other
senior Debt of AES shall be permitted); PROVIDED that (A) both before and after
giving effect to such issuance no Default shall have occurred and be continuing,
(B) on a PRO FORMA basis after giving effect to such issuance and the
application of the proceeds thereof (but without increasing or decreasing Parent
Operating Cash Flow on account of acquisitions for periods prior to such
acquisitions) AES would have been in compliance with Section 5.16 and (unless
AES shall have received net cash proceeds of not less than $500,000,000 from the
issuance, after September 1, 1999 and on or before the earlier of the date upon
which such Debt is issued and December 31, 1999 of its common stock to Persons
other than Subsidiaries or affiliates of AES) 5.15 as of the last day of the
fiscal quarter ended on, or most recently ended prior to, the date of such
issuance (assuming for this purpose that (x) such Debt (and any other Debt or
preferred stock of AES outstanding on the date of issuance of such Debt and
issued after the first day of the period of four consecutive fiscal quarters
ended on such last day) was issued and the proceeds applied on the first day of
the period of four consecutive fiscal quarters ended on such last day and (y)
all Debt and preferred stock of AES repaid or redeemed prior to or
simultaneously with the issuance of such Debt was repaid or redeemed on the day
prior to the first day of such period) and (C) such Debt (x) is not guaranteed
by any Subsidiary or Affiliate of AES and (y) does not require any scheduled
payment of principal prior to July 14, 2003.".

                                     3

<PAGE>


         SECTION 4.  AMENDMENT TO NEGATIVE PLEDGE. Section 5.12(f) of the Credit
Agreement is hereby amended to read in its entirety as follows:

         "(f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses or clause (l) of this Section; PROVIDED that such Debt is not increased
and is not secured by any additional assets (other than, in the case of Debt
permitted under Section 5.07(a)(v), Liens on assets of any Subsidiary permitted
under such Section 5.07(a)(v) to be obligated on such Debt);".

         SECTION 5.  CASH FLOW COVERAGE COVENANT.  Section 5.15 of the Credit
Agreement is hereby amended to read in its entirety as follows:

                           "SECTION 5.15. CASH FLOW COVERAGE. The Cash Flow
                  Coverage Ratio for any period of four consecutive fiscal
                  quarters of AES ending after the date hereof (including any
                  pro forma calculation under subsection (b) or (c) of Section
                  5.07 made by reference to such period) shall not be less than
                  (i) in the case of any period ending after December 31, 1998
                  and on or prior to March 31, 1999, 1.30 to 1.00, (ii) in the
                  case of any period ending after March 31, 1999 and on or prior
                  to September 30, 1999, 1.40 to 1.00, (iii) in the case of any
                  period ending after September 30, 1999 and on or prior to
                  September 30, 2000, 1.50 to 1.00 and (iv) in all other cases,
                  1.75 to 1.00."

         SECTION 6.  CASH FLOW TO TOTAL DEBT RATIO COVENANT. Section 5.16 of the
Credit Agreement is hereby amended to read in its entirety as follows:

                           "SECTION 5.16. CASH FLOW TO TOTAL DEBT RATIO. The
                  Cash Flow to Total Debt Ratio for any period ending on or
                  after March 31, 1998 shall not be less than (i) 0.10 to 1.00
                  at any time on or prior to December 31, 1999, (ii) 0.105 to
                  1.00 at any time after December 31, 1999 and on or prior to
                  March 31, 2000, (iii) 0.125 to 1.00 at any time after March
                  31, 2000 and on or prior to September 30, 2000 and (iv) 0.15
                  to 1.00 at any time thereafter."

         SECTION 7. REPRESENTATIONS OF BORROWER. AES represents and warrants
that (i) the representations and warranties of AES set forth in Article 4 of the
Credit Agreement will be true on and as of the Amendment Effective Date and (ii)
no Default will have occurred and be continuing on such date.

         SECTION 8. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

         SECTION 9. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         SECTION 10. EFFECTIVENESS. This Amendment shall become effective on the

                                     4

<PAGE>


date (the "AMENDMENT EFFECTIVE DATE") upon which:

         (a) the Agent shall have received from each of AES, each Guarantor,
each Fronting Bank and the Required Banks a counterpart hereof signed by such
party or facsimile or other written confirmation (in form satisfactory to the
Agent) that such party has signed a counterpart hereof; and

         (b) the Agent shall have received, for the account of each Bank that
shall have executed and delivered this Amendment to the Agent at or prior to
2:00 p.m. (New York City time) on September 28, 1999 (the "APPROVAL DEADLINE"),
an amendment fee in an amount equal to (i) if such Bank shall have executed and
delivered this Amendment to the Agent at or prior to 12:00 noon (New York City
time) on September 21, 1999 ( the "EARLY APPROVAL TIME"), 0.20% and (ii) if such
Bank shall have executed and delivered this Amendment after the Early Approval
Time and at or prior to the Approval Deadline, 0.10%, in each case multiplied by
the amount of such Bank's Commitment.

                                     5

<PAGE>


          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.

                                            THE AES CORPORATION

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

                                            MORGAN GUARANTY TRUST
                                                COMPANY OF NEW YORK

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

                                            NATIONSBANK, N.A.

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

                                            UNION BANK OF CALIFORNIA, N.A.

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

                                     6

<PAGE>


                                            BARCLAYS BANK PLC

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

                                            AUSTRALIA AND NEW ZEALAND
                                               BANKING GROUP LIMITED

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

                                            THE BANK OF NOVA SCOTIA

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

                                            BANKBOSTON, N.A.

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

                                            DRESDNER BANK AG, NEW YORK
                                              AND GRAND CAYMAN BRANCHES

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

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

                                     7

<PAGE>


                                            BANK ONE, N.A.(formerly known as THE
                                              FIRST NATIONAL BANK OF
                                              CHICAGO)

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

                                            THE INDUSTRIAL BANK OF JAPAN,
                                               LIMITED, NEW YORK BRANCH

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

                                            TORONTO DOMINION (TEXAS), INC.

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

                                            SOCIETE GENERALE

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

                                            CREDIT LYONNAIS NEW YORK
                                               BRANCH

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

                                     8

<PAGE>


                                            BAYERISCHE HYPO- UND
                                               VEREINSBANK AG,
                                               NEW YORK BRANCH

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

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

                                            BANQUE NATIONALE DE PARIS

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

                                            CIBC INC.

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

                                            COMMERZBANK AG, NEW YORK
                                               BRANCH

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

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

                                     9

<PAGE>


                                            WESTDEUTSCHE LANDESBANK
                                               GIROZENTRALE

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

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



                                            CREDIT LOCAL DE FRANCE, NEW
                                               YORK AGENCY

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

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

                                            FIRST HAWAIIAN BANK

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

                                     10

<PAGE>


                                            RIGGS BANK N.A.

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

                                            THE SANWA BANK, LIMITED
                                               NEW YORK BRANCH

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



                                            SUNTRUST BANK, CENTRAL
                                               FLORIDA, N.A.

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

                                            ARAB BANK PLC

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

                                            BARCLAYS BANK PLC, as Fronting Bank

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

                                     11

<PAGE>


                                            UNION BANK OF CALIFORNIA, N.A.,
                                            as Fronting Bank

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

                                            NATIONSBANK, N.A., as Fronting Bank

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

                                            AUSTRALIA AND NEW ZEALAND
                                            BANKING GROUP LIMITED, as Fronting
                                            Bank

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

                                            MORGAN GUARANTY TRUST
                                            COMPANY OF NEW YORK, as Fronting
                                            Bank

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

                                     12

<PAGE>


                                            MORGAN GUARANTY TRUST
                                               COMPANY OF NEW YORK, as Agent

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

The undersigned Guarantors hereby
consent to the foregoing Amendment
No. 3 to Amended and Restated
Credit Agreement:

AES HAWAII MANAGEMENT
   COMPANY, INC.

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

AES OKLAHOMA MANAGEMENT
   CO., INC.

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

                                     13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>6
<DESCRIPTION>EXHIBIT 10.16
<TEXT>

<PAGE>
                               SUBSIDIARY GUARANTY

         GUARANTY, dated as of September 30, 1999 made by AES Oklahoma
Management Co., Inc. ("AES OKLAHOMA"), AES Hawaii Management Company, Inc.
("AES Hawaii"), AES Southland Funding LLC, a Delaware limited liability
company ("AES SOUTHLAND") and AES Warrior Run Funding LLC, in Delaware
limited liability company ("AES WARRIOR RUN"), (each individually a
"Guarantor" and, collectively, the "Guarantors"), in favor of the banks (the
"Banks") and the fronting banks (the "Fronting Banks") party to the Credit
Agreement (as defined below) and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as agent (the "Agent") for the Banks.

                             PRELIMINARY STATEMENTS:

          (1) The Banks, the Fronting Banks and the Agent have entered into a
Credit Agreement, dated as of December 19, 1997 as amended and restated as of
March 31, 1999 and as further amended by Amendment No. 1 dated as of May 21,
1999, Amendment No. 2 dated as of July 27, 1999 and Amendment No.3 dated as
of September 28, 1999 (as so amended and as further amended from time to
time, the "Credit Agreement"), with The AES Corporation, a corporation
organized and existing under the laws of Delaware ("AES"), which owns 100% of
the outstanding shares of stock of each Guarantor.

          (2) Each Guarantor and its respective wholly-owned subsidiaries may
receive a portion of the proceeds of the Loans made, and the benefit of
Letters of Credit issued, under the Credit Agreement and otherwise derive
substantial direct and indirect benefit from the Credit Agreement.

          (3) It is a condition under the Credit Agreement that each
Guarantor shall have executed and delivered this Guaranty.

         NOW, THEREFORE, in consideration of the premises and in order to
satisfy the condition on which the Banks, the Fronting Banks and the Agent
were willing to enter into the Credit Agreement, the Guarantors hereby
jointly and severally agree as follows:

         SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined.

         SECTION 2. GUARANTY. Subject to Section 10, each Guarantor, jointly
and severally, hereby unconditionally guarantees, as primary obligor and not
merely as surety, the full and punctual payment as and when the same shall
become due and


<PAGE>


payable (whether at stated maturity, upon acceleration or otherwise) of the
principal of and interest on each Note issued by any Borrower pursuant to the
Credit Agreement, the full and punctual payment of each Reimbursement
Obligation under the Credit Agreement and the full and punctual payment of
all other amounts payable by any Borrower under the Credit Agreement. Upon
failure by any Borrower to pay punctually any such amount, the Guarantors
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Credit Agreement. The obligations of the Borrowers
guaranteed by the Guarantors are referred to herein as the "Guaranteed
Obligations". Without limiting the generality of the foregoing, each
Guarantor's liability shall extend to all amounts which constitute part of
the Guaranteed Obligations and would be owed by any Borrower under the Credit
Agreement but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding
involving such Borrower.

         SECTION 3. GUARANTY ABSOLUTE. Each Guarantor, jointly and severally,
guarantees that, subject to Section 10 hereof, the Guaranteed Obligations
will be paid strictly in accordance with the terms of the Credit Agreement,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Banks and the
Agent with respect thereto. The obligations of the Guarantors under this
Guaranty are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against the Guarantors to enforce
this Guaranty, irrespective of whether any action is brought against any
Borrower or whether any Borrower is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall, subject to Section 10
hereof, be absolute and unconditional and, without limiting the generality of
the foregoing, irrespective of:

                  (i) any lack of validity or enforceability of the Credit
         Agreement or any other agreement or instrument relating thereto, or any
         provision of applicable law or regulation purporting to prohibit the
         payment by any Borrower of any of the Guaranteed Obligations or any
         other amount payable by any Borrower under the Credit Agreement;

                 (ii) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Guaranteed Obligations, or any
         other amendment, waiver, extension, renewal, settlement, compromise or
         release in respect of or any consent to departure from the Credit
         Agreement including, without limitation, any increase in the Guaranteed
         Obligations resulting from the extension of additional credit to AES or
         any of its Subsidiaries or otherwise;

                (iii) any taking, exchange, release, impairment, invalidity or
         nonperfection of any collateral, or any taking, release or amendment or
         waiver of or consent to departure from any guaranty, for all or any of
         the Guaranteed Obligations;


                                          2


<PAGE>
                 (iv) any manner of application of collateral, or proceeds
         thereof, to all or any of the Guaranteed Obligations, or any manner of
         sale or other disposition of any collateral for all or any of the
         Guaranteed Obligations or any other assets of AES or any of its
         Subsidiaries;

                  (v) any change, restructuring or termination of the corporate
         structure or existence of AES or any of its Subsidiaries;

                 (vi) any insolvency, bankruptcy, reorganization or other
         similar proceeding affecting any Borrower or its assets or any
         resulting release or discharge of any of the Guaranteed Obligations or
         any other obligation of any Borrower contained in the Credit Agreement
         (other than as a result of the payment or performance in full thereof);

                (vii) the existence of any claim, set-off or other rights which
         the Guarantors may have at any time against any Borrower, the Agent,
         any Bank or any other corporation or person, whether in connection
         herewith or with any unrelated transactions, PROVIDED that nothing
         herein shall prevent the assertion of any such claim by separate suit
         or compulsory counterclaim; or

               (viii) any other circumstances which might, but for this Section,
         otherwise constitute a defense available to, or a discharge of, any
         Borrower or Guarantor.

         This Guaranty shall continue to be effective or shall be reinstated,
as the case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Agent or any
Bank upon the insolvency, bankruptcy or reorganization of any Borrower or
otherwise, all as though such payment had been due but not been made at such
time.

         SECTION 4. CASH COLLATERAL ACCOUNT. (a) Each Guarantor further
agrees that if any Borrower shall fail to deposit in the Cash Collateral
Account any amount required to be deposited therein pursuant to the Credit
Agreement, the Guarantors shall deposit such amount in a subaccount of the
Cash Collateral Account as collateral security for each Guarantor's potential
obligations hereunder. If the Guarantors fail to furnish such funds, the
Agent shall be authorized to debit any accounts the Guarantors maintain with
the Agent in such amount. Cash deposited in such subaccount of the Cash
Collateral Account pursuant to this Section shall be returned to the
Guarantors depositing the same to the extent that funds deposited by any
Borrower in the Cash Collateral Account would have been required to be
returned to such Borrower under the Credit Agreement.


                                        3


<PAGE>


          (b) Each Guarantor hereby pledges and grants to the Agent, for the
benefit of the Banks and the Agent, a continuing lien on and security
interest in all right, title and interest of such Guarantor with respect to
any funds held in the Cash Collateral Account from time to time, and all
proceeds thereof, as security for the payment of the Guaranteed Obligations.

          (c) The Agent may, at any time or from time to time after funds are
deposited in the Cash Collateral Account, apply funds then held in the Cash
Collateral Account to the payment of any of the Guaranteed Obligations, in
such order as the Agent may elect, as shall have become or shall become due
and payable by any Borrower to the Banks or the Agent under the Credit
Agreement.

          (d) Neither the Guarantors nor any person or entity claiming on
behalf of or through the Guarantors shall have any right to withdraw any of
the funds held in the Cash Collateral Account.

          (e) Each Guarantor agrees that it will not (i) sell or otherwise
dispose of any interest in the Cash Collateral Account or any funds held
therein, or (ii) create or permit to exist any lien, security interest or
other charge or encumbrance upon or with respect to the Cash Collateral
Account or any funds held therein, except as contemplated by the terms hereof.

         SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE GUARANTORS. Each
Guarantor respectively represents and warrants as follows:

          (a) Such Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its
incorporation, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.

          (b) The execution, delivery and performance by such Guarantor of
this Guaranty are within such Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable
law or regulation applicable to such Guarantor or the certificate of
incorporation or by-laws of such Guarantor or any judgment, injunction,
order, decree, material agreement or other material instrument binding upon
such Guarantor or result in the creation or imposition of any Lien on any
asset of AES or any of its Subsidiaries, except as contemplated by the terms
hereof.

          (c) This Guaranty constitutes a valid and binding obligation of
such Guarantor enforceable against such Guarantor in accordance with its
terms, except as the enforceability hereof may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights generally or by general principles of equity
limiting the availability of equitable remedies.


                                        4


<PAGE>


         SECTION 6. COVENANTS. So long as any Note or Letter of Credit shall
remain outstanding or Loan or Reimbursement Obligation shall remain unpaid or
any Commitment shall remain outstanding under the Credit Agreement, no
Guarantor will, without the written consent of the Required Banks, if, and
for so long as, an Actionable Default shall have occurred and be continuing
under the Credit Agreement, (i) declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities
on account of any shares of any class of capital stock of such Guarantor
(other than stock splits and dividends payable solely in equity securities of
such Guarantor), or purchase, redeem or otherwise acquire for value (or
permit any of its Subsidiaries to do so) any shares of any class of capital
stock of such Guarantor or any warrants, rights or options to acquire any
such shares, now or hereafter outstanding or (ii) make any Investment in or
otherwise advance any funds to any Borrower, or, except as may be required by
the Shady Point Financing Documents (as defined in Schedule I hereto), any
Subsidiary of AES. "Actionable Default" means an Event of Default described
in clauses (a), (e), (f), (g) and (h) of Section 6.01 of the Credit Agreement.

         SECTION 7. WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance, presentment, protest and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and
waives any requirement that the Agent or any Bank protect, secure, perfect or
insure any security interest or lien on any property subject thereto or
exhaust any right or take any action against any Borrower or any other person
or entity or any collateral.

         SECTION 8. SUBROGATION. Upon making any payment with respect to a
Borrower under this Guaranty, the Guarantor making such payment shall be
subrogated to the rights of the payee against such Borrower with respect to
such payment; PROVIDED that neither Guarantor shall enforce any payment by
way of subrogation until all amounts of principal of and interest on the
Notes and all other amounts payable by any Borrower under any Financing
Document shall have been paid in full.

         SECTION 9. STAY OF ACCELERATION. If acceleration of the time for
payment of any Guaranteed Obligation is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower, all such Guaranteed Obligations
otherwise subject to acceleration under the terms of the Credit Agreement
shall nonetheless be payable by the Guarantors hereunder forthwith on demand
by the Agent made at the request of the requisite proportion of the Banks
specified in Article VI of the Credit Agreement.

         SECTION 10. LIMIT OF LIABILITY. The obligations of each Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548


                                         5


<PAGE>


of the United States Bankruptcy Code or any comparable provisions of any
applicable state law (including, without limitation, the provisions of the
Uniform Fraudulent Transfer Act and the Uniform Fraudulent Conveyance Act, to
the extent incorporated in applicable state law).

         SECTION 11. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Guaranty, and no consent to any departure by either Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Banks and each Guarantor, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED that neither Guarantor shall be released
from its obligations under Section 2 hereof without the consent of all of the
Banks.

         SECTION 12. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including
telecopier, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered to it, if to a
Guarantor, to it in care of The AES Corporation at its address at 1001 North
19th Street, Arlington, Virginia 22209, Attention: Vice President, Chief
Financial Officer and Secretary, and if to the Agent, at its address
specified in the Credit Agreement, or, as to either party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and other communications shall be effective in the
manner and at the time set forth in Section 10.01 of the Credit Agreement.

         SECTION 13. NO WAIVER; REMEDIES. No failure on the part of the Agent
or any Bank to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise
of any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.

         SECTION 14. CONTINUING GUARANTY; ASSIGNMENT UNDER CREDIT AGREEMENT.
This Guaranty is a continuing guaranty and shall (i) remain in full force and
effect until the later of (x) the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty, (y) the
termination of all Commitments under the Credit Agreement and (z) the
surrender to the Fronting Bank or the expiration of all Letters of Credit
issued under the Credit Agreement, (ii) be binding upon the Guarantors and
their respective successors and assigns, and (iii) inure to the benefit of,
and be enforceable by, the Banks, the Fronting Banks, the Agent and their
respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), the Agent, any Fronting Bank and
any Bank may assign or otherwise transfer all or any portion of its rights
and obligations under the Credit Agreement and the Notes to any other person
or entity (to the extent therein provided), and such other person or entity
shall


                                       6


<PAGE>


thereupon become vested with all the benefits in respect thereof granted to
such assigning party herein or otherwise, subject, however, to the provisions
of Article VII (concerning the Agent) and Section 10.06 of the Credit
Agreement.

         SECTION 15. GOVERNING LAW. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York.


                                        7


<PAGE>


         IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                                           AES SOUTHLAND FUNDING LLC


                                           By: _______________________________
                                           Name:
                                           Title:


                                           AES WARRIOR RUN FUNDING LLC


                                           By:________________________________
                                           Name:
                                           Title:


                                           AES OKLAHOMA MANAGEMENT CO., INC.


                                           By:________________________________
                                           Name:
                                           Title:


                                           AES HAWAII MANAGEMENT COMPANY, INC.


                                           By:________________________________
                                           Name:
                                           Title:


                                             8


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>7
<DESCRIPTION>EXHIBIT 10.17
<TEXT>

<PAGE>

                                                                [EXECUTION COPY]

================================================================================

                              LETTER OF CREDIT AND
                             REIMBURSEMENT AGREEMENT

                                      among

                              THE AES CORPORATION,
                                AS ACCOUNT PARTY

                              THE SEVERAL BANKS AND
                             FINANCIAL INSTITUTIONS
                        PARTIES HERETO FROM TIME TO TIME
                             AS PARTICIPATING BANKS

                       THE LETTER OF CREDIT ISSUING BANKS
                        PARTIES HERETO FROM TIME TO TIME
                                AS ISSUING BANKS

                         UNION BANK OF CALIFORNIA, N.A.,
                            AS ADMINISTRATIVE AGENT,

                   MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                              AS SYNDICATION AGENT

                                       and

                             BANK OF AMERICA, N.A.,
                             AS DOCUMENTATION AGENT



                          Dated as of October 19, 1999

================================================================================
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                  PAGE

<S>     <C>       <C>                                                                               <C>
ARTICLE 1.        DEFINITIONS........................................................................1

     Section 1.1  Defined Terms......................................................................1

     Section 1.2  Other Definitional Provisions.....................................................18

     Section 1.3  Currency Equivalents Generally....................................................19


ARTICLE 2.        LETTERS OF CREDIT; REIMBURSEMENT..................................................20

     Section 2.1  Issuing Banks; Issuance of Letters of Credit......................................20

     Section 2.2  Termination or Reduction of the Commitments.......................................22

     Section 2.3  Commissions and Fees..............................................................22

     Section 2.4  Reimbursement and Other Payments by the Account Party.............................23

     Section 2.5  Participation; Reimbursement of Issuing Banks.....................................24

     Section 2.6  Payments and Computations.........................................................27

     Section 2.7  Default Interest..................................................................28

     Section 2.8  Requirements of Law...............................................................28

     Section 2.9  Taxes.............................................................................30

     Section 2.10 Sharing of Payments, Etc..........................................................32

     Section 2.11 Obligations Absolute..............................................................32

     Section 2.12 Evidence of Indebtedness..........................................................33

     Section 2.13 Extension of the Termination Date.................................................33

     Section 2.14 Cash Collateral Account; Letter of Credit in Lieu of Cash Collateral..............34

     Section 2.15 Computations of Outstandings; Determination of Available
                  Amount of Alternative Currency Letters of Credit..................................35


ARTICLE 3.        REPRESENTATIONS AND WARRANTIES....................................................37

     Section 3.1  Corporate Existence and Power.....................................................37

     Section 3.2  Corporate and Governmental Authorization; No Contravention........................37

     Section 3.3  Binding Effect; Due Execution and Delivery........................................38

     Section 3.4  Financial Information.............................................................38

     Section 3.5  Litigation........................................................................38

     Section 3.6  Compliance with ERISA.............................................................39


                                      -i-
<PAGE>

                               TABLE OF CONTENTS
                                  (CONTINUED)

                                                                                                  PAGE

     Section 3.7  Environmental Matters.............................................................39

     Section 3.8  Taxes.............................................................................39

     Section 3.9  Material AES Entities.............................................................40

     Section 3.10 Not an Investment Company.........................................................40

     Section 3.11 Public Utility Holding Company Act................................................40

     Section 3.12 Full Disclosure...................................................................40

     Section 3.13 Year 2000 Compliance..............................................................40


ARTICLE 4.        CONDITIONS PRECEDENT..............................................................41

     Section 4.1  Conditions Precedent to Effectiveness of this Agreement...........................41

     Section 4.2  Conditions Precedent to Each Extension of Credit..................................43

     Section 4.3  Reliance on Certificates..........................................................43


ARTICLE 5.        COVENANTS.........................................................................43

     Section 5.1  Information.......................................................................44

     Section 5.2  Payment of Obligations............................................................46

     Section 5.3  Maintenance of Property; Insurance................................................46

     Section 5.4  Conduct of Business and Maintenance of Existence..................................47

     Section 5.5  Compliance with Laws..............................................................47

     Section 5.6  Inspection of Property, Books and Records.........................................47

     Section 5.7  Debt..............................................................................47

     Section 5.8  Minimum Consolidated Net Worth....................................................51

     Section 5.9  Restricted Payments...............................................................52

     Section 5.10 Subordinated Debt and Senior Notes................................................52

     Section 5.11 Limitations on Guarantees and Commitments.........................................52

     Section 5.12 Negative Pledge...................................................................53

     Section 5.13 Consolidations, Mergers and Sale of Assets........................................54

     Section 5.14 Use of Letters of Credit..........................................................55

     Section 5.15 Cash Flow Coverage................................................................55

     Section 5.16 Cash Flow to Total Debt Ratio.....................................................56

     Section 5.17 Transactions with Affiliates......................................................56


                                      -ii-
<PAGE>

                               TABLE OF CONTENTS
                                  (CONTINUED)

                                                                                                  PAGE

     Section 5.18 Limitation on Investments.........................................................56

     Section 5.19 Year 2000 Compliance..............................................................57


ARTICLE 6.        EVENTS OF DEFAULT.................................................................58

     Section 6.1  Events of Default.................................................................58

     Section 6.2  Remedies Upon Events of Default...................................................60


ARTICLE 7.        THE ADMINISTRATIVE AGENT, THE PARTICIPATING BANKS AND THE ISSUING BANKS...........61

     Section 7.1  Appointment.......................................................................61

     Section 7.2  Delegation of Duties..............................................................61

     Section 7.3  Exculpatory Provisions............................................................61

     Section 7.4  Reliance by Administrative Agent..................................................62

     Section 7.5  Notice of Default.................................................................62

     Section 7.6  Non-Reliance on Administrative Agent, Issuing Banks and Other Participating Banks.62

     Section 7.7  Indemnification...................................................................63

     Section 7.8  Administrative Agent and Issuing Banks in Individual Capacity.....................63

     Section 7.9  Successor Administrative Agent....................................................63


ARTICLE 8.        MISCELLANEOUS.....................................................................64

     Section 8.1  Amendments and Waivers............................................................64

     Section 8.2  Notices...........................................................................65

     Section 8.3  No Waiver; Cumulative Remedies....................................................66

     Section 8.4  Payment of Expenses and Taxes; General Indemnity..................................66

     Section 8.5  Successors and Assigns; Participations; Purchasing Banks..........................66

     Section 8.6  Set-off...........................................................................69

     Section 8.7  Issuing Banks Not Liable..........................................................70

     Section 8.8  Counterparts......................................................................70

     Section 8.9  Severability......................................................................70

     Section 8.10 Integration.......................................................................71



                                     -iii-
<PAGE>

                               TABLE OF CONTENTS
                                  (CONTINUED)

                                                                                                  PAGE

     Section 8.11 Governing Law.....................................................................71

     Section 8.12 Submission To Jurisdiction; Waivers...............................................71

     Section 8.13 Acknowledgements..................................................................71

     Section 8.14 Judgment Currency.................................................................72

     Section 8.15 WAIVERS OF JURY TRIAL.............................................................72

     Section 8.16 Designated Senior Debt............................................................72
</TABLE>

SCHEDULES

     I      Commitments and Addresses
     II     Pricing Schedule
     III    Existing Agreements with Affiliates
     IV     Existing Letters of Credit

EXHIBITS

     A      Form of Commitment Transfer Supplement
     B      Form of Issuing Bank Agreement
     C      Form of Opinion of General Counsel of the Account Party
     D      Form of Opinion of Davis Polk & Wardwell, Special New York Counsel
            to the Account Party
     E      Form of Opinion of McDermott, Will & Emery, Special Counsel to the
            Administrative Agent


                                      -iv-
<PAGE>

     LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of October 19, 1999,
among THE AES CORPORATION, a Delaware corporation (the "ACCOUNT PARTY"), the
several banks and other financial institutions from time to time parties to this
Agreement (the "PARTICIPATING BANKS"), the letter of credit issuing banks from
time to time parties to this Agreement (in such capacity, and together with any
bank or financial institution party to an Issuing Bank Agreement, the "ISSUING
BANKS"), UNION BANK OF CALIFORNIA, N.A. ("UNION BANK"), as administrative agent
for the Issuing Banks and the Participating Banks hereunder (in such capacity,
the "ADMINISTRATIVE AGENT"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK
("MORGAN"), as Syndication Agent (in such capacity, the "SYNDICATION AGENT"),
and BANK OF AMERICA, N.A., as Documentation Agent (in such capacity, the
"DOCUMENTATION AGENT").

                              PRELIMINARY STATEMENT

     The Account Party has requested the Issuing Banks and the Participating
Banks to provide the letter of credit facility hereinafter described in the
amounts and on the terms and conditions set forth herein. The Issuing Banks and
the Participating Banks have so agreed on the terms and conditions set forth
herein, and the Administrative Agent has agreed to act as agent for the Issuing
Banks and the Participating Banks on such terms and conditions.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     SECTION 1.1 DEFINED TERMS. In addition to the terms defined in the preamble
hereto, as used in this Agreement, the following terms shall have the following
meanings (such meanings to be applicable to the singular and plural forms of the
terms defined):

          "ADDITIONAL GUARANTORS" has the meaning assigned to that term in the
     Existing Credit Facility (as in effect on the date hereof).

          "ADDITIONAL PERMITTED SUBORDINATED DEBT AGREEMENT" means an indenture
     or other agreement pursuant to which any Additional Permitted Subordinated
     Debt is issued or incurred, as the same may, subject to Section 5.10, be
     amended, modified or supplemented and in effect from time to time.

          "ADDITIONAL PERMITTED SUBORDINATED DEBT" means Debt of the Account
     Party (other than Debt evidenced by the Existing Subordinated Notes) which
     does not require any scheduled payment of principal prior to December 19,
     2003 and which has subordination provisions no less favorable to the Banks
     than those applicable to the Existing 8-3/8% Subordinated Notes and other
<PAGE>

                                                                               2


     terms and provisions applicable to the Account Party and its Subsidiaries
     that are no more restrictive in any material respect (including, without
     limitation, covenants and events of default) than those applicable to the
     Existing 8-3/8% Subordinated Notes or those otherwise acceptable to the
     Required Banks.

          "ADJUSTED PARENT OPERATING CASH FLOW" means, for any period, (i)
     Parent Operating Cash Flow for such period LESS (ii) the sum of the
     following expenses (determined without duplication), in each case to the
     extent paid by the Account Party during such period and regardless of
     whether any such amount was accrued during such period:

          (A) development expenses;

          (B) income tax expenses of the Account Party and its subsidiaries; and

          (C) corporate overhead expenses.

          "AES ELECTRIC" means Applied Energy Services Electric Limited, an
     English corporation, and its successors.

          "AES HAWAII MANAGEMENT" means AES Hawaii Management Company, Inc., a
     Delaware corporation and a Subsidiary of the Account Party, and its
     successors.

          "AES MANAGEMENT GROUP" means (i) individuals who are members of the
     board of directors or officers of the Account Party or the president of any
     Material AES Entity, (ii) their respective spouses, children,
     grandchildren, siblings and parents, (iii) trusts established for the sole
     or principal benefit of Persons described in clauses (i) and (ii) above,
     (iv) heirs, executors, administrators and personal or legal representatives
     of Persons described in clauses (i) and (ii) above, and (v) any corporation
     or other Person that is controlled by, and a majority of the equity
     interests in which are directly owned by, Persons described in clauses (i)
     and (ii) above.

          "AES JUNE 1999 FORM 10-Q" means the Account Party's quarterly report
     on Form 10-Q for the fiscal quarter ended June 30, 1999, as filed with the
     Securities and Exchange Commission pursuant to the Securities Exchange Act
     of 1934.

          "AES 1998 FORM 10-K" means the Account Party's annual report on Form
     10-K for the year ended December 31, 1998, as filed with the Securities and
     Exchange Commission pursuant to the Securities Exchange Act of 1934.

          "AES OKLAHOMA" means AES Oklahoma Management Co., Inc., a Delaware
     corporation and a Subsidiary of the Account Party, and its successors.

          "AES PLACERITA" means AES Placerita, Inc., a Delaware corporation and
     an indirect Subsidiary of the Account Party, and its successors.
<PAGE>

                                                                               3


          "AES SOUTHLAND" means AES Southland Funding LLC, a Delaware limited
     liability company and a Wholly-Owned Consolidated Subsidiary of the Account
     Party, and its successors.

          "AES WARRIOR RUN" means AES Warrior Run Funding LLC, a Delaware
     limited liability company and a Wholly-Owned Consolidated Subsidiary of the
     Account Party, and its successors.

          "AFFILIATE" means (i) any Person that directly, or indirectly through
     one or more intermediaries, controls the Account Party (a "CONTROLLING
     PERSON") or (ii) any Person (other than the Account Party or any Subsidiary
     of the Account Party) which is controlled by or is under common control
     with a Controlling Person. As used herein, the term "control" means
     possession, directly or indirectly, of the power to direct or cause the
     direction of the management or policies of a Person, whether through the
     ownership of voting securities, by contract or otherwise.

          "AGENCY FEE LETTERS" means, collectively, (i) the fee letter
     agreement, dated September 10, 1999, between the Account Party and Union
     Bank, (ii) the fee letter agreement, dated September 13, 1999, between the
     Account Party and Morgan, and (iii) the fee letter agreement, dated the
     date hereof, between the Account Party and the Administrative Agent, in
     each case as amended, supplemented or otherwise modified from time to time
     in accordance with the terms thereof.

          "AGREEMENT" means this Letter of Credit and Reimbursement Agreement,
     as amended, supplemented or otherwise modified from time to time in
     accordance with the terms hereof.

          "ALTERNATE BASE RATE" means a fluctuating interest rate PER ANNUM
     equal at all times to the higher of (i) the Reference Rate and (ii) 1/2 of
     one percent PER ANNUM plus the Federal Funds Rate. Each change in the
     Alternate Base Rate shall take effect concurrently with any change in the
     Reference Rate or the Federal Funds Rate.

          "ALTERNATIVE CURRENCY" means (i) any lawful currency (other than
     Dollars) that is freely transferable and convertible into Dollars or (ii)
     with respect to any Letter of Credit issued by an Issuing Bank, any other
     lawful currency (other than Dollars) that such Issuing Bank agrees may be
     used as the designated currency of such Letter of Credit, PROVIDED that
     such Issuing Bank is able to provide, and continues to provide, to the
     Administrative Agent the information required pursuant to Section 2.15(b)
     with respect to such Letter of Credit.

          "ALTERNATIVE CURRENCY LETTER OF CREDIT" means any Letter of Credit
     having a stated amount denominated in an Alternative Currency.

          "ASSET DISPOSITION" has the meaning set forth in the Existing
     Subordinated Note Indentures.
<PAGE>

                                                                               4


          "AUTOMATIC ACCELERATION EVENT" means the occurrence, with respect to
     the Account Party, of any of the Events of Default listed in clauses (g)
     and (h) of Section 6.1.

          "AVAILABLE AMOUNT" means, for any Letter of Credit on any date of
     determination, the maximum aggregate amount (which, in the case of any
     Alternative Currency Letter of Credit, shall be the Dollar Equivalent of
     such amount) available to be drawn under such Letter of Credit at any time
     on or after such date, the determination of such maximum amount to assume
     the compliance with and satisfaction of all conditions for drawing
     enumerated therein.

          "AVAILABLE COMMITMENT" means, for each Participating Bank on any day,
     the unused portion of such Participating Bank's Commitment, computed after
     giving effect to all Extensions of Credit and all expirations,
     terminations, cancellations or reductions in the Available Amount of
     Letters of Credit to be made on such day. "AVAILABLE COMMITMENTS" means the
     aggregate of the Participating Banks' Available Commitments.

          "BANKS" means, collectively, the Issuing Banks and the Participating
     Banks.

          "BENEFIT ARRANGEMENT" means, at any time, an employee benefit plan
     within the meaning of Section 3(3) of ERISA which is not a Plan or a
     Multiemployer Plan and which is maintained or otherwise contributed to by
     any member of the ERISA Group.

          "BUSINESS DAY" means a day of the year on which banks are not required
     or authorized to close in New York City and Los Angeles, California.

          "CASH COLLATERAL ACCOUNT" has the meaning assigned to that term in
     Section 2.14.

          "CASH FLOW COVERAGE RATIO" means, for any period, the ratio of (i)
     Adjusted Parent Operating Cash Flow for such period to (ii) Corporate
     Charges for such period.

          "CASH FLOW TO TOTAL DEBT RATIO" means, at any date, the ratio of (i)
     Adjusted Parent Operating Cash Flow for the period of four consecutive
     fiscal quarters ended on, or most recently prior to, such date to (ii) Debt
     (other than Specified Equity-Related Debt, but only to the extent that the
     sum of the aggregate principal amount of all Specified Equity-Related Debt
     plus the liquidation preference of all preferred stock of the Account Party
     does not exceed 25% of the sum (without duplication) of the aggregate
     principal amount of such Specified Equity-Related Debt, such preferred
     stock and Consolidated Net Worth at such date) of the Account Party at such
     date.

          "CLOSING DATE" means the Business Day upon which each of the
     conditions precedent enumerated in Section 4.1 shall be fulfilled to the
     satisfaction of the Administrative Agent, the Issuing Banks, the
     Participating
<PAGE>

                                                                               5


     Banks and the Account Party. All transactions contemplated to occur on the
     Closing Date shall occur contemporaneously on or prior to October 29, 1999
     at the offices of McDermott, Will & Emery, 50 Rockefeller Plaza, New York,
     New York 10020, at 10:00 A.M. (New York City time), or at such other place
     and time as the parties hereto may mutually agree.

          "COMMITMENT" means, for each Participating Bank, the obligation of
     such Participating Bank to participate in each Letter of Credit and the
     related Letter of Credit Liabilities in an aggregate amount no greater than
     the amount set forth opposite such Participating Bank's name on Schedule I
     hereto or, if such Participating Bank has entered into one or more
     Commitment Transfer Supplements with a Purchasing Bank, the aggregate
     amount set forth for such Participating Bank in the Register maintained by
     the Administrative Agent pursuant to Section 8.5(d), in each such case as
     such amount may be reduced from time to time pursuant to Section 2.2.
     "COMMITMENTS" means the total of the Participating Banks' Commitments
     hereunder. The Commitments shall in no event exceed $250 million.

          "COMMITMENT FEE RATE" means a rate PER ANNUM determined in accordance
     with the Pricing Schedule annexed as Schedule II hereto.

          "COMMITMENT PERCENTAGE" means, as of any date of determination (i)
     with respect to a Participating Bank initially a party hereto, the
     percentage set forth opposite such Participating Bank's name on Schedule I
     hereto, except as provided in clause (iii) below, (ii) with respect to a
     Purchasing Bank that became a Participating Bank party hereto by operation
     of Section 8.5, the Commitment Percentage stated to be assumed by such
     Purchasing Bank in the relevant Commitment Transfer Supplement, except as
     provided in clause (iii) below, and (iii) with respect to any Participating
     Bank described in clause (i) or (ii) above that assigns a percentage of its
     interests in accordance with Section 8.5, its Commitment Percentage as
     reduced by the percentage so assigned.

          "COMMITMENT TRANSFER SUPPLEMENT" means a Commitment Transfer
     Supplement entered into by a Participating Bank and a Purchasing Bank in
     accordance with Section 8.5, substantially in the form of Exhibit A hereto.

          "CONSOLIDATED DEBT" means, at any date, the Debt of the Account Party
     and its Consolidated Subsidiaries, determined on a consolidated basis as of
     such date.

          "CONSOLIDATED NET INCOME" means, for any period, the consolidated net
     income (or loss) of the Account Party and its Consolidated Subsidiaries for
     such period.

          "CONSOLIDATED NET WORTH" means, at any date, the consolidated
     stockholders' equity of the Account Party and its Consolidated Subsidiaries
     determined as of such date without giving effect to any currency
     translation adjustments after September 30, 1997.
<PAGE>

                                                                               6


          "CONSOLIDATED SUBSIDIARY" means, at any date with respect to any
     Person, any Subsidiary of such Person or other entity the accounts of which
     would be consolidated with those of such Person in its consolidated
     financial statements if such statements were prepared as of such date.

          "CORPORATE CHARGES" means, for any period, the sum of the following
     amounts (determined without duplication), in each case to the extent paid
     by the Account Party during such period and regardless of whether any such
     amount was accrued during such period:

               (A) interest expense (including, without limitation, interest
          expense in respect of Specified Equity-Related Debt) of the Account
          Party for such period;

               (B) rental expense of the Account Party for such period; and

               (C) dividends paid on the Account Party's capital stock during
          such period.

          "DEBT" of any Person means at any date, without duplication, (i) all
     obligations of such Person for borrowed money, (ii) all obligations of such
     Person evidenced by bonds, debentures, notes or other similar instruments,
     (iii) all obligations of such Person to pay the deferred purchase price of
     property or services, except trade accounts payable arising in the ordinary
     course of business, (iv) all obligations of such Person as lessee which are
     capitalized in accordance with generally accepted accounting principles,
     (v) all obligations (whether contingent or non-contingent) of such Person
     to reimburse any bank or other Person in respect of amounts paid under a
     letter of credit, surety or performance bond or similar instrument, (vi)
     all Debt secured by a Lien on any asset of such Person, whether or not such
     Debt is otherwise an obligation of such Person, and (vii) all Debt of
     others Guaranteed by such Person. For purposes hereof, contingent
     obligations of the type described in clause (v) of this definition with
     respect to letters of credit not issued hereunder shall not be treated as
     "Debt" hereunder to the extent that such obligations are cash
     collateralized or to the extent that the issuer of any such letter of
     credit is entitled to draw under a Letter of Credit issued hereunder which
     by its terms requires that drawings under such Letter of Credit be applied
     only to reimburse such issuer for amounts paid by such issuer under such
     letter of credit.

          "DEFAULT" means any condition or event which constitutes an Event of
     Default or which with the giving of notice or lapse of time or both would,
     unless cured or waived, become an Event of Default.

          "DEFAULT RATE" means a fluctuating interest rate equal at all times to
     2% PER ANNUM above the Alternate Base Rate in effect from time to time.

          "DESIGNATED SUBSIDIARY" means each of AES Connecticut Management Co.,
     Inc., AES Oklahoma Management Co., Inc., AES Hawaii Management Co., Inc.,
     AES Thames, Inc., AES Hawaii, Inc., AES Shady Point, Inc., AES Southland
     and its Subsidiaries, AES Warrior Run and its Subsidiaries, and
<PAGE>

                                                                               7


     each Subsidiary of the Account Party that holds a direct or indirect
     interest in AES Southland or AES Warrior Run.

          "DOLLAR EQUIVALENT" means, on any date of determination with respect
     to any Alternative Currency Letter of Credit, (i) in calculating the
     maximum aggregate amount available to be drawn under such Alternative
     Currency Letter of Credit at any time on or after such date, the amount
     thereof in Dollars most recently reported to the Administrative Agent
     pursuant to Section 2.15(b) and (ii) in calculating the amount of any
     Drawing under such Alternative Currency Letter of Credit, the aggregate
     amount of Dollars paid by the relevant Issuing Bank to purchase the
     Alternative Currency paid by such Issuing Bank in respect of such Drawing.

          "DOLLARS" and the sign "$" each means lawful currency of the United
     States.

          "DRAWING" means a drawing effected under any Letter of Credit.

          "8% SENIOR NOTES" means the Account Party's 8% Senior Notes due 2008
     issued pursuant to the 1998 Senior Note Indenture.

          "ENVIRONMENTAL LAWS" means any and all federal, state, local and
     foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
     judgments, orders, decrees, plans, injunctions, permits, concessions,
     grants, franchises, licenses, agreements and other governmental
     restrictions relating to the environment, the effect of the environment on
     human health or to emissions, discharges or releases of pollutants,
     contaminants, Hazardous Substances or wastes into the environment,
     including, without limitation, ambient air, surface water, ground water or
     land, or otherwise relating to the manufacture, processing, distribution,
     use, treatment, storage, disposal, transport or handling of pollutants,
     contaminants, Hazardous Substances or wastes or the clean-up or other
     remediation thereof.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended, or any successor statute.

          "ERISA GROUP" means the Account Party, its Subsidiaries and all
     members of a controlled group of corporations and all trades or businesses
     (whether or not incorporated) under common control which, together with the
     Account Party or any of its Subsidiaries, are treated as a single employer
     under Section 414 of the Internal Revenue Code.

          "EVENT OF DEFAULT" has the meaning specified in Section 6.1.

          "EXISTING CREDIT FACILITY" means the Credit Agreement, dated as of
     December 19, 1997, as amended and restated as of March 31, 1999 and as
     amended pursuant to Amendment No. 1 thereto dated as of May 21, 1999,
     Amendment No. 2 thereto dated as of July 27, 1999, and Amendment No. 3
     thereto dated as of September 28, 1999, among the Account Party, the banks
     listed therein, the Fronting Banks listed therein, and Morgan Guaranty
     Trust
<PAGE>

                                                                               8


     Company of New York, as Agent, as the same may be amended, modified,
     supplemented, extended, renewed, refinanced or replaced and in effect from
     time to time.

          "EXISTING 8-3/8% SUBORDINATED NOTES" means the Account Party's 8-3/8%
     Senior Subordinated Notes due 2007 issued pursuant to the Existing 8-3/8%
     Subordinated Note Indenture.

          "EXISTING 8-3/8% SUBORDINATED NOTE INDENTURE" means the Indenture
     dated as of July 17, 1997 between the Account Party and The Bank of New
     York, as Trustee, relating to the Existing 8-3/8% Subordinated Notes, as
     such Indenture may, subject to Section 5.10, be amended, modified or
     supplemented and in effect from time to time.

          "EXISTING 8.50% SUBORDINATED NOTES" means the Account Party's 8.50%
     Senior Subordinated Notes due 2007 issued pursuant to the Existing October
     1997 Subordinated Note Indenture.

          "EXISTING 8.875% SUBORDINATED DEBENTURES" means the Account Party's
     8.875% Senior Subordinated Debentures due 2027 issued pursuant to the
     Existing October 1997 Subordinated Note Indenture.

          "EXISTING LETTER OF CREDIT" means any letter of credit issued by an
     Issuing Bank (whether prior to or after the date hereof) for the account of
     the Account Party or any of its Subsidiaries pursuant to the Existing
     Credit Facility or any other agreement (other than this Agreement) to which
     the Account Party is a party, including each of the letters of credit set
     forth in Schedule IV hereto.

          "EXISTING OCTOBER 1997 SUBORDINATED NOTE INDENTURE" means the
     Indenture dated as of October 29, 1997 between the Account Party and The
     First National Bank of Chicago, as Trustee, relating to the Existing 8.50%
     Subordinated Notes and the Existing 8.875% Subordinated Debentures, as such
     Indenture may, subject to Section 5.10, be amended, modified or
     supplemented and in effect from time to time.

          "EXISTING SUBORDINATED NOTES" means (i) the Existing 8-3/8%
     Subordinated Notes, (ii) the Existing 10 1/4% Subordinated Notes, (iii) the
     Existing 8.50% Subordinated Notes and (iv) the Existing 8.875% Subordinated
     Debentures.

          "EXISTING SUBORDINATED NOTE INDENTURES" means (i) the Existing 8-3/8%
     Subordinated Note Indenture, (ii) the Existing 10-1/4% Subordinated Note
     Indenture and (iii) the Existing October 1997 Subordinated Note Indenture.

          "EXISTING 10-1/4% SUBORDINATED NOTES" means the Account Party's
     10-1/4% Senior Subordinated Notes due 2006 issued pursuant to the Existing
     10-1/4% Subordinated Note Indenture.
<PAGE>

                                                                               9


          "EXISTING 10-1/4% SUBORDINATED NOTE INDENTURE" means the Indenture
     dated as of July 1, 1996 between the Account Party and The First National
     Bank of Chicago, as Trustee, relating to the Existing 10-1/4% Subordinated
     Notes, as such Indenture may, subject to Section 5.10, be amended, modified
     or supplemented and in effect from time to time.

          "EXTENSION OF CREDIT" means (i) the issuance (or deemed issuance) of a
     Letter of Credit or (ii) the amendment of any Letter of Credit having the
     effect of extending the stated expiry or termination date thereof or
     increasing the Available Amount thereunder.

          "FEDERAL FUNDS RATE" means, for any day, the rate PER ANNUM (rounded
     upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
     average of the rates on overnight Federal funds transactions with members
     of the Federal Reserve System arranged by Federal funds brokers on such
     day, as published by the Federal Reserve Bank of New York on the Business
     Day next succeeding such day; PROVIDED that (i) if such day is not a
     Business Day, the Federal Funds Rate for such day shall be such rate on
     such transactions on the next preceding Business Day as so published on the
     next succeeding Business Day, and (ii) if no such rate is so published on
     such next succeeding Business Day, the Federal Funds Rate for such day
     shall be the average (rounded upward, if necessary, to the nearest 1/100 of
     1%) of the quotations for such day on such transactions received by the
     Administrative Agent from three Federal funds brokers of recognized
     standing selected by it.

          "GOVERNMENTAL AUTHORITY" means any nation or government, any state or
     other political subdivision thereof and any entity exercising executive,
     legislative, judicial, regulatory or administrative functions of or
     pertaining to government.

          "GUARANTEE" by any Person means any obligation, contingent or
     otherwise, of such Person directly or indirectly guaranteeing any Debt or
     other obligation of any other Person and, without limiting the generality
     of the foregoing, any obligation, direct or indirect, contingent or
     otherwise, of such Person (i) to purchase or pay (or advance or supply
     funds for the purchase or payment of) such Debt or other obligation
     (whether arising by virtue of partnership arrangements, by agreement to
     keep-well, to purchase assets, goods, securities or services, to
     take-or-pay or to maintain financial statement conditions or otherwise) or
     (ii) entered into for the purpose of assuring in any other manner the
     obligee of such Debt or other obligation of the payment thereof or to
     protect such obligee against loss in respect thereof (in whole or in part);
     PROVIDED that the term Guarantee shall not include endorsements for
     collection or deposit in the ordinary course of business. The term
     "Guarantee" used as a verb has a corresponding meaning.

          "HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
     otherwise hazardous substance, including petroleum, its derivatives,
     by-products and other hydrocarbons, or any substance having any constituent
     elements displaying any of the foregoing characteristics.
<PAGE>

                                                                              10


          "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
     amended, or any successor statute.

          "INVESTMENT" means any investment in any Person, whether by means of
     share purchase, capital contribution, loan, Guarantee, time deposit or
     otherwise (but not including any demand deposit).

          "INVESTMENT AND GUARANTEE COMMITMENTS" means, without duplication, (i)
     all commitments (contingent or otherwise) by the Account Party to make
     Investments and (ii) all obligations (contingent or otherwise but excluding
     obligations hereunder) of the Account Party to make payments under
     Guarantees.

          "ISSUING BANK" has the meaning assigned to such term in the preamble
     hereto and includes (i) any Participating Bank designated by the Account
     Party that accepts such designation and (ii) any other financial
     institution designated by the Account Party and acceptable to the
     Administrative Agent that accepts such designation, in each case in
     accordance with Section 2.1, as the issuer of a Letter of Credit pursuant
     to an Issuing Bank Agreement. As of the date hereof, the Account Party has
     designated Union Bank, Morgan and the other financial institutions set
     forth in Schedule IV hereto as Issuing Banks.

          "ISSUING BANK AGREEMENT" means an agreement between an Issuing Bank
     and the Account Party, substantially in the form of Exhibit B or otherwise
     in form and substance satisfactory to the Administrative Agent (it being
     understood that any such agreement that (i) contains a provision
     substantially similar to Section 2.01 of the form of Issuing Bank Agreement
     attached hereto as Exhibit B and (ii) does not contain any terms that are
     inconsistent with any of the terms of this Agreement, shall be deemed to be
     satisfactory to the Administrative Agent), providing for the issuance (or
     deemed issuance) of one or more Letters of Credit.

          "LETTER OF CREDIT" means a letter of credit issued (or deemed issued)
     by an Issuing Bank pursuant to Section 2.1 (including each Existing Letter
     of Credit set forth in Schedule IV) for the account of the Account Party or
     one or more of its Subsidiaries (PROVIDED, that the Account Party shall
     remain liable with respect to the reimbursement of all Drawings thereunder
     pursuant to this Agreement), as such letter of credit may from time to time
     be increased, extended or otherwise modified in accordance with the terms
     of this Agreement and the Issuing Bank Agreement to which it relates.

          "LETTER OF CREDIT COMMISSION RATE" means a rate PER ANNUM determined
     in accordance with the Pricing Schedule annexed as Schedule II hereto.

          "LETTER OF CREDIT EXPIRATION DATE" means the date that occurs five
     Business Days prior to the then-scheduled Termination Date.
<PAGE>

                                                                              11


          "LETTER OF CREDIT LIABILITIES" means, at any time and in respect of
     any Letter of Credit, the sum, without duplication, of (i) the Available
     Amount of such Letter of Credit PLUS (ii) the aggregate unpaid amount of
     all Reimbursement Obligations in respect of previous Drawings made under
     such Letter of Credit.

          "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
     charge, security interest or encumbrance of any kind, or any other type of
     preferential arrangement that has the practical effect of creating a
     security interest, in respect of such asset. For the purposes of this
     Agreement, the Account Party or any of its Subsidiaries shall be deemed to
     own subject to a Lien any asset which it has acquired or holds subject to
     the interest of a vendor or lessor under any conditional sale agreement,
     capital lease or other title retention agreement relating to such asset.

          "LOAN DOCUMENTS" means this Agreement, the Issuing Bank Agreements,
     the Agency Fee Letters and all other agreements, instruments and documents
     now or hereafter executed and delivered by the Account Party or any
     Subsidiary Guarantor pursuant hereto or thereto.

          "MATERIAL AES ENTITY" means (i) any Subsidiary Guarantor, (ii) any
     Specified Subsidiary and (iii) any other Person in which the Account Party
     has a direct or indirect equity Investment if such Person's contribution to
     Parent Operating Cash Flow for the four most recently completed fiscal
     quarters of the Account Party constitutes 15% or more of Parent Operating
     Cash Flow for such period.

          "MATERIAL DEBT" means, with respect to any Person, Debt (other than
     the Reimbursement Obligations) of such Person arising in one or more
     related or unrelated transactions, in an aggregate principal amount
     exceeding $15,000,000.

          "MATERIAL PLAN" means at any time a Plan or Plans having aggregate
     Unfunded Liabilities in excess of $15,000,000.

          "MAXIMUM OUTSTANDING EXPOSURE" has the meaning assigned to that term
     in Section 2.15(a).

          "MINIMUM CP RATING" means (i) A-1 for Standard & Poor's Ratings
     Services, (ii) P-1 for Moody's Investors Service, Inc., (iii) F-1 for Fitch
     IBCA, Inc. and (iv) D-1 for Duff & Phelps Credit Rating Co.

          "MULTIEMPLOYER PLAN" means at any time an employee pension benefit
     plan within the meaning of Section 4001(a)(3) of ERISA to which any member
     of the ERISA Group is then making or accruing an obligation to make
     contributions or has within the preceding five plan years made
     contributions, including for these purposes any Person which ceased to be a
     member of the ERISA Group during such five year period.
<PAGE>

                                                                              12


          "NET CASH PROCEEDS" has the meaning set forth in the Existing
     Subordinated Note Indentures.

          "1998 SENIOR NOTE INDENTURE" means the Senior Indenture, dated as of
     December 8, 1998, between the Account Party and The First National Bank of
     Chicago, as Trustee, relating to the Senior Notes, as such Indenture may,
     subject to Section 5.10, be amended, modified or supplemented and in effect
     from time to time.

          "9.50% SENIOR NOTES" means the Account Party's 9.50% Senior Notes due
     2009 issued pursuant to the 1998 Senior Note Indenture.

          "PARENT OPERATING CASH FLOW" means, for any period, the sum of the
     following amounts (determined without duplication), but only to the extent
     received in cash by the Account Party from any other Person during such
     period:

          (A) dividends paid to the Account Party by its Subsidiaries during
     such period;

          (B) consulting and management fees paid to the Account Party for such
     period;

          (C) tax sharing payments made to the Account Party during such period;

          (D) interest and other distributions paid during such period with
     respect to cash and other Temporary Cash Investments of the Account Party
     (other than with respect to amounts on deposit in any account to cash
     collateralize Letters of Credit issued (or deemed issued) hereunder or
     letters of credit issued (or deemed issued) under the Existing Credit
     Facility); and

          (E) other cash payments made to the Account Party by its Subsidiaries
     other than (i) returns of invested capital, (ii) payments of the principal
     of Debt of any such Subsidiary to the Account Party, and (iii) payments in
     an amount equal to the aggregate amount released from debt service reserve
     accounts upon the issuance of Letters of Credit for the benefit of the
     beneficiaries of such accounts.
<PAGE>

                                                                              13


     For purposes of determining Parent Operating Cash Flow:

          (1) net cash payments received by a Qualified Holding Company during
     any period which could have been (without regard for any cash held by such
     Qualified Holding Company at the beginning of such period), but were not,
     paid as a dividend to the Account Party during such period due to tax or
     other cash management considerations may be included in Parent Operating
     Cash Flow for such period; PROVIDED that any amounts so included will not
     be included in Parent Operating Cash Flow if and when paid to the Account
     Party in any subsequent period;

          (2) if at any time there shall exist an event or condition which
     permits any holder to accelerate the maturity date of any Debt of, or
     terminate its commitment to extend credit to, any Subsidiary of the Account
     Party, then the contributions of such Subsidiary to Parent Operating Cash
     Flow for any period ending at or prior to such time shall be eliminated and
     Parent Operating Cash Flow shall be calculated after giving effect to such
     elimination;

          (3) if any Subsidiary of the Account Party is sold or otherwise
     disposed of (by way of merger, sale of capital stock, sale of assets or
     otherwise), (x) the net cash proceeds from such sale or other disposition
     shall not be included in Parent Operating Cash Flow for any period and (y)
     the contributions of such Subsidiary to Parent Operating Cash Flow for any
     period shall be eliminated and Parent Operating Cash Flow shall be
     calculated after giving effect to such elimination; and

          (4) no dividends, fees or payments made to the Account Party with the
     proceeds of any amounts paid to the Account Party or any of its
     Subsidiaries in connection with the $525,000,000 additional prepayment made
     by The Connecticut Light and Power Company ("CL&P") pursuant to the First
     Amendment to the Electricity Purchase Agreement between CL&P and AES
     Thames, Inc., or any amounts paid to the Account Party or any of its
     Subsidiaries in connection with any monetization, sale or securitization of
     any right to receive any such prepayment, shall be included in Parent
     Operating Cash Flow, except to the extent that such proceeds (x) have been
     received by the Account Party in cash in such period or an earlier period
     and (y) are included in Consolidated Net Income for such period.

          "PARTICIPANT" has the meaning assigned to such term in Section 8.5(b).

          "PBGC" means the Pension Benefit Guaranty Corporation or any entity
     succeeding to any or all of its functions under ERISA.

          "PERMITTED SENIOR UNSECURED DEBT" means unsecured Debt of the Account
     Party that (i) is not guaranteed by any Subsidiary or Affiliate of the
     Account Party and (ii) that is in an aggregate principal amount not
     exceeding the lesser of (x) $300,000,000 and (y) $600,000,000 less the
     aggregate amount of the Commitments (as defined in the Existing Credit
     Facility).
<PAGE>

                                                                              14


          "PERSON" means an individual, partnership, corporation (including,
     without limitation, a business trust), limited liability company, joint
     stock company, trust, unincorporated association, joint venture,
     Governmental Authority, or other entity or organization of whatever nature.

          "PLAN" means at any time an employee pension benefit plan (other than
     a Multiemployer Plan) which is covered by Title IV of ERISA or subject to
     the minimum funding standards under Section 412 of the Internal Revenue
     Code and either (i) is maintained, or contributed to, by any member of the
     ERISA Group for employees of any member of the ERISA Group or (ii) has at
     any time within the preceding five years been maintained, or contributed
     to, by any Person which was at such time a member of the ERISA Group for
     employees of any Person which was at such time a member of the ERISA Group.

          "POWER PROJECT" means an electric power or thermal energy generation
     or cogeneration facility or related facilities, and its or their related
     electric power transmission, distribution, fuel supply and fuel
     transportation facilities, together with its or their related power supply,
     thermal energy and fuel contracts as well as other contractual arrangements
     with customers, suppliers and contractors.

          "POWER PROJECT DEBT" means Debt of a Subsidiary of the Account Party
     permitted by Section 5.7(a)(ii).

          "POWER PROJECT DEFAULT" means any event or condition which results in
     the acceleration of the maturity of any Power Project Debt or enables the
     holder of such Power Project Debt or any Person acting on such holder's
     behalf to then accelerate the maturity thereof, or failure to pay any Power
     Project Debt at the final maturity thereof.

          "PURCHASING BANKS" has the meaning assigned to that term in Section
     8.5(c).

          "QUALIFIED HOLDING COMPANY" means any Wholly-Owned Consolidated
     Subsidiary of the Account Party that satisfies, and all of whose direct or
     indirect holding companies (other than the Account Party) are Wholly-Owned
     Consolidated Subsidiaries of the Account Party that satisfy, the following
     conditions:

               (i) its direct and indirect interest in any Power Project or
          unrelated business shall be limited to the ownership of capital stock
          or Debt obligations of a Person with a direct or indirect interest in
          such Power Project or unrelated business;

               (ii) no consensual encumbrance or restriction of any kind shall
          exist on its ability to make payments, distributions, loans, advances
          or transfers to the Account Party;

               (iii) it shall not have outstanding any Debt other than
          Guarantees of Debt of the Account Party under the Existing Credit
<PAGE>

                                                                              15


          Facility (subject to Section 5.7(a)(iv)) and under the Loan Documents
          and Debt to other Qualified Holding Companies; and

               (iv) it shall engage in no business or other activity, shall
          enter into no binding agreements and shall incur no obligations other
          than (A) the holding of the capital stock and Debt obligations
          permitted under clause (i) above, (B) the holding of cash received
          from its Subsidiaries and the investment thereof in Temporary Cash
          Investments, (C) the payment of dividends to the Account Party, (D)
          ordinary business development activities, (E) the making (but not the
          entering into binding obligations to make) of Investments in Power
          Projects owned by its Subsidiaries, and (F) in the case of AES
          Electric, the making of Investments in Power Projects owned by NIGEN
          Limited and Medway Power Limited as of the date of this Agreement
          under any agreement by which it is bound as of the date of this
          Agreement.

          "QUALIFIED PREFERRED EQUITY" means, at any date, equity interests in a
     Consolidated Subsidiary of the Account Party (i) that are not (A) required
     to be redeemed or redeemable at the option of the holder thereof prior to
     the fifth anniversary of the Termination Date or (B) convertible into or
     exchangeable for (unless solely at the option of the Account Party) equity
     interests referred to in clause (A) above or Debt having a scheduled
     maturity, or requiring any repayments or prepayments of principal or any
     sinking fund or similar payments in respect of principal or providing for
     any such repayment, prepayment, sinking fund or other payment at the option
     of the holder thereof prior to the fifth anniversary of the Termination
     Date and (ii) as to which, at such date, AES has the right to defer the
     payment of all dividends and other distributions in respect thereof for the
     period of at least 19 consecutive quarters beginning at such date.

          "REFERENCE RATE" means the rate of interest announced publicly by
     Union Bank in Los Angeles, California, from time to time, as the Union Bank
     Reference Rate (it being acknowledged that such Reference Rate may not
     necessarily be the lowest rate of interest charged to any class of
     borrowers by Union Bank).

          "REGISTER" has the meaning assigned to that term in Section 8.5(d).

          "REGULATION G" means Regulation G of the Board of Governors of the
     Federal Reserve System, as in effect from time to time.

          "REGULATION U" means Regulation U of the Board of Governors of the
     Federal Reserve System, as in effect from time to time.

          "REIMBURSEMENT OBLIGATIONS" means at any date the obligations then
     outstanding of the Account Party under Section 2.4 to reimburse the Issuing
     Banks for amounts drawn under Letters of Credit.
<PAGE>

                                                                              16


          "RELATED PARTIES" means, with respect to any specified Person, such
     Person's affiliates (including its Affiliates and Subsidiaries) and the
     respective directors, officers, employees, agents, attorneys-in-fact and
     advisors of such Person and such Person's affiliates (including its
     Affiliates and Subsidiaries).

          "REQUEST FOR ISSUANCE" has the meaning assigned to that term in
     Section 2.1(c).

          "REQUIRED BANKS" means, on any date of determination, Participating
     Banks who, collectively, on such date (i) have Commitment Percentages in
     the aggregate of greater than 50% or (ii) if the Commitments have been
     terminated, hold participations in a majority of the then aggregate
     outstanding Letter of Credit Liabilities.

          "REQUIREMENT OF LAW" means, as to any Person, any law, treaty, rule or
     regulation or determination of an arbitrator or a court or other
     Governmental Authority (including, without limitation, any judgment, writ,
     injunction, decree, or order of any court), in each case applicable to or
     binding upon such Person or any of its property or to which such Person or
     any of its property is subject.

          "RESTRICTED PAYMENT" means (i) any dividend or other distribution on
     any shares of the Account Party's common stock (except dividends payable
     solely in shares of its common stock) or (ii) any payment on account of the
     purchase, redemption, retirement or acquisition of (a) any shares of the
     Account Party's capital stock or (b) any option, warrant or other right to
     acquire shares of the Account Party's capital stock.

          "SENIOR NOTES" means, collectively, the 8% Senior Notes and the 9.50%
     Senior Notes.

          "SIGNIFICANT AES ENTITY" means (i) any Material AES Entity and (ii)
     any other Person in which the Account Party has a direct or indirect equity
     Investment if (A) such Person's contribution to Parent Operating Cash Flow
     for the four most recently completed fiscal quarters of the Account Party
     constitutes 10% or more of Parent Operating Cash Flow for such period, or
     (B) the Account Party's direct or indirect interest in the total assets of
     such Person if such Person is a Consolidated Subsidiary or in the net
     assets of such Person in all other cases is at least equal to 10% of the
     consolidated assets of the Account Party and its Consolidated Subsidiaries,
     taken as a whole, or the Account Party's direct or indirect interest in the
     total net income of such Person (for the preceding fiscal quarter) is at
     least equal to 10% of the net income of the Account Party and its
     Consolidated Subsidiaries (for the preceding fiscal quarter) taken as a
     whole.

          "SOUTHLAND" means AES Southland Holdings, LLC.

          "SPECIFIED EQUITY-RELATED DEBT" means, at any date, (i) Debt of the
     Account Party (A) that is owed to a Consolidated Subsidiary of the Account
<PAGE>

                                                                              17


     Party, (B) that is issued in connection with the issuance by such
     Consolidated Subsidiary of Qualified Preferred Equity, (C) that is
     subordinated to other Debt of the Account Party of at least the types and
     to at least the extent as was, on the date of issuance thereof, the Junior
     Subordinated Debentures issued by the Account Party in connection with the
     issuance by AES Trust II of its $2.75 Term Convertible Securities, Series
     B, on October 29, 1996, (D) as to which, at such date, the Account Party
     has the right to defer the payment of all interest for the period of at
     least 19 consecutive quarters beginning at such date and (E) that does not
     mature, in whole or in part, and is not subject to any required repayment
     or prepayment, any required sinking fund or similar payment or any
     repayment or prepayment or sinking fund or similar payment at the option of
     the holder thereof, prior to the fifth anniversary of the Termination Date,
     and (ii) Guarantees by the Account Party of the obligations of the issuer
     of any Qualified Preferred Equity in respect of such Qualified Preferred
     Equity.

          "SPECIFIED SUBSIDIARY" means each Designated Subsidiary and each other
     Subsidiary of the Account Party that holds, directly or indirectly, any
     interest in any Designated Subsidiary.

          "SUBORDINATED DEBT" means Debt in respect of the Existing Subordinated
     Notes and the Additional Permitted Subordinated Debt.

          "SUBORDINATED NOTE INDENTURES" means the Existing Subordinated Note
     Indentures and the Additional Permitted Subordinated Debt Agreements.

          "SUBSIDIARY" means, with respect to any Person, any corporation or
     other entity of which securities or other ownership interests having
     ordinary voting power to elect a majority of the board of directors or
     other persons performing similar functions are at the time directly or
     indirectly owned by such Person.

          "SUBSIDIARY GUARANTORS" has the meaning assigned to that term in the
     Existing Credit Facility (as in effect on the date hereof).

          "SUBSIDIARY GUARANTY" has the meaning assigned to that term in the
     Existing Credit Facility (as in effect on the date hereof).

          "TEMPORARY CASH INVESTMENT" means any Investment in (A)(i) direct
     obligations of the United States or any agency thereof, or obligations
     guaranteed by the United States or any agency thereof, (ii) commercial
     paper rated at least the Minimum CP Rating by any two of Standard & Poor's
     Ratings Services, Moody's Investors Service, Inc., Fitch IBCA, Inc. and
     Duff & Phelps Credit Rating Co., PROVIDED that one of such two Minimum CP
     Ratings is by Standard & Poor's Ratings Services or Moody's Investors
     Service, Inc., (iii) time deposits with, including certificates of deposit
     issued by, any office located in the United States of any bank or trust
     company which is organized or licensed under the laws of the United States
     or any state thereof and has capital, surplus and undivided profits
     aggregating at least $500,000,000, (iv) medium term notes, asset backed
     securities, bonds, notes
<PAGE>

                                                                              18


     and letter of credit supported instruments, issued by any entity organized
     under the laws of the United States, or any state or municipality of the
     United States and rated in any of the three highest rated categories by
     Standard & Poor's Ratings Services or Moody's Investors Service, Inc., (v)
     repurchase agreements with respect to securities described in clause (i)
     above entered into with an office of a bank or trust company meeting the
     criteria specified in clause (iii) above, (vi) eurodollar certificates of
     deposit issued by any bank or trust company which has capital and
     unimpaired surplus of not less than $500,000,000 or (vii) with respect to
     any Subsidiary of the Account Party, any category of investment designated
     as permissible investments under such Subsidiary's project loan
     documentation, PROVIDED in each case (except clause (vii)) that such
     Investment matures within fifteen months from the date of acquisition
     thereof by the Account Party or any of its Subsidiaries, and (B) registered
     investment companies that are "money market funds" within the meaning of
     Rule 2a-7 under the Investment Company Act of 1940.

          "TERMINATION DATE" means the earlier to occur of (i) the third
     anniversary of the date hereof or such later date to which the Termination
     Date is extended in accordance with Section 2.13 and (ii) the date of
     termination or reduction in whole of the Commitments pursuant to Section
     2.2 or 6.2.

          "TRANSFEREE" has the meaning assigned to that term in Section 8.5(f).

          "UNFUNDED LIABILITIES" means, with respect to any Plan at any time,
     the amount (if any) by which (i) the value of all benefit liabilities under
     such Plan, determined on a plan termination basis using the assumptions
     prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii)
     the fair market value of all Plan assets allocable to such liabilities
     under Title IV of ERISA (excluding any accrued but unpaid contributions),
     all determined as of the then most recent valuation date for such Plan, but
     only to the extent that such excess represents a potential liability of a
     member of the ERISA Group to the PBGC or any other Person under Title IV of
     ERISA.

          "UNITED STATES" means the United States of America, including the
     States and the District of Columbia, but excluding its territories and
     possessions.

          "WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
     Subsidiary all of the shares of capital stock or other ownership interests
     of which (except directors' qualifying shares) are at the time directly or
     indirectly owned by the Account Party.

          "YEAR 2000 COMPLIANT" has the meaning assigned to that term in Section
     3.13.

     SECTION 1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto.
<PAGE>

                                                                              19


     (b) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Account Party's independent public accountants) with the most recent audited
consolidated financial statements of the Account Party and its Consolidated
Subsidiaries delivered to the Banks; PROVIDED that, if the Account Party
notifies the Administrative Agent that the Account Party wishes to amend any
covenant in Article 5 to eliminate the effect of any change in generally
accepted accounting principles on the operation of such covenant (or if the
Administrative Agent notifies the Account Party that the Required Banks wish to
amend Article 5 for such purpose), then the Account Party's compliance with such
covenant shall be determined on the basis of generally accepted accounting
principles in effect immediately before the relevant change in generally
accepted accounting principles became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Account
Party and the Required Banks.

     (c) Unless otherwise indicated, each reference in this Agreement to a
specific time of day is a reference to New York City time. In the computation of
periods of time under this Agreement, any period of a specified number of days
or months shall be computed by including the first day or month occurring during
such period and excluding the last such day or month. In the case of a period of
time "FROM" a specified date "TO" or "UNTIL" a later specified date, the word
"FROM" means "FROM AND INCLUDING" and the words "TO" and "UNTIL" each means "TO
BUT EXCLUDING".

     (d) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"INCLUDE", "INCLUDES", and "INCLUDING" shall be deemed to be followed by the
phrase "WITHOUT LIMITATION". The word "WILL" shall be construed to have the same
meaning and effect as the word "SHALL". Unless the context requires otherwise
(i) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein or in any other Loan Document), (ii) any reference herein to
any Person shall be construed to include such Person's successors and assigns,
(iii) the words "HEREIN", "HEREOF" and "HEREUNDER", and words of similar import,
shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, (iv) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (v) the words "ASSET" and
"PROPERTY" shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

     SECTION 1.3 CURRENCY EQUIVALENTS GENERALLY. For all purposes of this
Agreement, the equivalent in any Alternative Currency of an amount in Dollars
shall be determined at the rate of exchange quoted by the Administrative Agent
in Los Angeles, California, at 11:00 a.m. (Los Angeles time) on the date of
determination, to prime banks in Los

<PAGE>

                                                                              20


Angeles, California for the spot purchase in the Los Angeles foreign exchange
market of such amount of Dollars with such Alternative Currency.

                                    ARTICLE 2
                        LETTERS OF CREDIT; REIMBURSEMENT

     SECTION 2.1 ISSUING BANKS; ISSUANCE OF LETTERS OF CREDIT. (a) Subject to
the terms and conditions hereof, the Account Party may from time to time
identify and arrange for one or more Participating Banks or other financial
institutions to act as Issuing Banks hereunder. Any such designation by the
Account Party shall be accepted by the proposed Issuing Bank and shall be
notified to the Administrative Agent at least three Business Days prior to the
first date upon which the Account Party proposes that such Issuing Bank issue
(or, pursuant to subsection (d) below, be deemed to have issued) its first
Letter of Credit. Within two Business Days following the receipt of any such
designation of a financial institution (other than a Participating Bank) as a
proposed Issuing Bank, the Administrative Agent shall notify the Account Party
as to whether such designee is acceptable to the Administrative Agent. The
failure by the Administrative Agent to provide such notice to the Account Party
within such time period shall be deemed to be an approval of such proposed
Issuing Bank. Nothing contained herein shall be deemed to require any
Participating Bank to agree to act as an Issuing Bank, if it does not so desire.

     (b) Each Participating Bank severally agrees, on the terms and conditions
hereinafter set forth, to participate in each Letter of Credit issued hereunder
and the related Letter of Credit Liabilities during the period from the Closing
Date until the Termination Date, in an aggregate outstanding amount not to
exceed on any day such Participating Bank's Commitment. The Commitments are
revolving in nature and, within the limits hereinafter set forth, the Account
Party may, from the Closing Date until the Termination Date, request Extensions
of Credit hereunder at any time up to the Available Commitments at such time in
accordance with the terms hereof.

     (c) Each Letter of Credit (other than an Existing Letter of Credit) shall
be issued (or the stated maturity thereof extended or be amended or modified to
increase the Available Amount thereof) on not less than two Business Days' (or
such shorter period of time as shall be acceptable to the Administrative Agent
and the relevant Issuing Bank) prior written notice thereof to the
Administrative Agent (which shall promptly distribute copies thereof to the
Participating Banks) and the relevant Issuing Bank. Each such notice (a "REQUEST
FOR ISSUANCE") shall specify (i) the date (which shall be a Business Day, but in
no event later than ten Business Days immediately preceding the Termination
Date) of issuance of such Letter of Credit (or the date of effectiveness of such
extension or increase, as the case may be) and the stated expiry date thereof
(which shall be no later than the earlier to occur of (A) the date that occurs
two years after the date of issuance of such Letter of Credit and (B) the Letter
of Credit Expiration Date), (ii) the proposed stated amount of such Letter of
Credit (which shall be in Dollars or an Alternative Currency and shall not be
less than $300,000 (or the equivalent thereof in an Alternative Currency));
PROVIDED, HOWEVER, that up to five Letters of Credit may be issued with stated
amounts less than $300,000 (or the equivalent thereof in an Alternative
Currency), (iii)
<PAGE>

                                                                              21


the proposed terms of such Letter of Credit (or the proposed form thereof shall
be attached to such Request for Issuance), (iv) the transaction that is to be
supported or financed with such Letter of Credit, including identification of
the Power Project, if any, to which such transaction relates and the name of the
proposed account party for such Letter of Credit (which may be the Account Party
or one or more of its Subsidiaries), (v) the identity of the Issuing Bank for
such Letter of Credit and (vi) such other information as shall demonstrate
compliance of such Letter of Credit with the requirements specified therefor in
this Agreement and the relevant Issuing Bank Agreement. Each Request for
Issuance shall be irrevocable unless modified or rescinded by the Account Party
prior to the time that the Administrative Agent distributes copies thereof to
the Participating Banks. Not later than 12:00 noon (or such later time as shall
be acceptable to the Account Party and the relevant Issuing Bank) on the
proposed date of issuance (or effectiveness) specified in such Request for
Issuance, and upon fulfillment of the applicable conditions precedent and the
other requirements set forth herein and in the relevant Issuing Bank Agreement,
such Issuing Bank shall issue (or extend or increase, as the case may be) such
Letter of Credit and provide notice and a copy thereof to the Administrative
Agent, which shall promptly furnish copies thereof to the Participating Banks.

     (d) Subject to the requirements of subsection (c) above, upon at least five
Business Days prior written notice to the Administrative Agent, the Account
Party may request that an Existing Letter of Credit (other than the Existing
Letters of Credit set forth in Schedule IV) be deemed to be a Letter of Credit
issued hereunder. Such request shall be accompanied by a copy of such Existing
Letter of Credit and a consent of the bank or other financial institution that
issued such Existing Letter of Credit to its deemed issuance hereunder. If the
Administrative Agent determines that such Existing Letter of Credit meets the
requirements specified therefor in this Agreement (including the requirements
set forth in clauses (i) and (ii) of subsection (c) above and in subsection (e)
below) and the relevant Issuing Bank Agreement, then (i) the Administrative
Agent shall promptly provide a copy of such Existing Letter of Credit to the
Participating Banks and (ii) subject to the satisfaction of the conditions
precedent set forth in Section 4.2, and notwithstanding any reference in such
Existing Letter of Credit to the Existing Credit Facility or any other credit
facility pursuant to which such Existing Letter of Credit was issued, such
Existing Letter of Credit shall be deemed to constitute a Letter of Credit and
to have been issued hereunder on the date set forth in the Account Party's
notice to the Administrative Agent (by the Issuing Bank that issued or was
deemed to have issued such Existing Letter of Credit under the Existing Credit
Facility or such other credit facility); PROVIDED, HOWEVER, that nothing
contained in this Section 2.1 shall extend, modify or otherwise affect the
existing expiry date under any such Existing Letter of Credit (PROVIDED, that
the expiry date of each such Existing Letter of Credit shall comply with the
requirements set forth in clause (i) of subsection (c) above). In addition, and
notwithstanding any reference to the Existing Credit Facility contained in any
of the Existing Letters of Credit set forth in Schedule IV hereto, on and as of
the Closing Date each Existing Letter of Credit set forth in Schedule IV shall
be deemed to be a Letter of Credit and to have been issued on the Closing Date
(by the Issuing Bank that issued or was deemed to have issued such Existing
Letter of Credit under the Existing Credit Facility) pursuant to this Section
2.1; PROVIDED HOWEVER, that nothing contained in this

<PAGE>

                                                                              22


Section 2.1 shall extend, modify or otherwise affect the existing expiry date
under any such Existing Letter of Credit.

     (e) Notwithstanding any other provision contained herein to the contrary,
in no event shall any Letter of Credit be (i) issued (or deemed issued) or (ii)
amended or modified to increase the Available Amount thereof if, after giving
effect to such issuance or amendment, the principal amount outstanding hereunder
would exceed the Commitments.

     (f) The Account Party shall provide to the Administrative Agent a copy of
each amendment or modification to a Letter of Credit (other than any amendment
or modification that constitutes an Extension of Credit) not later than two
Business Days prior to the effective date of any such amendment or modification.
The Administrative Agent shall promptly provide a copy of each such amendment or
modification received by it to the Participating Banks.

     SECTION 2.2 TERMINATION OR REDUCTION OF THE COMMITMENTS. (a) The Account
Party may, upon at least three Business Days' notice to the Administrative Agent
(which shall promptly distribute copies thereof to the Participating Banks),
terminate in whole or reduce ratably in part the unused portions of the
Commitments; PROVIDED that any such partial reduction shall be in the aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof;
and PROVIDED, FURTHER, that the Commitments shall in no event be reduced
pursuant to this subsection (a) to an amount which is less than the aggregate
Available Amount of all Letters of Credit then outstanding.

     (b) In the event that the Account Party or any of its Subsidiaries shall at
any time, or from time to time, receive any Net Cash Proceeds of any Asset
Disposition, the Commitments of the Participating Banks shall, unless the
Required Banks otherwise agree, be ratably reduced by such amounts and at such
times as may be required to avoid any requirement that all or any portion of
such Net Cash Proceeds be applied to repay, prepay, repurchase or defease any
Subordinated Debt (after taking into account (i) any reductions in the
"Commitments" under the Existing Credit Facility and (ii) the application of
such Net Cash Proceeds to repay any other Debt (other than Subordinated Debt) of
the Account Party or its Subsidiaries), PROVIDED that any such reduction that
requires the deposit of cash collateral or the delivery of a standby letter of
credit pursuant to Section 2.15(c) shall not take effect until such cash
collateral is deposited or such letter of credit is delivered (as the case may
be) pursuant to Section 2.15(c).

     (c) The Commitments shall terminate on the Termination Date, and any
Reimbursement Obligations then outstanding (together with accrued interest
thereon) shall be due and payable on such date.

     SECTION 2.3 COMMISSIONS AND FEES. (a) The Account Party agrees to pay to
the Administrative Agent for the account of each Participating Bank a commitment
fee on the average daily amount of such Participating Bank's Available
Commitment at a rate PER ANNUM equal to the Commitment Fee Rate in effect from
time to time, from the date of this Agreement until the Termination Date,
payable quarterly in

<PAGE>

                                                                              23


arrears on the last Business Day of each January, April, July and October,
commencing on the first such date to occur following the date hereof, and on the
Termination Date.

     (b) The Account Party hereby agrees to pay to the Administrative Agent, for
the account of the Participating Banks ratably in accordance with their
respective Commitment Percentages, a letter of credit commission with respect to
each Letter of Credit on the Available Amount of such Letter of Credit in effect
from time to time from the date of issuance of such Letter of Credit until the
Letter of Credit Expiration Date at a rate equal to the Letter of Credit
Commission Rate, payable quarterly in arrears on the last Business Day of
January, April, July and October in each year, commencing on the first such date
to occur following the date of issuance of the Letter of Credit, and on the
Letter of Credit Expiration Date.

     (c) The Account Party also agrees to pay to the Administrative Agent, for
the account of Administrative Agent, the Syndication Agent, the Documentation
Agent, the Participating Banks, and the Issuing Banks, such other fees as may be
agreed upon from time to time by the Account Party and such parties.

     (d) Notwithstanding anything to the contrary contained in Section 2.15, in
calculating the fees payable by the Account Party pursuant to subsections (a)
and (b) above for each quarterly period referred to therein, the Letter of
Credit Liabilities and the Available Amount in respect of each Alternative
Currency Letter of Credit outstanding from time to time during such period shall
be deemed to equal, at all times during each calendar month in such period, the
Dollar Equivalent thereof as of the first Business Day of such calendar month
(as reported to the Administrative Agent pursuant to Section 2.15(b)); PROVIDED,
HOWEVER, that (i) in the case of any Alternative Currency Letter of Credit
issued during such calendar month, the Letter of Credit Liabilities and the
Available Amount in respect thereof shall be deemed to equal, at all times
during such calendar month following the date of such issuance, the Dollar
Equivalent thereof as of such date of issuance (as reported to the
Administrative Agent pursuant to Section 2.15(b)), and (ii) in the case of any
increase or decrease in the Available Amount of any Alternative Currency Letter
of Credit during such calendar month (other than any increase or decrease
attributable solely to currency exchange rate fluctuations), the Letter of
Credit Liabilities and the Available Amount in respect thereof shall be deemed
to equal, at all times during such calendar month following the date of such
increase or decrease (as the case may be), the Dollar Equivalent thereof after
giving effect to such increase or decrease (as the case may be) (as reported to
the Administrative Agent pursuant to Section 2.15(b)).

     SECTION 2.4 REIMBURSEMENT AND OTHER PAYMENTS BY THE ACCOUNT PARTY. If any
amount is drawn under any Letter of Credit, the Account Party irrevocably and
unconditionally agrees to reimburse the applicable Issuing Bank in Dollars for
all amounts paid by such Issuing Bank upon such Drawing (which, in the case of
any Drawing under an Alternative Currency Letter of Credit, shall be the Dollar
Equivalent thereof), together with any and all reasonable charges and expenses
which any Bank may pay or incur relative to such Drawing, and all such amounts
due from the Account Party shall bear interest, payable on the date upon which
such amounts shall be due and payable, for each day from and including the date
of such Drawing to

<PAGE>

                                                                              24


but excluding the date such reimbursement payment is due and payable, at a rate
equal to the Alternate Base Rate in effect from time to time PLUS 1.0% PER
ANNUM. Such reimbursement payment, together with all accrued interest thereon,
shall be due and payable not later than 12:00 noon on the fifth Business Day
succeeding the date of such Drawing. Each Issuing Bank shall promptly notify the
Administrative Agent and the Account Party of each drawing under any Letter of
Credit issued by such Issuing Bank (and, in the case of any drawing under an
Alternative Currency Letter of Credit, the Dollar Equivalent of such drawing).

     SECTION 2.5 PARTICIPATION; REIMBURSEMENT OF ISSUING BANKS. (a) Upon the
issuance (or deemed issuance) of each Letter of Credit by an Issuing Bank under
Section 2.1, such Issuing Bank shall be deemed, without further action by any
party hereto, to have sold and transferred to each Participating Bank, and each
Participating Bank shall be deemed, without further action by any party hereto,
to have purchased and acquired from such Issuing Bank, an undivided interest and
participation in such Letter of Credit and the related Letter of Credit
Liabilities, in the amount required so that the participations of the
Participating Banks therein shall be in proportion to their respective
Commitment Percentages.

     (b) If any Issuing Bank shall not have been reimbursed in full for any
payment made by such Issuing Bank under any Letter of Credit on the date of such
payment, the Issuing Bank shall promptly notify the Administrative Agent and the
Administrative Agent shall promptly notify each Participating Bank of such
non-reimbursement, the amount thereof (which, in the case of any payment under
an Alternative Currency Letter of Credit, shall be the Dollar Equivalent
thereof) and, subject to subsection (g) below, the amount of such Participating
Bank's participation therein. Upon receipt of such notice from the
Administrative Agent, each Participating Bank shall, subject to the last
sentence of subsection (d) below and to subsection (g) below, pay to the
applicable Issuing Bank, directly, an amount equal to such Participating Bank's
ratable portion (according to such Participating Bank's Commitment Percentage)
of such unreimbursed amount paid by such Issuing Bank, plus interest on such
amount at a rate PER ANNUM equal to the Federal Funds Rate from the date of such
payment by such Issuing Bank to the date of payment to such Issuing Bank by such
Participating Bank. All such payments by each Participating Bank shall be made
in Dollars and in same day funds:

          (x) not later than 3:00 p.m. on the day such notice is received by
     such Participating Bank if such notice is received at or prior to 12:00
     noon on a Business Day; or

          (y) not later than 12:00 noon on the Business Day next succeeding the
     day such notice is received by such Participating Bank, if such notice is
     received after 12:00 noon on a Business Day.

If a Participating Bank shall have paid to the applicable Issuing Bank its
ratable portion of any unreimbursed amount paid by such Issuing Bank, together
with all interest thereon required by the second sentence of this subsection
(b), such Participating Bank shall be entitled to receive its ratable share of
all interest paid by the Account Party in respect of such unreimbursed amount
from the date paid by such


<PAGE>

                                                                              25


Issuing Bank. If such Participating Bank shall have made such payment to such
Issuing Bank, but without all such interest thereon required by the second
sentence of this subsection (b), such Participating Bank shall be entitled to
receive its ratable share of the interest paid by the Account Party in respect
of such unreimbursed amount only from the date it shall have paid all interest
required by the second sentence of this subsection (b). Each Participating Bank
shall be subrogated to the rights of the applicable Issuing Bank against the
Account Party to the extent such payment due from such Participating Bank to
such Issuing Bank is paid.

     (c) If the Account Party shall reimburse an Issuing Bank for any Drawing
after the Participating Banks shall have made funds available to such Issuing
Bank with respect to such Drawing in accordance with subsection (b) above, such
Issuing Bank shall promptly upon receipt of such reimbursement distribute to
each Participating Bank its PRO RATA share thereof (based upon such
Participating Bank's Commitment Percentage), including interest, to the extent
received by such Issuing Bank. If an Issuing Bank is required at any time
(whether before or after the Termination Date) to return to the Account Party or
to a trustee, receiver, liquidator, custodian or other similar official any
portion of the payments made by the Account Party to such Issuing Bank in
payment of any Reimbursement Obligation or interest thereon upon the insolvency
of the Account Party, or the commencement of any case or proceeding under any
bankruptcy, insolvency or other similar law with respect to the Account Party,
each Participating Bank shall, on demand of such Issuing Bank, forthwith return
to such Issuing Bank any amounts transferred to such Participating Bank by such
Issuing Bank in respect thereof pursuant to this subsection PLUS such
Participating Bank's PRO RATA share (based upon such Participating Bank's
Commitment Percentage) of any interest on such payments required to be paid to
the Person recovering such payments PLUS interest on the amount so demanded from
the day such demand is made, if such demand is made by 12:00 noon, or from the
next succeeding Business Day, if such demand is made after 12:00 noon, to but
not including the day such amounts are returned by such Participating Bank to
such Issuing Bank at a rate PER ANNUM for each day equal to (1) the Federal
Funds Rate for the day of such demand and (2) the Alternate Base Rate for each
day thereafter.

     (d) Each Participating Bank's obligation to make each payment to any
Issuing Bank, and such Issuing Bank's right to receive the same, shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, (i) any of the circumstances set
forth in Section 2.11, (ii) the occurrence or continuance of any Default or
Event of Default, (iii) the failure of any other Participating Bank to make any
payment under this Section 2.5, (iv) any set-off, counterclaim, recoupment,
defense or other right which any such Participating Bank or any other Person may
have against the Administrative Agent, any Issuing Bank or any other Person for
any reason whatsoever, (v) the termination of the Commitments or any Letter of
Credit, (vi) any adverse change in the condition (financial or otherwise) of the
Account Party or any other Person, (vii) any breach of any Loan Document by any
party thereto, (viii) the fact that any condition precedent to the issuance of,
or the making of any payment under, any Letter of Credit was not in fact met,
(ix) any violation or asserted violation of law by any Bank or any affiliate
thereof, or (x) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing. Each Participating Bank further agrees
that each such payment shall be

<PAGE>

                                                                              26


made without any set-off, abatement, withholding or reduction whatsoever.
Notwithstanding the foregoing or any other provision contained herein, in no
event shall any Participating Bank be obligated to make any payment to an
Issuing Bank to the extent that such payment would result in such Participating
Bank's Commitment Percentage of the principal amount outstanding hereunder to
exceed such Participating Bank's Commitment; PROVIDED, that the foregoing shall
not affect the obligation of the Account Party (which is absolute, unconditional
and irrevocable) to reimburse each Issuing Bank for the entire amount of each
payment made by such Issuing Bank under a Letter of Credit, including any amount
thereof that is not paid by any Participating Bank to such Issuing Bank
(pursuant to this sentence or otherwise).

     (e) The failure of any Participating Bank to make any payment to any
Issuing Bank in accordance with this Section 2.5 shall not relieve any other
Participating Bank of its obligation to make payment, but neither any Issuing
Bank nor any Participating Bank shall be responsible for the failure of any
other Participating Bank to make such payment. Nothing herein shall in any way
limit, waive or otherwise reduce any claims that any party hereto may have
against any non-performing Participating Bank.

     (f) If any Participating Bank shall fail to make any payment to any Issuing
Bank in accordance with this Section 2.5, then, in addition to other rights and
remedies which such Issuing Bank may have, the Administrative Agent is hereby
authorized, at the request of such Issuing Bank, to withhold and apply to the
payment of such amounts owing by such Participating Bank to such Issuing Bank
and any related interest, that portion of any payment received by the
Administrative Agent that would otherwise be payable to such Participating Bank.
In furtherance of the foregoing, if any Participating Bank shall fail to make
any payment to any Issuing Bank in accordance with subsection (b) above, and
such failure shall continue for five (5) Business Days following written notice
of such failure from such Issuing Bank to such Participating Bank, such Issuing
Bank may acquire, or transfer to a third party in exchange for the sum or sums
due from such Participating Bank, such Participating Bank's interest in the
related unreimbursed amounts and all other rights of such Participating Bank
hereunder in respect thereof, without, however, relieving such Participating
Bank from any liability for damages, costs and expenses suffered by such Issuing
Bank as a result of such failure. The purchaser of any such interest shall be
deemed to have acquired an interest senior to the interest of such Participating
Bank and shall be entitled to receive all subsequent payments which such Issuing
Bank or the Administrative Agent would otherwise have made hereunder to such
Participating Bank in respect of such interest.

     (g) In the event that, on the date of any Drawing, (i) the outstanding
principal amount hereunder exceeds the Maximum Outstanding Exposure, (ii) the
applicable Issuing Bank is not reimbursed by the Account Party on such date
pursuant to Section 2.4 for the entire amount of such Drawing, and (iii) the
Participating Banks, pursuant to the last sentence of subsection (d) above, are
not obligated to reimburse such Issuing Bank for the entire amount of such
Drawing, the Administrative Agent shall, solely for purposes of determining the
portion of such Drawing to be reimbursed by each Participating Bank, (A)
allocate the respective Commitments of the Participating Banks to the Letter of
Credit Liabilities of each Letter of Credit on such

<PAGE>

                                                                              27


date on a PRO RATA basis (based upon (1) the proportion of the Commitments to
the aggregate amount of the Letter of Credit Liabilities of all outstanding
Letters of Credit and (2) each Participating Bank's Commitment Percentage), (B)
based on such allocation, determine the reimbursement obligation of each
Participating Bank with respect to such Drawing and (C) promptly notify each
Participating Bank of the amount of its reimbursement obligation with respect to
such Drawing.

     SECTION 2.6 PAYMENTS AND COMPUTATIONS. (a) The Account Party shall make
each payment hereunder not later than 12:00 noon on the day when due, in each
case in lawful money of the United States to the Administrative Agent at its
address referred to in Section 8.2 in immediately available funds (except
payments to be made directly to any Issuing Bank as expressly provided herein),
without set-off, abatement, withholding, counterclaim or other deduction. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of reimbursements, principal, interest, fees or other
amounts payable to the Issuing Banks and the Participating Banks to whom the
same are payable, ratably, at its address set forth in Section 8.2 (in the case
of the Issuing Bank) or for the account of their respective lending offices (in
the case of the Participating Banks), in each case to be applied in accordance
with the terms of this Agreement. Upon the Administrative Agent's acceptance of
a Commitment Transfer Supplement and recording of the information contained
therein in the Register pursuant to Section 8.5, from and after the effective
date specified in such Commitment Transfer Supplement, the Administrative Agent
shall make all payments hereunder in respect of the interest assigned thereby to
the Purchasing Bank thereunder, and the parties to such Commitment Transfer
Supplement shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves. Notwithstanding
anything to the contrary contained herein, in no event shall any Participating
Bank make or receive any payment in an Alternative Currency.

     (b) All computations of interest based on the Alternate Base Rate, if and
so long as the Alternate Base Rate is based on the Reference Rate, shall be made
by the Administrative Agent on the basis of a year of 365 or 366 days, as the
case may be. All other computations of interest hereunder (including
computations of the Alternate Base Rate if and so long as such rate is based on
the Federal Funds Rate), and all computations of fees, commissions and other
amounts hereunder, shall be made by the Administrative Agent or the party
claiming such other amounts, as the case may be, on the basis of a year of 360
days. In each such case, such computation shall be made for the actual number of
days (including the first day, but excluding the last day) occurring in the
period for which such interest, commissions or fees are payable. Each such
determination by the Administrative Agent or a Participating Bank, as the case
may be, shall be conclusive and binding for all purposes, absent manifest error.

     (c) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest, commissions and fees hereunder.

     (d) Unless the Administrative Agent shall have received notice from the
Account Party prior to the date on which any payment is due to any Bank
hereunder
<PAGE>

                                                                              28


that the Account Party will not make such payment in full, the Administrative
Agent may assume that the Account Party has made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption, cause to be distributed to such Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent the Account
Party shall not have so made such payment in full to the Administrative Agent,
such Bank shall repay to the Administrative Agent forthwith on demand such
amount distributed to such Bank, together with interest thereon, for each day
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Administrative Agent, at the Federal Funds Rate.

     (e) If, after the Administrative Agent has paid to any Bank any amount
pursuant to subsection (a) above, such payment is rescinded or must otherwise be
returned or must be paid over by the Administrative Agent to any Person, whether
pursuant to any bankruptcy or insolvency law, Section 2.10 or otherwise, such
Bank shall, at the request of the Administrative Agent, promptly repay to the
Administrative Agent an amount equal to its ratable share of such payment,
together with any interest required to be paid by the Administrative Agent with
respect to such payment.

     (f) Unless an Issuing Bank shall have received notice from the Account
Party prior to the date on which any payment is due to any Participating Bank
hereunder that the Account Party will not make such payment in full, such
Issuing Bank may assume that the Account Party has made such payment in full to
such Issuing Bank on such date and such Issuing Bank may, in reliance upon such
assumption, cause to be distributed to such Participating Bank on such due date
an amount equal to the amount then due such Participating Bank. If and to the
extent the Account Party shall not have so made such payment in full to such
Issuing Bank, such Participating Bank shall repay to such Issuing Bank forthwith
on demand such amount distributed to such Participating Bank, together with
interest thereon, for each day from the date such amount is distributed to such
Participating Bank until the date such Participating Bank repays such amount to
such Issuing Bank, at the Federal Funds Rate.

     SECTION 2.7 DEFAULT INTEREST. Any amounts payable by the Account Party
hereunder that are not paid when due shall (to the fullest extent permitted by
law) bear interest, from the date when due until paid in full, at the Default
Rate, payable on demand.

     SECTION 2.8 REQUIREMENTS OF LAW. (a) In the event that any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Bank with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:

          (i) shall subject any Bank to any tax of any kind whatsoever with
     respect to the Letters of Credit, its participation interest therein, this
     Agreement or any other Loan Document, or change the basis of taxation of
     payments to such Bank in respect thereof (except for taxes covered by
     Section 2.9 and changes in the rate of tax on the overall net income or the
     gross receipts, as applicable, of such Bank);
<PAGE>

                                                                              29


          (ii) shall impose, modify or hold applicable any reserve, special
     deposit, compulsory loan or similar requirement against letters of credit,
     participation interests therein or other similar liabilities in or for the
     account of, or other extensions of credit by, any office of any Bank; or

          (iii) shall impose on any Bank any other condition;

and the result of any of the foregoing is to increase the cost to such Bank, by
an amount which such Bank deems to be material, of issuing or maintaining any
Letter of Credit or its participation interest therein (as the case may be) or
to reduce any amount receivable hereunder in respect thereof, then, in any such
case, the Account Party shall promptly (but in no event more than ten (10) days
after notice is received by the Account Party in respect thereof) pay such Bank,
upon its demand, any additional amounts necessary to compensate such Bank for
such increased cost or reduced amount receivable. If any Bank becomes entitled
to claim any additional amounts pursuant to this Section, it shall promptly
notify the Account Party, through the Administrative Agent, of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Bank, through the
Administrative Agent, to the Account Party shall be conclusive in the absence of
manifest error. The agreements in this Section 2.8 shall survive the termination
of this Agreement and the payment of all amounts payable hereunder.

     (b) In the event that any Bank shall have determined that any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Bank or any corporation controlling
such Bank with any request or directive regarding capital adequacy (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Bank's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Bank
or such corporation could have achieved but for such change or compliance
(taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, after submission by such Bank to the Account Party (with
a copy to the Administrative Agent) of a written request therefor, the Account
Party shall promptly (but in no event more than ten (10) days after such request
is received by the Account Party) pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction.

     (c) Each Bank will promptly notify the Account Party and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
that will entitle such Bank to compensation pursuant to this Section and will
designate a different lending office through which it issues or participates in
(as the case may be) Letters of Credit hereunder if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
<PAGE>

                                                                              29


     SECTION 2.9 TAXES. (a) All payments made by the Account Party under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, EXCLUDING, in the case of the Administrative Agent and each Bank, net
income taxes, gross receipt taxes (imposed in lieu of net income taxes) and
franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or such Bank, as the case may be, as a result of a present
or former connection between the jurisdiction of the government or taxing
authority imposing such tax and the Administrative Agent or such Bank (excluding
a connection arising solely from the Administrative Agent or such Bank having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement) (all such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions and withholdings being hereinafter called "TAXES"). If
any Taxes are required to be withheld from any amounts payable to the
Administrative Agent or any Bank hereunder, the amounts so payable to the
Administrative Agent or such Bank shall be increased to the extent necessary to
yield to the Administrative Agent or such Bank (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any Taxes are payable by the
Account Party, as promptly as possible thereafter the Account Party shall send
to the Administrative Agent for its own account or for the account of such Bank,
as the case may be, a certified copy of an original official receipt received by
the Account Party showing payment thereof. If the Account Party fails to pay any
Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Account Party shall indemnify the Administrative Agent and the
Banks for any incremental taxes, interest or penalties that may become payable
by the Administrative Agent or any Bank as a result of any such failure. The
agreements in this Section shall survive the termination of this Agreement and
all other amounts payable hereunder.

     (b) In addition, the Account Party agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made by it hereunder or under any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "OTHER TAXES").

     (c) The Account Party agrees to indemnify each Bank and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 2.9) paid by such Bank or the Administrative
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 15 days from the date such Bank or the Administrative Agent (as
the case may be) makes demand therefor.

     (d) Each Bank that is not incorporated under the laws of the United States
or a state thereof agrees that it will deliver to the Account Party and the
Administrative Agent two duly completed copies of United States Internal Revenue
Service Form W-
<PAGE>

                                                                              31


8BEN or W-8ECI or successor applicable form, as the case may be. Each such Bank
also agrees to deliver to the Account Party and the Administrative Agent two
further copies of said Form W-8BEN or W-8ECI, or successor applicable forms or
other manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Account Party or the Administrative Agent, and such extensions or renewals
thereof as may reasonably be requested by the Account Party or the
Administrative Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Bank from duly completing
and delivering any such form with respect to it and such Bank so advises the
Account Party and the Administrative Agent. Such Bank shall certify that it is
entitled to receive payments under this Agreement and the other Loan Documents
without deduction or withholding of any United States federal income taxes and
that it is entitled to an exemption from United States backup withholding tax.

     (e) For any period with respect to which a Bank has failed to provide the
Account Party with the appropriate form pursuant to subsection (d) above (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Bank shall not be entitled to indemnification under this Section 2.9 with
respect to Taxes imposed by the United States; PROVIDED, HOWEVER, that should a
Bank, which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a form required
hereunder, the Account Party shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.

     (f) If the Account Party is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 2.9, then such Bank will change
the jurisdiction of its lending office through which it issues or participates
in (as the case may be) Letters of Credit hereunder so as to eliminate or reduce
any such additional amounts that may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.

     (g) Each Bank and the Administrative Agent agrees that it will promptly,
but in any event within 30 days, after receiving notice thereof from any taxing
authority, notify the Account Party of the assertion of any liability by such
taxing authority with respect to Taxes or Other Taxes; PROVIDED, that the
failure to give such notice shall not relieve the Account Party of its
obligations under this Section 2.9 except to the extent that the Account Party
has been prejudiced by such failure and except that the Account Party shall not
be liable for penalties, interest or expenses accruing after such 30 day period
until such time as it receives the notice contemplated above, after which time
it shall be liable for interest, penalties and expenses accruing after such
receipt.

     (h) If any Bank or the Administrative Agent shall receive a credit or
refund from a taxing authority (as a result of any error in the imposition of
Tax or Other Tax by such taxing authority) with respect to and actually
resulting from an amount of such Taxes or Other Taxes paid by the Account Party
pursuant to this Section 2.9,
<PAGE>

                                                                              32


such Bank or the Administrative Agent (as the case may be) shall promptly pay to
the Account Party the amount so received (without interest thereon, whether or
not received).

     SECTION 2.10 SHARING OF PAYMENTS, ETC. If any Participating Bank shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise, but excluding any proceeds received by
assignments or sales of participations in accordance with Section 8.5 to a
Person that is not an Affiliate or Subsidiary of the Account Party) on account
of its participation interest in the Letter of Credit Liabilities or other
amounts owing to it (other than pursuant to Section 2.8 or 2.9) in excess of its
ratable share of payments on account of the participation interests or other
amounts obtained by all the Participating Banks, such Participating Bank shall
forthwith purchase from the other Participating Banks such participations in the
portions of such participation interests and other amounts owing to them as
shall be necessary to cause such purchasing Participating Bank to share the
excess payment ratably with each of them; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Participating Bank, such purchase from each Participating Bank shall be
rescinded and such Participating Bank shall repay to the purchasing
Participating Bank the purchase price to the extent of such recovery together
with an amount equal to such Participating Bank's ratable share (according to
the proportion of (i) the amount of such Participating Bank's required repayment
to (ii) the total amount so recovered from the purchasing Participating Bank) of
any interest or other amount paid or payable by the purchasing Participating
Bank in respect of the total amount so recovered. The Account Party agrees that
any Participating Bank so purchasing a participation from another Participating
Bank pursuant to this Section 2.10 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Participating Bank were the direct
creditor of the Account Party in the amount of such participation.
Notwithstanding the foregoing, if any Participating Bank shall obtain any such
excess payment involuntarily, such Participating Bank may, in lieu of purchasing
a participation from the other Participating Banks in accordance with this
Section 2.10, on the date of receipt of such excess payment, return such excess
payment to the Administrative Agent for distribution in accordance with Section
2.6.

     SECTION 2.11 OBLIGATIONS ABSOLUTE. The obligations of the Account Party
under this Agreement shall be absolute, unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement (as the same may
be amended from time to time) under all circumstances, including, without
limitation, the following circumstances:

          (a) any lack of validity or enforceability of any Loan Document, any
     Letter of Credit or any document or agreement delivered in connection
     herewith or therewith;

          (b) any change in the time, manner, or place of payment of, or in any
     other term of, all or any of the obligations of the Account Party in
     respect of any Letter of Credit or any other amendment or waiver of or any
     consent to
<PAGE>

                                                                              32


     departure from all or any of the Loan Documents or any document or
     agreement delivered in connection therewith;

          (c) the existence of any claim, set-off, defense or other right which
     the Account Party may have at any time against the beneficiary or any
     transferee of any Letter of Credit (or any Persons for whom any such
     beneficiary or transferee may be acting), the Administrative Agent, any
     Issuing Bank, any Participating Bank, or any other Person, whether in
     connection with this Agreement, the transactions contemplated in any of the
     Loan Documents, or any unrelated transaction;

          (d) any statement or any other document presented under any Letter of
     Credit proving to be forged, fraudulent, invalid or insufficient in any
     respect or any statement therein being untrue or inaccurate in any respect;

          (e) payment by an Issuing Bank under any Letter of Credit against
     presentation of a draft, document or certificate which does not comply with
     the terms of such Letter of Credit;

          (f) any exchange of, release of, or non-perfection of any interest in
     any collateral, or any release or amendment or waiver of or consent to
     departure from any guarantee, for all or any of the obligations of the
     Account Party in respect of any Letter of Credit; or

          (g) any other circumstance or happening whatsoever, whether or not
     similar to any of the foregoing.

The foregoing shall not affect the Account Party's right to assert a claim
against any Issuing Bank pursuant to Section 8.7 (and the liability of such
Issuing Bank with respect to any such claim shall be limited as set forth in
Section 8.7).

     SECTION 2.12 EVIDENCE OF INDEBTEDNESS. Each Issuing Bank and Participating
Bank shall maintain, in accordance with their usual practice, an account or
accounts evidencing the indebtedness of the Account Party resulting from each
drawing under a Letter of Credit (in the case of each Issuing Bank) and from
each participation interest therein (in the case of each Participating Bank)
made or acquired, respectively, from time to time hereunder and the amounts of
principal and interest payable and paid from time to time hereunder; PROVIDED,
that a Bank's failure to make (or any error in making) any recordation or entry
in such account or accounts shall not affect the Account Party's obligations
hereunder or under any other Loan Document.

     SECTION 2.13 EXTENSION OF THE TERMINATION DATE. At least 30 but not more
than 90 days prior to each anniversary of the date hereof (but in any event no
later than 60 days prior to the then-scheduled Termination Date), the Account
Party may, by delivering a written notice to such effect to the Administrative
Agent (each such request being irrevocable), request that each Bank consent to a
one-year extension of the Termination Date. Upon receipt of any such notice, the
Administrative Agent shall promptly communicate such request to the Banks.
Within 30 days following the giving of such notice by the Account Party, the
Banks shall indicate to the
<PAGE>

                                                                              34


Administrative Agent whether the Account Party's request to so extend the
then-scheduled Termination Date is acceptable to the Banks (and, if so, the
conditions, if any, relating to such acceptance, including conditions relating
to renewal fees payable and legal documentation), it being understood that the
unanimous written consent of the Issuing Banks and the Participating Banks shall
be required to effect any such requested extension, that the determination by
each Bank will be in its sole and absolute discretion and that the failure of
any Bank to so respond within such period shall be deemed to constitute a
refusal by such Bank to consent to such request (with the result being that such
request is denied). The Administrative Agent shall promptly notify the Account
Party and the Banks of the result of such request, and if such request shall
have been consented to by all of the Banks, upon the satisfaction of all of the
conditions for extension (including the payment of any renewal fees and the
costs and expenses of effecting the extension of the Termination Date), and
provided that no Default shall have occurred and then be continuing, the
Termination Date shall be extended to the first anniversary of the
then-scheduled Termination Date; PROVIDED, HOWEVER, that the Termination Date
shall be so extended notwithstanding the existence of one or more Issuing Banks
(the "NONEXTENDING ISSUING BANKS") that have elected not to extend (or failed to
notify the Administrative Agent of its (or their) consent to extend) if each
such Nonextending Issuing Bank has been terminated as an Issuing Bank hereunder,
and all Letters of Credit issued (or deemed issued) by such Nonextending Issuing
Bank have been cancelled or replaced by new Letters of Credit issued by one or
more other Issuing Banks pursuant to the terms hereof.

     SECTION 2.14 CASH COLLATERAL ACCOUNT; LETTER OF CREDIT IN LIEU OF CASH
COLLATERAL. (a) All amounts required to be deposited as cash collateral with the
Administrative Agent pursuant to Section 2.15(c) or Section 6.2 shall be
deposited in a cash collateral account (the "CASH COLLATERAL ACCOUNT")
established by the Account Party with the Administrative Agent and under the
exclusive dominion and control of the Administrative Agent, to be held, applied
or released for application as provided in this Section 2.14.

     (b) If and when any portion of the Letter of Credit Liabilities on which
any deposit of cash collateral was based (the "RELEVANT CONTINGENT EXPOSURE")
shall become fixed (a "DIRECT EXPOSURE") as a result of the payment by an
Issuing Bank of a draft presented under any relevant Letter of Credit (including
any such payment under an Alternative Currency Letter of Credit for which the
relevant Issuing Bank, as a result of fluctuations in currency exchange rates,
is not reimbursed in full by the Participating Banks), the amount of such Direct
Exposure (but not more than the amount in the Cash Collateral Account at the
time) shall be withdrawn by the Administrative Agent from the Cash Collateral
Account and shall be paid to the relevant Issuing Bank to be applied against
such Direct Exposure and the Relevant Contingent Exposure shall thereupon be
reduced by such amount.

     (c) Interest and other payments and distributions made on or with respect
to the cash collateral held by the Administrative Agent shall be for the account
of the Account Party and shall constitute cash collateral to be held by the
Administrative Agent or returned to the Account Party in accordance with Section
2.15(d); PROVIDED that the Administrative Agent shall have no obligation to
invest any cash collateral on behalf of the Account Party or any other Person.
Beyond the exercise of reasonable
<PAGE>

                                                                              35


care in the custody thereof, the Administrative Agent shall have no duty as to
any cash collateral in its possession or control or in the possession or control
of any agent or bailee or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The Administrative
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the cash collateral in its possession if the cash collateral is
accorded treatment substantially equal to that which it accords its own
property, and shall not be liable or responsible for any loss or damage to any
of the cash collateral, or for any diminution in the value thereof, by reason of
the act or omission of any agent or bailee selected by the Administrative Agent
in good faith. All expenses and liabilities incurred by the Administrative Agent
in connection with taking, holding and disposing of any cash collateral
(including customary custody and similar fees with respect to any cash
collateral held directly by the Administrative Agent) shall be paid by the
Account Party from time to time upon demand. Upon a Default, the Administrative
Agent shall be entitled to apply (and, at the request of the Required Banks but
subject to applicable law, shall apply) cash collateral or the proceeds thereof
to payment of any such expenses, liabilities and fees.

     (d) Notwithstanding the foregoing subsections of this Section 2.14 or any
other provision contained herein, the Account Party shall be required to comply
with the foregoing subsections of this Section 2.14 and the requirements set
forth in Sections 2.15(c) and 6.2 to provide cash collateral only to the extent
that such compliance and such requirements are not prohibited by the Existing
Credit Facility.

     (e) If and to the extent that the Existing Credit Facility prohibits the
Account Party from providing cash collateral pursuant to this Section 2.14 or if
the Account Party otherwise so elects, the Account Party shall, pursuant to
Sections 2.15(c) and 6.2, deliver to the Administrative Agent an irrevocable
standby letter of credit in lieu of such cash collateral. If and when any
portion of the Letter of Credit Liabilities on which any delivery of such a
letter of credit was based (the "RELEVANT LC CONTINGENT EXPOSURE") shall become
fixed (a "DIRECT LC EXPOSURE") as a result of the payment by an Issuing Bank of
a draft presented under any relevant Letter of Credit (including any such
payment under an Alternative Currency Letter of Credit for which the relevant
Issuing Bank, as a result of fluctuations in currency exchange rates, is not
reimbursed in full by the Participating Banks), the Administrative Agent shall
be entitled to draw under such standby letter of credit an amount equal to such
Direct LC Exposure and shall pay such amount to the relevant Issuing Bank to be
applied against such Direct LC Exposure and the Relevant LC Contingent Exposure
shall thereupon be reduced by such amount.

     SECTION 2.15 COMPUTATIONS OF OUTSTANDINGS; DETERMINATION OF AVAILABLE
AMOUNT OF ALTERNATIVE CURRENCY LETTERS OF CREDIT. (a) Whenever reference is made
in this Agreement to the principal amount outstanding on any date under this
Agreement, such reference shall refer to the aggregate Letter of Credit
Liabilities of all Letters of Credit outstanding on such date, after giving
effect to all Extensions of Credit to be made on such date. For purposes of
calculating the principal amount outstanding hereunder on any date of
determination, the aggregate Available Amount in respect of all Alternative
Currency Letters of Credit shall be deemed to equal the amount thereof most
recently reported to the Administrative Agent pursuant to subsection (b) below.
At no time shall the principal amount outstanding under this Agreement exceed
the sum of (i) the
<PAGE>

                                                                              36


aggregate amount of the Commitments, PLUS (ii) the aggregate amount of cash
collateral held by the Administrative Agent in the Cash Collateral Account, PLUS
(iii) the aggregate stated amount of all outstanding irrevocable standby letters
of credit delivered to the Administrative Agent pursuant to Section 2.14(e)
(such sum being referred to herein as the "MAXIMUM OUTSTANDING EXPOSURE").
References to the unused portion of the Commitments shall refer to the excess,
if any, of the Commitments over the principal amount outstanding hereunder; and
references to the unused portion of any Participating Bank's Commitment shall
refer to such Participating Bank's Commitment Percentage of the unused
Commitments.

     (b) Each Issuing Bank that issues an Alternative Currency Letter of Credit
shall (i) on the first Business Day of each calendar month, deliver to the
Administrative Agent a schedule listing (A) each outstanding Alternative
Currency Letter of Credit issued by such Issuing Bank, (B) the maximum aggregate
amount available to be drawn under each such Alternative Currency Letter of
Credit at any time on or after such date (denominated in the applicable
Alternative Currency), assuming the compliance with and satisfaction of all
conditions for drawing enumerated therein, and (C) the equivalent in Dollars of
such amount (as determined by such Issuing Bank on the basis of exchange rates
available to or otherwise used by such Issuing Bank), together with the
applicable exchange rate utilized by such Issuing Bank and the source thereof,
(ii) on the date of issuance of any Alternative Currency Letter of Credit
(including, if any Alternative Currency Letters of Credit are issued or deemed
issued on the Closing Date, on the Closing Date), deliver to the Administrative
Agent a schedule listing the information described in clauses (B) and (C) above,
(iii) on the date of any increase or decrease in the Available Amount of any
Alternative Currency Letter of Credit (other than any increase or decrease
attributable solely to currency exchange rate fluctuations), deliver to the
Administrative Agent a schedule listing the information described in clauses (B)
and (C) above after giving effect to such increase or decrease (as the case may
be), and (iv) not later than one Business Day after its receipt of a written
request therefor from the Administrative Agent or any Participating Bank,
deliver to the Administrative Agent a schedule listing the information described
in clauses (A), (B) and (C) above. The Administrative Agent shall promptly after
its receipt thereof deliver a copy of each such schedule to the Account Party
and the Participating Banks. For all purposes under this Agreement, unless
otherwise expressly set forth herein, the Available Amount in respect of each
Alternative Currency Letter of Credit shall be deemed to equal, on any date of
determination, the Dollar Equivalent thereof as most recently reported to the
Administrative Agent by the relevant Issuing Bank pursuant to this subsection
(b).

     (c) If, on (i) the date that any schedule is delivered by an Issuing Bank
to the Administrative Agent pursuant to subsection (b) above, (ii) any date,
after giving effect to any reduction in the Commitments pursuant to Section
2.2(b) or (c), or (iii) any other date, the aggregate principal amount
outstanding hereunder on such date (calculated pursuant to subsections (a) and
(b) above) exceeds the Maximum Outstanding Exposure, then within two Business
Days thereafter (A) the Account Party shall be obligated (but only to the extent
not prohibited under the Existing Credit Facility) to deposit cash collateral
with the Administrative Agent in the Cash Collateral Account in an amount equal
to such excess to be held, applied or released for application as provided in
Section 2.14, or (B) if such deposit of cash collateral is prohibited by the
Existing Credit Facility or if the Account Party otherwise so elects,
<PAGE>

                                                                              37


the Account Party shall be obligated to deliver to the Administrative Agent (for
the benefit of the Issuing Banks and the Participating Banks) an irrevocable
standby letter of credit (issued pursuant to the Existing Credit Facility or any
other credit facility or agreement (other than this Agreement) to which the
Account Party is a party) having a stated amount equal to such excess, which
letter of credit shall be issued by a commercial bank, and shall be in form and
substance, satisfactory to the Administrative Agent.

     (d) If at any time the Maximum Outstanding Exposure exceeds the principal
amount outstanding hereunder, the Account Party may provide a written notice to
the Administrative Agent requesting the Administrative Agent to (1) withdraw
such excess amount from the Cash Collateral Account and pay such amount to the
Account Party and/or (2) reduce the stated amount of, or cancel, one or more of
such standby letters of credit (in an aggregate amount not to exceed such
excess), and, provided that no Default shall have occurred and be continuing,
the Administrative Agent shall promptly undertake such actions in accordance
with the instructions of the Account Party. If a Default shall have occurred and
be continuing, the Administrative Agent shall not take any of the foregoing
actions and, if and when requested by the Required Banks, the amounts held in
the Cash Collateral Account shall be withdrawn by the Administrative Agent, and
the Administrative Agent shall draw upon such standby letters of credit, and the
proceeds thereof shall be applied by the Administrative Agent FIRST to repay the
Reimbursement Obligations and other due and unpaid amounts required to be paid
by the Account Party hereunder and SECOND, so long as no Letters of Credit are
then outstanding, any remaining amounts shall be paid to the Account Party.

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

     The Account Party hereby represents and warrants to the Administrative
Agent, each Issuing Bank and each Participating Bank that:

     SECTION 3.1. CORPORATE EXISTENCE AND POWER. The Account Party is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.

     SECTION 3.2. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION.
The execution, delivery and performance by the Account Party of the Loan
Documents to which it is a party are within the Account Party's corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of the Account Party or of any agreement, judgment, injunction, order, decree or
other instrument binding upon
<PAGE>

                                                                              38


the Account Party or any of its Subsidiaries or result in the creation or
imposition of any Lien on any asset of the Account Party or of any Material AES
Entity.

     SECTION 3.3. BINDING EFFECT. This Agreement constitutes a valid and binding
agreement of the Account Party and each other Loan Document to which the Account
Party is a party, when executed and delivered in accordance with this Agreement,
will constitute a valid and binding obligation of the Account Party, in each
case enforceable in accordance with its terms. This Agreement has been, and each
other Loan Document to which the Account Party is a party when executed and
delivered in accordance with this Agreement will be, duly executed and delivered
by the Account Party.

     SECTION 3.4. FINANCIAL INFORMATION

     (a) The consolidated balance sheet of the Account Party and its
Consolidated Subsidiaries as of December 31, 1998 and the related consolidated
statements of operations and cash flows for the fiscal year then ended, reported
on by Deloitte & Touche LLP and set forth in the AES 1998 Form 10-K, a copy of
which has been delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated financial
position of the Account Party and its Consolidated Subsidiaries as of such date
and their consolidated results of operations and cash flows for such fiscal
year.

     (b) The unaudited consolidated balance sheet of the Account Party and its
Consolidated Subsidiaries as of June 30, 1999 and the related unaudited
consolidated statements of operations and cash flows for the fiscal quarter and
the portion of the Account Party's fiscal year then ended, set forth in the AES
June 1999 Form 10-Q, a copy of which has been delivered to each of the Banks,
fairly present, in conformity with generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
subsection (a) of this Section, the consolidated financial position of the
Account Party and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal quarter and
portion of such fiscal year (subject to normal year-end adjustments).

     (c) Since December 31, 1998 there has been no material adverse change in
the business, financial position, results of operations or prospects of the
Account Party and its Consolidated Subsidiaries, considered as a whole.

     SECTION 3.5 LITIGATION. Except as disclosed in the AES June 1999 Form 10-Q,
there is no action, suit or proceeding pending against, or to the knowledge of
the Account Party threatened against or affecting, the Account Party or any of
its Subsidiaries before any court or arbitrator or any governmental body, agency
or official in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Account Party and its
Consolidated Subsidiaries or which in any manner draws into question the
validity of any Loan Document.
<PAGE>

                                                                              39


     SECTION 3.6 COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the currently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability in excess of $100,000 under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.

     SECTION 3.7 ENVIRONMENTAL MATTERS. In the ordinary course of its business,
each of the Account Party and its Subsidiaries conducts an ongoing review of the
effect of Environmental Laws on the business, operations and properties of the
Account Party or such Subsidiary, in the course of which it identifies and
evaluates associated liabilities and costs (including, without limitation, any
capital or operating expenditures required for clean-up or closure of properties
presently or previously owned, any capital or operating expenditures required to
achieve or maintain compliance with environmental protection standards imposed
by law or as a condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or permanent
shutdown of any facility or reduction in the level of or change in the nature of
operations conducted thereat, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Substances by the Account Party or its
Subsidiaries, and any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). On the basis of this
review, the Account Party has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Account Party and its
Consolidated Subsidiaries, considered as a whole.

     SECTION 3.8 TAXES. United States Federal income tax returns of the Account
Party and its Subsidiaries have been examined and closed through the fiscal year
ended December 31, 1992. The Account Party and its Subsidiaries have filed all
United States Federal income tax returns and the Account Party and all Material
AES Entities have filed all other material tax returns which are required to be
filed by them and have paid all taxes due as indicated on such returns or
pursuant to any assessment received by the Account Party or any of its
Subsidiaries or any Material AES Entity other than any such taxes that are being
diligently contested in good faith through appropriate proceedings and for which
adequate reserves have been established in accordance with generally accepted
accounting principals. The charges, accruals and reserves on the books of the
Account Party, its Subsidiaries and all Material AES Entities in respect of
taxes or other governmental charges are, in the opinion of the Account Party,
adequate.
<PAGE>

                                                                              40


     SECTION 3.9 MATERIAL AES ENTITIES. Each Material AES Entity is a
corporation duly incorporated, validly existing and (other than any Material AES
Entity that is not incorporated under the laws of the United States or any
political subdivision thereof) in good standing under the laws of its
jurisdiction of incorporation. Each Material AES Entity has all corporate powers
and all material governmental licenses, authorization, consents and approvals
required to carry on its business as proposed to be conducted and has all
governmental licenses, authorizations, consents and approvals required to have
been obtained prior to the date hereof and which are material to the operation
of its business as proposed to be conducted, except to the extent that the
failure to obtain any such license, authorization, consent or approval,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect upon the business, financial condition, operations,
property and prospects of the Account Party and its Consolidated Subsidiaries,
taken as a whole.

     SECTION 3.10 NOT AN INVESTMENT COMPANY. The Account Party is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

     SECTION 3.11 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Account Party
nor any of its Subsidiaries is subject to regulation as a "holding company" or a
"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 the Public
Utility Holding Company Act of 1935, as amended ("PUHCA"), except that the
Account Party, its subsidiary in the United Kingdom (Applied Energy Services
Electric Limited) and certain other Subsidiaries of the Account Party, are
exempt holding companies under Section 3(a)(5) of PUHCA by order of the
Securities and Exchange Commission.

     SECTION 3.12 FULL DISCLOSURE. All information heretofore furnished by the
Account Party to the Administrative Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Account Party to the
Administrative Agent or any Bank will be, true and accurate in all material
respects on the date as of which such information is stated or certified. The
Account Party has disclosed to the Banks in writing any and all facts which
materially and adversely affect or may affect (to the extent the Account Party
can now reasonably foresee), the business, operations or financial condition of
the Account Party and its Consolidated Subsidiaries, taken as a whole, or the
ability of the Account Party to perform its obligations under the Loan
Documents.

     SECTION 3.13 YEAR 2000 COMPLIANCE. The Account Party has (i) initiated a
review and assessment of all areas within the business and operations of the
Account Party and its Subsidiaries (including those areas affected by suppliers
and vendors) that could be adversely affected by the "YEAR 2000 PROBLEM" (that
is, the risk that computer applications used by them (or their respective
suppliers and vendors) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis and (iii) to date,
<PAGE>

                                                                              41


implemented such plan in accordance with such timetable, except to the extent
that the failure to do so could not reasonably be expected to have a material
adverse effect upon the business, financial position or results of operations of
the Account Party and its Consolidated Subsidiaries, taken as a whole. The
Account Party reasonably believes that all computer applications (including
those of suppliers and vendors) that are material to the business or operations
of the Account Party and its Subsidiaries will on a timely basis be able to
perform properly date-sensitive functions for all dates before and from and
after January 1, 2000 (that is, be "YEAR 2000 COMPLIANT"), except to the extent
that the failure to do so could not reasonably be expected to have a material
adverse effect upon the business, financial position or results of operations of
the Account Party and its Consolidated Subsidiaries, taken as a whole.

                                    ARTICLE 4
                              CONDITIONS PRECEDENT

     SECTION 4.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT. The
effectiveness of this Agreement and the obligation of any Issuing Bank to issue
any Letter of Credit on the Closing Date is subject to the fulfillment of the
following conditions precedent:

     (a) LOAN DOCUMENTS. The Administrative Agent shall have received on or
before the Closing Date the following, each dated on or as of the Closing Date,
in form and substance satisfactory to the Administrative Agent, and (except for
the Agency Fee Letter referred to in clause (iii) below) in sufficient copies
for each Participating Bank:

          (i) Counterparts of this Agreement, duly executed by the Account
     Party, with a counterpart for each Participating Bank;

          (ii) Issuing Bank Agreements, duly executed by the Account Party and
     each of Union Bank, Morgan and the other Issuing Banks listed in Schedule
     IV, in form and substance satisfactory to the Administrative Agent; and

          (iii) the Agency Fee Letter between the Account Party and the
     Administrative Agent, duly executed by the Account Party.

     (b) CORPORATE DOCUMENTS AND PROCEEDINGS. The Administrative Agent shall
have received on or before the Closing Date a certificate of the Secretary or an
Assistant Secretary of the Account Party, dated the Closing Date, in form and
substance satisfactory to the Administrative Agent and in sufficient copies for
each Participating Bank, certifying:

          (i) the names and true signatures of the officers of the Account Party
     authorized to sign each Loan Document to which it is a party and the other
     documents to be delivered by the Account Party hereunder;

          (ii) that attached thereto are true, correct and complete copies of
     (A) the Certificate of Incorporation and By-laws of the Account Party, in
     each case
<PAGE>

                                                                              42


     together with all amendments thereto, as in effect on such date; (B) the
     resolutions of the Board of Directors of the Account Party approving each
     Loan Document to which it is a party and the other documents to be
     delivered by or on behalf of the Account Party hereunder and thereunder;
     and (C) all documents evidencing other necessary corporate or other similar
     action, if any, with respect to the execution, delivery and performance by
     the Account Party of each Loan Document to which it is a party;

          (iii) that the resolutions referred to in the foregoing clause (ii)(B)
     have not been modified, revoked or rescinded and are in full force and
     effect on such date; and

          (iv) that attached thereto are true and correct copies of good
     standing certificates of the Account Party from the Secretary of State (or
     other appropriate governmental official) of the State of Delaware and the
     Commonwealth of Virginia.

     (c) REPRESENTATIONS AND WARRANTIES; EVENT OF DEFAULT. The Administrative
Agent shall have received on or before the Closing Date a certificate of a duly
authorized officer of the Account Party, dated the Closing Date, in form and
substance satisfactory to the Administrative Agent and in sufficient copies for
each Participating Bank, certifying that, on and as of the Closing Date, (i) the
representations and warranties of the Account Party contained in Article 3 of
this Agreement are true and correct and (ii) no event has occurred and is
continuing that constitutes a Default or an Event of Default, in each case both
before and after giving effect to the transactions contemplated by the Loan
Documents.

     (d) NO VIOLATION. The consummation of the transactions contemplated by the
Loan Documents shall not contravene, violate or conflict with, nor involve the
Administrative Agent, any Issuing Bank or any Participating Bank in any
violation of, any Requirement of Law.

     (e) FEES AND EXPENSES. All fees and other amounts payable pursuant to
Section 2.3, Section 8.4, and the Agency Fee Letters shall have been paid in
full (to the extent then due and payable).

     (f) LEGAL OPINIONS. The Administrative Agent shall have received, with a
counterpart for each Participating Bank, the executed legal opinions of (i)
William R. Luraschi, Esq., General Counsel to the Account Party, in
substantially the form of Exhibit C, (ii) Davis Polk & Wardwell, special New
York counsel to the Account Party, in substantially the form of Exhibit D, and
(iii) McDermott, Will & Emery, special counsel to the Administrative Agent, in
substantially the form of Exhibit E. Such legal opinions shall be dated the
Closing Date and shall cover such other matters incident to the transactions
contemplated by the Loan Documents as the Administrative Agent may reasonably
require.

     (g) ADDITIONAL MATTERS. All corporate and other proceedings, and all
approvals, documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be
<PAGE>

                                                                              43


satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other approvals, opinions and
documents in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as the Administrative Agent shall reasonably
request.

     SECTION 4.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. The
obligation of each Issuing Bank to issue any Letter of Credit or to make any
other Extension of Credit shall be subject to the further conditions precedent
that, on the date of issuance (or deemed issuance) of such Letter of Credit or
the date of such other Extension of Credit, as the case may be, and after giving
effect thereto:

          (a) The following statements shall be true (and each of the giving of
     the applicable notice or request with respect thereto and the making of
     such Extension of Credit shall constitute a representation and warranty by
     the Account Party that, on the date of such Extension of Credit, such
     statements are true):

               (i) the representations and warranties contained in Article 3 of
          this Agreement are true and correct on and as of the date of such
          Extension of Credit, before and after giving effect to such Extension
          of Credit, as though made on and as of such date; and

               (ii) no Default has occurred and is continuing, or would result
          from such Extension of Credit.

          (b) The Administrative Agent shall have received such other approvals,
     opinions and documents as any Bank, through the Administrative Agent, may
     reasonably and in good faith request, and such approvals, opinions and
     documents shall be in form and substance satisfactory to the Administrative
     Agent.

     SECTION 4.3 RELIANCE ON CERTIFICATES. The Administrative Agent, the Issuing
Banks and the Participating Banks shall be entitled to rely conclusively upon
the certificates delivered from time to time by officers of the Account Party as
to the names, incumbency, authority and signatures of the respective persons
named therein until such time as the Administrative Agent may receive a
replacement certificate, in form acceptable to the Administrative Agent, from an
officer of the Account Party identified to the Administrative Agent as having
authority to deliver such certificate, setting forth the names and true
signatures of the officers and other representatives of the Account Party
thereafter authorized to act on behalf of the Account Party and, in all cases,
the Administrative Agent, the Issuing Banks and the Participating Banks may rely
on the information set forth in any such certificate.

                                    ARTICLE 5
                                    COVENANTS

     The Account Party agrees that, so long as any Participating Bank has any
Commitment hereunder or any Letter of Credit or Reimbursement Obligation remains
outstanding:
<PAGE>

                                                                              44


     SECTION 5.1 INFORMATION. The Account Party will deliver to the
Administrative Agent and each of the Participating Banks:

     (a) as soon as available and in any event within 120 days after the end of
each fiscal year of the Account Party, a consolidated and consolidating balance
sheet of the Account Party as of the end of such fiscal year, an unconsolidated
balance sheet of the Account Party as of the end of such fiscal year, the
related consolidated, consolidating and unconsolidated (as applicable)
statements of operations for such fiscal year, the related consolidated and
unconsolidated statements of cash flows for such fiscal year and a statement of
the cash flow to the Account Party of each Subsidiary of the Account Party for
such fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, said consolidated financial statements to be reported
on, in a manner acceptable to the Securities and Exchange Commission, by
Deloitte & Touche LLP or other independent public accountants of nationally
recognized standing and such consolidating and unconsolidated financial
statements to be certified as to fairness of presentation, generally accepted
accounting principles (other than failure to consolidate) and consistency by the
chief executive officer, president, chief financial officer or chief accounting
officer of the Account Party;

     (b) as soon as available and in any event within 60 days after the end of
each of the first three quarters of each fiscal year of the Account Party, a
consolidated balance sheet of the Account Party as of the end of such quarter
and an unconsolidated balance sheet of the Account Party as of the end of such
fiscal quarter and the related consolidated and unconsolidated statements of
operations for such quarter and for the portion of the Account Party's fiscal
year ended at the end of such quarter and the related consolidated and
unconsolidated statements of cash flows for the portion of the Account Party's
fiscal year ended at the end of such quarter, and a statement of the cash flow
to the Account Party of each Subsidiary of the Account Party for such quarter
and for the portion of the Account Party's fiscal year ended at the end of such
quarter, setting forth in the case of such consolidated statements of operations
and cash flows, in comparative form, the figures for the corresponding quarter
and the corresponding portion of the Account Party's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by the
chief executive officer, president, chief financial officer or chief accounting
officer of the Account Party;

     (c) simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate of the chief executive
officer, president, chief financial officer or chief accounting officer of the
Account Party (i) setting forth in reasonable detail the calculations required
to establish whether the Account Party was in compliance with the requirements
of Sections 5.7, 5.8, 5.9, 5.11, 5.13, 5.15, 5.16 and 5.18 on the date of such
financial statements, (ii) stating to the knowledge of the Account Party whether
any Default exists on the date of such certificate and, if any Default then
exists, setting forth the details thereof and the action which the Account Party
is taking or proposes to take with respect thereto and (iii) accompanied by a
schedule setting forth in reasonable detail a description, including, where
applicable, the expected and maximum dollar amounts thereof, of all material
contingent liabilities not disclosed in such financial statements;
<PAGE>

                                                                              45


     (d) simultaneously with the delivery of each set of financial statements
referred to in clause (a) above, a statement of the firm of independent public
accountants which reported on such statements (i) whether anything has come to
their attention as a result of their audit (which was not directed primarily
toward obtaining knowledge of noncompliance) to cause them to believe that the
Account Party has failed to comply with the terms, covenants, provisions or
conditions as they relate to accounting of financial matters addressed in
Sections 5.7 to 5.17, inclusive, and (ii) confirming the calculations set forth
in the officer's certificate delivered simultaneously therewith pursuant to
clause (c) above;

     (e) within five days after any officer of the Account Party obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the chief executive officer, president, executive vice-president or chief
financial officer of the Account Party setting forth the details thereof and the
action which the Account Party is taking or proposes to take with respect
thereto;

     (f) promptly upon the mailing thereof to the shareholders of the Account
Party generally, copies of all financial statements, reports and proxy
statements so mailed;

     (g) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their equivalents)
which the Account Party shall have filed with the Securities and Exchange
Commission;

     (h) if and when any member of the ERISA Group (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security, a certificate of the chief executive
officer, president, chief financial officer or chief accounting officer of the
Account Party setting forth details as to such occurrence and the action, if
any, which the Account Party or the applicable member of the ERISA Group is
required or proposes to take;
<PAGE>

                                                                              46


     (i) not less than 10 days prior to the anticipated receipt by the Account
Party or any Subsidiary of the Account Party of Net Cash Proceeds from any Asset
Disposition, a certificate of the chief executive officer, president, chief
financial officer or chief accounting officer of the Account Party setting forth
a description of the transaction giving rise to such Net Cash Proceeds, the date
or dates upon which such Net Cash Proceeds are anticipated to be received by the
Account Party or such Subsidiary and the amount of Net Cash Proceeds anticipated
to be received on such date or each of such dates;

     (j) promptly after receipt by the Account Party or any Subsidiary of the
Account Party or any Material AES Entity, a copy of each complaint, order,
citation, notice or other written communication from any Person with respect to
the existence or alleged existence of a material violation of any applicable
Environmental Law or the incurrence of any liability, obligation, loss, damage,
cost, expense, fine, penalty or sanction or the requirement to commence any
remedial action resulting from or in connection with any air emission, water
discharge, noise emission, Hazardous Substance or any other environmental,
health or safety matter at, upon, under or within any of the properties now or
previously owned, leased or operated by the Account Party, any of its
Subsidiaries or any Material AES Entity, or due to the operations or activities
of the Account Party, any Subsidiary of the Account Party, any Material AES
Entity or any other Person on or in connection with any such property or any
part thereof; and

     (k) from time to time such additional information regarding the financial
position or business of the Account Party and its Subsidiaries as the
Administrative Agent, at the request of any Participating Bank, may reasonably
request.

     SECTION 5.2 PAYMENT OF OBLIGATIONS. The Account Party will pay and
discharge all its material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested in good
faith by appropriate proceedings, and will maintain, and will cause each of its
Subsidiaries to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.

     SECTION 5.3 MAINTENANCE OF PROPERTY; INSURANCE. (a) The Account Party will
keep, and will cause each of its Subsidiaries to keep, all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted.

     (b) The Account Party will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Account Party or in such Subsidiary's own
name), with financially sound and responsible insurance companies, insurance of
such types, in at least such amounts and against at least such risks (and with
such risk retention) as are usually insured against in similar circumstances in
the same general area by companies of established repute engaged in the same or
a similar business; and will furnish to each Bank upon request information
presented in reasonable detail as to the insurance so carried.
<PAGE>

                                                                              47


     SECTION 5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Account
Party (a) will continue, and will cause each Material AES Entity to continue, to
engage in business of the same general type as now conducted by the Account
Party and its Subsidiaries, (b) will continue, and will cause each Material AES
Entity to continue, to operate their respective businesses on a basis
substantially consistent with the policies and standards of the Account Party or
such Material AES Entity as in effect on the date hereof and (c) will preserve,
renew and keep in full force and effect, and will cause each Material AES Entity
to preserve, renew and keep in full force and effect, their respective corporate
existence and their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; PROVIDED that nothing in this
Section 5.4 shall prohibit (i) the merger of a Subsidiary of the Account Party
into the Account Party or the merger or consolidation of any such Subsidiary
with or into another Person if the corporation surviving such consolidation or
merger is a Subsidiary of the Account Party and if, in each case, after giving
effect thereto, (x) no Default shall have occurred and be continuing and (y) the
Account Party shall not be liable for any Debt of such Subsidiary except to the
extent that it was liable for such Debt prior to giving effect to such merger or
(ii) the termination of the corporate existence of any Subsidiary of the Account
Party if the Account Party in good faith determines that such termination is in
the best interest of the Account Party and is not materially disadvantageous to
the Banks.

     SECTION 5.5 COMPLIANCE WITH LAWS. The Account Party will comply, and cause
each of its Subsidiaries to comply, in all material respects with all applicable
laws, ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder) (a) except for such non-compliance as would
result solely in the payment of monetary compensation by the Account Party or
such Subsidiary in an amount not to exceed $200,000 for each such non-compliance
and (b) except where the necessity of compliance therewith is contested in good
faith by appropriate proceedings.

     SECTION 5.6 INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Account Party
will keep, and will cause each of its Subsidiaries to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Significant AES Entity to permit, representatives of
any Bank at such Bank's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.

     SECTION 5.7 DEBT. (a) The Account Party shall not, and shall not permit any
of its Subsidiaries to, incur, assume, create or suffer to exist any Debt
(including any Guarantees of Debt, surety bonds and obligations in respect of
letters of credit), except for:

          (i) Debt under the Loan Documents and any Guarantees thereof;
<PAGE>

                                                                              48


          (ii) Debt incurred by a Subsidiary (A) (1) to finance the development,
     acquisition, construction, operation, maintenance or working capital
     requirements of a Power Project or any unrelated business operated or
     managed (including on a joint basis with others), directly or indirectly,
     by the Account Party and in which such Subsidiary has a direct or indirect
     interest or (2) in respect of any letter of credit issued in replacement of
     funds on deposit in any debt service reserve or other similar account of a
     Power Project in which such Subsidiary has a direct or indirect interest
     (up to a maximum aggregate stated amount of all such letters of credit of
     all Subsidiaries equal to $100,000,000) to the extent that such funds so
     replaced are received by the Account Party as a result of such funds being
     used to pay dividends or make distributions on the capital stock of such
     Subsidiary and any other Subsidiary in the chain of ownership between the
     Account Party and such Subsidiary and (B) that is not also the Debt of, or
     Guaranteed by, any other Subsidiary with an interest in any other Power
     Project or unrelated business (except for Debt incurred or assumed by
     Subsidiaries of the Account Party (other than Specified Subsidiaries)
     which, at the time such Debt was incurred or assumed, in the aggregate,
     represent less than 50% of the Parent Operating Cash Flow (other than
     Parent Operating Cash Flow attributable to Specified Subsidiaries) for the
     immediately preceding four fiscal quarters);

          (iii) Debt existing on the date hereof (other than Debt under the
     Existing Credit Facility);

          (iv) Debt under the Existing Credit Facility; PROVIDED, HOWEVER, that
     the aggregate principal amount of such Debt at any time outstanding, and
     the aggregate amount of commitments under the Existing Credit Facility,
     shall not exceed $650,000,000 UNLESS (A) the Subsidiary Guaranties are
     irrevocably released or terminated in their entirety (so that the Existing
     Credit Facility does not have the benefit of any Guarantees) or (B) the
     Account Party's obligations hereunder and under the other Loan Documents
     are equally and ratably guaranteed by the Subsidiary Guarantors pursuant to
     guaranty agreements in form and substance substantially similar to the
     Subsidiary Guaranties;

          (v) Debt owing to the Account Party or a Consolidated Subsidiary of
     the Account Party;

          (vi) Debt of the Account Party or its Subsidiaries representing a
     refinancing, replacement or refunding of Debt permitted by clauses (ii) and
     (iii) above; PROVIDED that (A) the aggregate principal amount of such Debt
     outstanding or available will not be increased at the time of such
     refinancing, replacement or refunding (other than (1) in the case of Debt
     ("HAWAII REFINANCING DEBT") refinancing, replacing or refunding Debt of AES
     Hawaii, Inc. outstanding on May 15, 1997 ("REPLACED HAWAII DEBT") (so long
     as such Hawaii Refinancing Debt has no scheduled principal repayments, or
     principal payments at the option of the holder thereof in the absence of
     the occurrence of specified events, in any such case in excess of those
     required under the Replaced Hawaii Debt, prior to June 1, 2004), an
     increase of up to $300,000,000 in excess of the aggregate principal amount
     of Debt that is being
<PAGE>

                                                                              49


     refinanced, replaced or refunded to the extent that proceeds in at least
     the amount of such increase are received by the Account Party as a result
     of such proceeds being used to pay dividends or make distributions on the
     capital stock of such Subsidiary and any other Subsidiary in the chain of
     ownership between the Account Party and such Subsidiary, (2) in the case of
     Debt refinancing, replacing or refunding Debt of the corporations or other
     entities that hold the Account Party's interest in the Tiszai II and
     Tiszaipalkonya Power Projects (including, without limitation, Debt of a
     Subsidiary of the Account Party that does not have a direct or indirect
     interest in any other Power Project, the proceeds of which are used to
     refinance such Debt of such corporations or other entities and to pay
     dividends to the Account Party) outstanding on October 21, 1997, an
     increase of up to $85,000,000 in excess of the aggregate principal amount
     of Debt that is being refinanced, replaced or refunded to the extent that
     proceeds of at least $45,000,000 are received by the Account Party as a
     result of such proceeds being used to pay dividends or make distributions
     on the capital stock of such Subsidiary and any other Subsidiary in the
     chain of ownership between the Account Party and such Subsidiary and (3) in
     the case of Debt refinancing, replacing or refunding Debt of Dominican
     Power Partners, LDC ("DPP") outstanding on October 21, 1997 (including,
     without limitation, Debt of AES Los Mina Finance Company the proceeds of
     which are used to refinance such Debt of DPP and to pay dividends to the
     Account Party), an increase of up to $100,000,000 in excess of the
     aggregate principal amount of Debt that is being refinanced, replaced or
     refunded to the extent that proceeds of at least $80,000,000 are received
     by the Account Party as a result of such proceeds being used to pay
     dividends or make distributions on the capital stock of such Subsidiary and
     any other Subsidiary in the chain of ownership between the Account Party
     and such Subsidiary), (B) no obligor shall be liable for any such Debt
     except to the extent that it was liable for the Debt so refinanced,
     replaced or refunded (except that (I) AES Los Mina Finance Company may
     incur Debt the proceeds of which are used to refinance Debt of DPP and pay
     dividends to the Account Party, (II) a Subsidiary of the Account Party that
     does not have a direct or indirect interest in any other Power Project may
     incur Debt the proceeds of which are used to refinance Debt of the
     corporations or other entities that hold the Account Party's interest in
     the Tiszai II and Tiszaipalkonya Power Projects and pay dividends to the
     Account Party, (III) a Subsidiary of the Account Party that does not have a
     direct or indirect interest in any Power Project other than AES Sul
     Distribudora Gaucha de Energia S.A. ("AES SUL") may incur Debt the proceeds
     of which are used to refinance Debt of AES Sul and (IV) a Subsidiary of the
     Account Party (the "REFINANCING SUBSIDIARY") that has a direct or indirect
     interest in a Power Project may incur Debt the proceeds of which are used
     to refinance Debt of another Subsidiary of the Account Party (the
     "REFINANCED SUBSIDIARY") that has a direct or indirect interest in such
     Power Project, PROVIDED that the Refinancing Subsidiary has no direct or
     indirect interest in any Power Project other than Power Projects in which
     the Refinanced Subsidiary has a direct or indirect interest) and (C) if any
     Debt being refinanced, replaced or refunded is subordinated to the Debt of
     the Account Party hereunder or of any Subsidiary under any Guarantee
     thereof, such Debt shall be subordinated at least to the same extent;
<PAGE>

                                                                              50


          (vii) Guarantees by the Account Party of (x) Debt permitted by clause
     (ii)(A)(1) above, (y) Debt permitted by clause (ii)(A)(2) above in respect
     of letters of credit issued in replacement of debt service reserve or other
     similar accounts related to the AES Hawaii (formerly known as Barbers
     Point), Shady Point or Thames Power Projects and (z) to the extent that the
     same constitutes a refinancing of Debt referred to in subclause (x) or (y)
     above, Debt permitted under clause (vi) above;

          (viii) Additional Permitted Subordinated Debt;

          (ix) Permitted Senior Unsecured Debt;

          (x) surety bonds in respect performance obligations of the Account
     Party and letters of credit, in an aggregate principal amount at any time
     outstanding not to exceed the excess of (A) $400,000,000 over (B) the
     Letter of Credit Liabilities;

          (xi) the Subsidiary Guaranties; and

          (xii) other Debt not described in clauses (i) through (xi) above in an
     aggregate principal amount at any time outstanding not to exceed
     $10,000,000;

 PROVIDED, HOWEVER, that notwithstanding any other provision contained herein,
the Subsidiary Guarantors shall not directly or indirectly Guarantee any Debt of
the Account Party (other than the Debt referred to in clause (iv) above) unless
the Account Party's obligations hereunder and under the other Loan Documents are
equally and ratably guaranteed by the Subsidiary Guarantors pursuant to guaranty
agreements in form and substance substantially similar to the Subsidiary
Guaranties.

     (b) The Account Party shall not issue any Additional Permitted Subordinated
Debt or Permitted Senior Unsecured Debt unless (i) both before and after giving
effect to such issuance no Default shall have occurred and be continuing and
(ii) on a PRO FORMA basis after giving effect to such issuance and the
application of the proceeds thereof (but without increasing or decreasing Parent
Operating Cash Flow on account of acquisitions for periods prior to such
acquisitions), the Account Party would have been in compliance with Section 5.16
and (unless the Account Party shall have received net cash proceeds of not less
than $500,000,000 from the issuance, after September 1, 1999 and on or before
the earlier of the date upon which such Additional Permitted Subordinated Debt
or Permitted Senior Unsecured Debt, as applicable, is issued and December 31,
1999, of its common stock to Persons other than Subsidiaries or affiliates of
the Account Party) 5.15 as of the last day of the fiscal quarter ended on, or
most recently ended prior to, the date of such issuance (assuming for this
purpose that (x) such Additional Permitted Subordinated Debt or Permitted Senior
Unsecured Debt, as applicable (and any other Debt or preferred stock of the
Account Party outstanding on the date of issuance of such Additional Permitted
Subordinated Debt or Permitted Senior Unsecured Debt, as applicable, and issued
after the first day of the period of four consecutive fiscal quarters ended on
such last day), was issued and the proceeds applied on the first day of the
period of four consecutive
<PAGE>

                                                                              51


fiscal quarters ended on such last day and (y) all Debt and preferred stock of
the Account Party repaid or redeemed prior to or simultaneously with the
issuance of such Additional Permitted Subordinated Debt or Permitted Senior
Unsecured Debt, as applicable, was repaid or redeemed on the day prior to the
first day of such period).

     (c) In addition to the Debt permitted by subsections (a) and (b) above, the
Account Party shall be permitted to incur, assume, create and suffer to exist up
to an aggregate principal amount not to exceed the sum of (1) $600,000,000 PLUS
(2) an amount equal to 50% of the aggregate net proceeds received by the Account
Party from issuances and sales (other than sales to the Account Party or any of
its Subsidiaries or Affiliates) of its common stock after September 1, 1999 of
unsecured senior and/or subordinated Debt issued and sold by way of (i) a
registered public offering, (ii) an offering made to qualified institutional
buyers pursuant to Rule 144A under the Securities Act and/or (iii) in the form
of term loans from banks or other institutional lenders or investors, in each
case having terms and provisions applicable to the Account Party and its
Subsidiaries that are no more restrictive in any material respect (including,
without limitation, covenants and events of default) than those included in
existing outstanding public Debt of the Account Party or otherwise acceptable to
the Required Banks (except that limitations on (I) the ability of Subsidiaries
and Affiliates of the Account Party to guarantee other senior Debt of the
Account Party, (II) the ability of the Account Party to grant Liens on stock of
Subsidiaries or intercompany advances to secure other senior Debt of the Account
Party or (III) the ability of Subsidiaries or Affiliates of the Account Party to
grant Liens on their assets (including stock of Subsidiaries and intercompany
advances) to secure guarantees of other senior Debt of the Account Party shall
be permitted); PROVIDED that (A) both before and after giving effect to such
issuance no Default shall have occurred and be continuing, (B) on a PRO FORMA
basis after giving effect to such issuance and the application of the proceeds
thereof (but without increasing or decreasing Parent Operating Cash Flow on
account of acquisitions for periods prior to such acquisitions) the Account
Party would have been in compliance with Section 5.16 and (unless the Account
Party shall have received net cash proceeds of not less than $500,000,000 from
the issuance, after September 1, 1999 and on or before the earlier of the date
upon which such Debt is issued and December 31, 1999, of its common stock to
Persons other than Subsidiaries or affiliates of the Account Party) 5.15 as of
the last day of the fiscal quarter ended on, or most recently ended prior to,
the date of such issuance (assuming for this purpose that (x) such Debt (and any
other Debt or preferred stock of the Account Party outstanding on the date of
issuance of such Debt and issued after the first day of the period of four
consecutive fiscal quarters ended on such last day) was issued and the proceeds
applied on the first day of the period of four consecutive fiscal quarters ended
on such last day and (y) all Debt and preferred stock of the Account Party
repaid or redeemed prior to or simultaneously with the issuance of such Debt was
repaid or redeemed on the day prior to the first day of such period) and (C)
such Debt (x) is not guaranteed by any Subsidiary or Affiliate of the Account
Party and (y) does not require any scheduled payment of principal prior to July
14, 2003.

     SECTION 5.8 MINIMUM CONSOLIDATED NET WORTH. Consolidated Net Worth will at
no time be less than the sum of (i) $1,160,000,000 PLUS (ii) for each fiscal
quarter of the Account Party ended after December 19, 1997 and at or prior to
such
<PAGE>

                                                                              52


time for which Consolidated Net Income is a positive number, an amount equal to
50% of Consolidated Net Income for such fiscal quarter PLUS (iii) an amount
equal to 75% of the cumulative net proceeds to the Account Party from issuances
of equity securities made by the Account Party from and after December 19, 1997.

     SECTION 5.9 RESTRICTED PAYMENTS. Neither the Account Party nor any of its
Subsidiaries will declare or make any Restricted Payment unless, after giving
effect thereto, the aggregate of all Restricted Payments declared or made
subsequent to June 30, 1995 does not exceed the sum of $5 million PLUS 5% (or,
if such amount is a loss, MINUS 100%) of Consolidated Net Income of the Account
Party and its Consolidated Subsidiaries for the period from June 30, 1995
through the last day of the fiscal quarter of the Account Party then most
recently ended (treated for this purpose as a single accounting period). Nothing
in this Section shall prohibit the payment of any dividend or distribution
within 45 days after the declaration thereof if such declaration was not
prohibited by this Section.

     SECTION 5.10 SUBORDINATED DEBT AND SENIOR NOTES. (a) The Account Party will
not, and will not permit any of its Subsidiaries to, consent to or solicit any
amendment, supplement, waiver or other modification of any Subordinated Note
Indenture or any other agreement or instrument evidencing or governing any
Subordinated Debt that would (i) increase the interest rate applicable thereto,
(ii) shorten the time or increase the amount of any principal payment
thereunder, (iii) change, in any manner, the subordination provisions thereof or
(iv) change any of the covenants, events of default or other provisions thereof
in any manner that could make any such covenant, event of default or other
provision more restrictive or that could otherwise be disadvantageous to the
Account Party or the Participating Banks, without the express prior written
consent of the Required Banks.

     (b) The Account Party will not, and will not permit any of its Subsidiaries
to, consent to or solicit any amendment, supplement, waiver or other
modification of the 1998 Senior Note Indenture or any other agreement or
instrument evidencing or governing any Senior Notes that (i) would increase the
interest rate applicable thereto, (ii) shorten the time or increase the amount
of any principal payment thereunder or (iii) change any of the covenants, events
of default or other provisions thereof in any manner that could make any such
covenant, event of default or other provision more limiting or that could
otherwise be disadvantageous to the Account Party or the Participating Banks,
without the express prior written consent of the Required Banks.

     SECTION 5.11 LIMITATIONS ON GUARANTEES AND COMMITMENTS. (a) The aggregate
amount of Investment and Guarantee Commitments shall not at any time exceed an
amount equal to the sum of:

     (i) the product of (A) Parent Operating Cash Flow for the period of four
consecutive fiscal quarters then most recently ended MULTIPLIED by (B) four (4),
PLUS

     (ii) the excess, if any, of (A) the aggregate amount of net cash proceeds
received by the Account Party from the issuance of equity securities and from
the disposition of Material AES Entities during the period from December 19,
1997 to such time (to the extent not used to prepay Subordinated Debt or to
permanently retire
<PAGE>

                                                                              53


any other Debt) over (B) the aggregate amount of cash Investments (other than
Temporary Cash Investments) and cash payments made by the Account Party under
Guarantees during such period PLUS $430,000,000;

PROVIDED, that for purposes of determining compliance with this subsection (a),
the aggregate amount of Investment and Guarantee Commitments at any time shall
be reduced to the extent collateralized with cash and cash equivalents and any
deposit or other posting by the Account Party of cash or cash equivalents as
collateral for any Investment and Guarantee Commitment shall be treated as a
cash Investment for purposes of clause (ii)(B) of this subsection (a).

     (b) The Account Party shall not make or enter into any Investment and
Guarantee Commitments at any time that the Account Party's senior unsecured Debt
is rated less than BB- by Standard & Poor's Ratings Services or less than Ba3 by
Moody's Investors Service, Inc.

     SECTION 5.12 NEGATIVE PLEDGE. Neither the Account Party nor any Subsidiary
of the Account Party will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:

     (a) Liens existing on the date of this Agreement securing Debt outstanding
on the date of this Agreement;

     (b) any Lien existing on any asset of any corporation at the time such
corporation becomes a Subsidiary of the Account Party and not created in
contemplation of such event;

     (c) any Lien on any asset securing Debt incurred or assumed for the purpose
of financing all or any part of the cost of acquiring such asset, PROVIDED that
such Lien attaches to such asset concurrently with or within 90 days after the
acquisition thereof;

     (d) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Account Party or a
Subsidiary of the Account Party and not created in contemplation of such event;

     (e) any Lien existing on any asset prior to the acquisition thereof by the
Account Party or a Subsidiary of the Account Party and not created in
contemplation of such acquisition;

     (f) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses or clause (l) of this Section; PROVIDED that such Debt is not increased
and is not secured by any additional assets (other than, in the case of Debt
permitted under Section 5.7(a)(vi), Liens on assets of any Subsidiary permitted
under such Section 5.7(a)(vi) to be obligated on such Debt);

     (g) Liens arising in the ordinary course of its business which (i) do not
secure Debt, (ii) do not secure any obligation in any amount exceeding
$25,000,000
<PAGE>

                                                                              54


and (iii) do not in the aggregate materially detract from the value of its
assets or materially impair the use thereof in the operation of its business;

     (h) Liens in connection with worker's compensation, social security
obligations, taxes, assessments, statutory obligations or other similar charges,
good faith deposits in connection with tenders, contracts or leases to which the
Account Party or any of its Subsidiaries is a party or other deposits required
to be made in the ordinary course of business and not in connection with
borrowing money or obtaining advances or credit, PROVIDED in each case that the
obligation or liability arises in the ordinary course of business and if overdue
is being contested in good faith by appropriate proceedings;

     (i) inchoate materialmen's, mechanics', workmen's, repairmen's, employees',
carriers', warehousemen's, or other like Liens arising in the ordinary course of
business of the Account Party or its Subsidiaries;

     (j) with respect to real property, easements, rights of way, reservations
and other minor defects or irregularities in title which do not materially
impair the use thereof for the purposes for which it is held by the Account
Party or its Subsidiaries;

     (k) Liens on cash collateral securing (i) Investment and Guarantee
Commitments, (ii) the Letter of Credit Liabilities and (iii) the "Letter of
Credit Liabilities" (as defined in the Existing Credit Facility); and

     (l) Liens securing Power Project Debt or utility obligations or other
customer, supplier or contractor obligations associated with a Power Project
that are limited to the assets and revenues of the related Power Project and the
capital stock or other assets (including contract rights) of Subsidiaries of the
Account Party having a direct or indirect interest in such Power Project.

     SECTION 5.13 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. (a) The Account
Party will not will consolidate or merge with or into any other Person; PROVIDED
that the Account Party may merge with another Person if (i) the Account Party is
the corporation surviving such merger or the corporation surviving such merger
assumes all obligations of the Account Party under the Loan Documents and (ii)
immediately after giving effect to such merger, no Default shall have occurred
and be continuing.

     (b) The Account Party will not sell, lease or otherwise transfer, directly
or indirectly, all or any substantial part of the assets of the Account Party
and its Subsidiaries, taken as a whole, to any other Person.

     (c) The Account Party will not sell or otherwise transfer, or permit to be
sold or otherwise transferred, directly or indirectly, any shares of capital
stock of any Material AES Entity which are owned, directly or indirectly, by the
Account Party; PROVIDED that the Account Party may transfer, or permit the
transfer of, shares of capital stock of a Material AES Entity owned, directly or
indirectly, by the Account Party if:
<PAGE>

                                                                              55


          (i) after giving effect to such transfer, the Account Party will
     continue to own, directly or indirectly, at least 80% of the outstanding
     capital stock of each Material AES Entity;

          (ii) the consideration received by the Account Party or a Subsidiary
     of the Account Party for such transfer (A) has a value, as determined by
     the Account Party, at least equal to the fair market value of the shares of
     capital stock transferred and (B) is in the form of cash or capital stock
     or partnership or other similar equity interests of a Person the principal
     assets of which consist of direct or indirect interests in one or more
     Power Projects, or a combination of the foregoing;

          (iii) after giving effect to such transfer, no Default shall have
     occurred and be continuing;

          (iv) on a PRO FORMA basis after giving effect to such transfer, the
     Cash Flow Coverage Ratio for the four consecutive fiscal quarters then most
     recently ended is at least 1.75 to 1.00 (assuming for this purpose that
     such transfer occurred on the first day of such period of four consecutive
     fiscal quarters);

          (v) AES Hawaii, Inc. shall at all times remain a direct Subsidiary of
     AES Hawaii Management and AES Shady Point, Inc. shall at all times remain a
     direct Subsidiary of AES Oklahoma;

          (vi) AES Western Maryland Management, Inc., AES Mexico Farms Inc. and
     AES Warrior Run Limited Partnership shall at all times remain Subsidiaries
     of AES Warrior Run and shall hold, directly or indirectly, substantially
     all of the assets held by them on March 4, 1999; and

          (vii) Southland and Subsidiaries of Southland holding substantially
     all of the assets of Southland and its Subsidiaries as of March 4, 1999
     shall at all times remain Subsidiaries of AES Southland;

PROVIDED, HOWEVER, that the foregoing clauses (v), (vi) and (vii) shall not
apply if the corresponding covenants in the Existing Credit Facility are
permanently deleted pursuant to an amendment thereto or otherwise have no
further force or effect thereunder.

     SECTION 5.14 USE OF LETTERS OF CREDIT. The Letters of Credit will be used
to support bidding activities, other performance and financial obligations and
other general corporate purposes of the Account Party and its Subsidiaries. None
of the proceeds of any Letter of Credit will be used, directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of buying or
carrying any "margin stock" within the meaning of Regulation U or Regulation G.

     SECTION 5.15 CASH FLOW COVERAGE. The Cash Flow Coverage Ratio for any
period of four consecutive fiscal quarters of the Account Party ending after the
date hereof (including any PRO FORMA calculation under subsection (b) or (c) of
Section 5.7 made by reference to such period) shall not be less than (i) in the
case of any
<PAGE>

                                                                              56


period ending after the date hereof and on or prior to September 30, 2000, 1.50
to 1.00 and (ii) in all other cases, 1.75 to 1.00.

     SECTION 5.16 CASH FLOW TO TOTAL DEBT RATIO. The Cash Flow to Total Debt
Ratio shall not, at any time after the date hereof, be less than (i) 0.10 to
1.00 at any time on or prior to December 31, 1999, (ii) 0.105 to 1.00 at any
time after December 31, 1999 and on or prior to March 31, 2000, (iii) 0.125 to
1.00 at any time after March 31, 2000 and on or prior to September 30, 2000 and
(iv) 0.15 to 1.00 at any time thereafter.

     SECTION 5.17 TRANSACTION WITH AFFILIATES. Except pursuant to agreements
existing on the date hereof and listed on Schedule III attached hereto, the
Account Party will not, and will not permit any of its Subsidiaries to, directly
or indirectly, in any transaction involving aggregate consideration in excess of
$1,000,000, pay any funds to or for the account of, make any investment (whether
by acquisition of stock or indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise) in, lease, sell, transfer or otherwise
dispose of any assets, tangible or intangible, to, or participate in, or effect
any transaction in connection with any joint enterprise or other joint
arrangement with, any Affiliate; PROVIDED, HOWEVER, that the foregoing
provisions of this Section shall not prohibit (a) the Account Party from
declaring or paying any lawful dividend so long as, after giving effect thereto,
no Default shall have occurred and be continuing, (b) the Account Party or any
Subsidiary of the Account Party from making sales to or purchases from any
Affiliate and, in connection therewith, extending credit or making payments, or
from making payments for services rendered by any Affiliate, if such sales or
purchases are made or such services are rendered in the ordinary course of
business and on terms and conditions at least as favorable to the Account Party
or such Subsidiary as the terms and conditions which would apply in a similar
transaction with a Person not an Affiliate, (c) the Account Party or any
Subsidiary of the Account Party from making payments of principal, interest and
premium on any Debt of the Account Party or such Subsidiary held by an Affiliate
if the terms of such Debt are substantially as favorable to the Account Party or
such Subsidiary as the terms which could have been obtained at the time of the
creation of such Debt from a lender which was not an Affiliate and (d) the
Account Party or any Subsidiary of the Account Party from participating in, or
effecting any transaction in connection with, any joint enterprise or other
joint arrangement with any Affiliate if the Account Party or such Subsidiary
participates in the ordinary course of its business and on a basis no less
advantageous than the basis on which such Affiliate participates. The provisions
of this Section 5.17 shall not apply to (i) transactions between the Account
Party or any of its Subsidiaries, on the one hand, and any employee of the
Account Party or any of its Subsidiaries, on the other hand, that are approved
by the Board of Directors of the Account Party or any committee of the Board of
Directors consisting of the Account Party's independent directors and (ii) the
payment of reasonable and customary regular fees to directors of the Account
Party or a Subsidiary of the Account Party.

     SECTION 5.18 LIMITATION ON INVESTMENTS. (a) The Account Party will not
permit any Specified Subsidiary to make any Investment in, or to consolidate or
merge with, any other Person with a direct or indirect interest in any Power
Project or unrelated business other than the Power Project or
<PAGE>

                                                                              57


unrelated business in which such Specified Subsidiary has a direct or indirect
interest prior to the making of such Investment or the consummation of such
consolidation or merger; PROVIDED, HOWEVER, that this subsection (a) shall not
apply if the corresponding covenant in the Existing Credit Facility is
permanently deleted pursuant to an amendment thereto or otherwise has no further
force or effect thereunder.

     (b) The Account Party will not permit any Subsidiary of the Account Party
with any direct or indirect interest in (i) a Power Project to make any
Investment in, or consolidate or merge with, any other Person with a direct or
indirect interest in any other Power Project or any unrelated business or (ii)
any unrelated business to make any Investment in, or to consolidate or merge
with, any other Person with a direct or indirect interest in any Power Project;
PROVIDED that one or more Subsidiaries of the Account Party (each, an
"INTERMEDIATE HOLDING COMPANY") may serve as holding companies for any or all of
the Account Party's direct and indirect interests in Power Projects and
unrelated businesses, so long as:

          (A) each such Intermediate Holding Company's direct and indirect
     interest in any Power Project or unrelated business shall be limited to the
     ownership of capital stock or Debt obligations of a Person with a direct or
     indirect interest in such Power Project or unrelated business;

          (B) no Lien shall exist upon any asset of any Intermediate Holding
     Company (other than Liens on the capital stock of the Account Party or a
     Subsidiary of an Intermediate Holding Company securing Debt of such
     Intermediate Holding Company or such Subsidiary and Liens securing Debt
     permitted under clause (ii) of Section 5.7(a));

          (C) no Intermediate Holding Company shall incur, assume, create or
     suffer to exist any Debt (including any Guarantee of Debt) other than Debt
     owing to the Account Party or any Intermediate Holding Company and Debt
     permitted by clauses (i) and (ii) of Section 5.7(a) or (to the extent that
     such Debt represents a refinancing or replacement of Debt permitted by
     clause (ii) of Section 5.7(a)) clause (vi) of Section 5.7(a) (without
     giving effect to clauses (I) through (IV) of subclause (B) thereof); and

          (D) AES Electric may make Investments in Power Projects owned by NIGEN
     Limited and Medway Power Limited as of the date of this Agreement under any
     agreement by which it is bound as of the date of this Agreement.

     SECTION 5.19 YEAR 2000 COMPLIANCE. The Account Party shall promptly notify
the Administrative Agent in the event that the Account Party discovers or
determines that any computer application (including those of its suppliers,
vendors and customers) that is material to its or any of its Subsidiaries'
business and operations will not be Year 2000 compliant, except to the extent
that such failure could not reasonably be expected to have a material adverse
effect upon the business, financial position or results of operations of the
Account Party and its Consolidated Subsidiaries, taken as a whole.
<PAGE>

                                                                              58


                                    ARTICLE 6
                                EVENTS OF DEFAULT

     SECTION 6.1 EVENTS OF DEFAULT. The following events shall each constitute
an "EVENT OF DEFAULT", if the same shall occur and be continuing after the grace
period and notice requirement (if any) applicable thereto:

          (a) the Account Party shall fail to pay when due any Reimbursement
     Obligation, or shall fail to pay within three days of the date when due any
     interest, fees or other amounts payable under any Loan Document; or

          (b) The Account Party shall fail to observe or perform any covenant
     contained in Sections 5.7 to 5.18, inclusive; or

          (c) the Account Party shall fail to observe or perform any covenant or
     agreement contained in any Loan Document (other than those covered by
     clause (a) or (b) above) for 20 days after written notice thereof has been
     given to the Account Party by the Administrative Agent at the request of
     any Bank; or

          (d) any representation, warranty, certification or statement made by
     the Account Party in any Loan Document or in any certificate, financial
     statement or other document delivered pursuant to any Loan Document shall
     prove to have been incorrect in any material respect when made (or deemed
     made); or

          (e) the Account Party shall fail to make any payment in respect of any
     Material Debt when due or within any applicable grace period; or

          (f) any event or condition shall occur which (i) results in the
     acceleration of the maturity of any Material Debt of AES or of any Material
     Debt of any Subsidiary or Subsidiaries of the Account Party (except AES
     Placerita and Central Termica San Nicolas S.A.) that, individually or in
     the aggregate (in each case together with any Person in which such
     Subsidiary has a direct or indirect equity Investment), contributed 15% or
     more to Parent Operating Cash Flow for the four most recently completed
     fiscal quarters of the Account Party, (ii) results in the termination of
     any commitment to provide financing in an amount in excess of $15,000,000
     to the Account Party or any Material AES Entity or (iii) enables (or, with
     the giving of notice or lapse of time or both, would enable) the holder of
     any Material Debt of the Account Party or any Person acting on such
     holder's behalf to accelerate the maturity thereof; or

          (g) the Account Party or any Significant AES Entity shall commence a
     voluntary case or other proceeding seeking liquidation, reorganization or
     other relief with respect to itself or its debts under any
<PAGE>

                                                                              59


     bankruptcy, insolvency or other similar law now or hereafter in effect or
     seeking the appointment of a trustee, receiver, liquidator, custodian or
     other similar official for it or any substantial part of its property, or
     shall consent to any such relief or to the appointment of or taking
     possession by any such official in an involuntary case or other proceeding
     commenced against it, or shall make a general assignment for the benefit of
     creditors, or shall fail generally to pay its debts as they become due, or
     shall take any corporate action to authorize any of the foregoing; or

          (h) an involuntary case or other proceeding shall be commenced against
     the Account Party or any Significant AES Entity seeking liquidation,
     reorganization or other relief with respect to it or its debts under any
     bankruptcy, insolvency or other similar law now or hereafter in effect or
     seeking the appointment of a trustee, receiver, liquidator, custodian or
     other similar official of it or any substantial part of its property, and
     such involuntary case or other proceeding shall remain undismissed and
     unstayed for a period of 60 days; or an order for relief shall be entered
     against the Account Party or any Significant AES Entity under the federal
     bankruptcy laws as now or hereafter in effect; or

          (i) any member of the ERISA Group shall fail to pay when due an amount
     or amounts aggregating in excess of $15,000,000 which it shall have become
     liable to pay under Title IV of ERISA; or notice of intent to terminate a
     Material Plan shall be filed under Title IV of ERISA by any member of the
     ERISA Group, any plan administrator or any combination of the foregoing; or
     the PBGC shall institute proceedings under Title IV of ERISA to terminate,
     to impose liability (other than for premiums under Section 4007 of ERISA)
     in respect of, or to cause a trustee to be appointed to administer any
     Material Plan; or a condition shall exist by reason of which the PBGC would
     be entitled to obtain a decree adjudicating that any Material Plan must be
     terminated; or there shall occur a complete or partial withdrawal from, or
     a default, within the meaning of Section 4219(c)(5) of ERISA, with respect
     to one or more Multiemployer Plans which could cause one or more members of
     the ERISA Group to incur a current payment obligation in excess of
     $15,000,000; or

          (j) a judgment or order for the payment of money in excess of
     $15,000,000 shall be rendered against the Account Party or any Subsidiary
     of the Account Party, and such judgment or order shall continue unsatisfied
     and unstayed for a period of 10 days; or

          (k) any person or group of persons (within the meaning of Section 13
     or 14 of the Securities Exchange Act of 1934, as amended) other than a
     member of the AES Management Group shall have acquired beneficial ownership
     (within the meaning of Rule 13d-3 promulgated by the Securities and
     Exchange Commission under said Act) of 20% or more of the outstanding
     shares of common stock of the Account Party; or during any period of twelve
     consecutive calendar months, individuals who were directors of the Account
     Party on the first day of such period (or who were appointed or nominated
     for election as directors of the Account Party by at least a majority of
     the
<PAGE>

                                                                              60


     individuals who were directors on the first day of such period) shall
     cease to constitute a majority of the board of directors of the Account
     Party.

     SECTION 6.2 REMEDIES UPON EVENTS OF DEFAULT. Upon the occurrence and during
the continuance of any Event of Default, the Administrative Agent shall at the
request of the Required Banks, upon notice to the Account Party (i) declare the
Commitments and the commitments of the Issuing Banks to make any Extension of
Credit to be terminated, whereupon the same shall forthwith terminate (PROVIDED,
that the obligations of the Participating Banks under Section 2.5 shall continue
notwithstanding any such termination), (ii) declare all amounts payable
hereunder by the Account Party, whether matured or unmatured (including all
Reimbursement Obligations and all interest thereon), to be immediately due and
payable, whereupon the same shall immediately become due and payable without
demand, presentment, protest or further notice of any kind, all of which are
hereby expressly waived by the Account Party, and/or (iii) make demand upon the
Account Party to, and forthwith upon such demand the Account Party shall, (A)
subject to Section 2.14(d), pay to the Administrative Agent in immediately
available funds at the Administrative Agent's office designated in such demand,
for deposit in the Cash Collateral Account or any other account designated by
the Administrative Agent, as provided in Section 2.14, an amount equal to the
aggregate Available Amount at such time, or (B) deliver to the Administrative
Agent (for the benefit of the Issuing Banks and the Participating Banks) an
irrevocable standby letter of credit (issued pursuant to the Existing Credit
Facility or any other credit facility or agreement (other than this Agreement)
to which the Account Party is a party) having a stated amount equal to the
aggregate Available Amount at such time, which letter of credit shall be issued
by a commercial bank, and shall be in form and substance, satisfactory to the
Administrative Agent; PROVIDED, HOWEVER, that upon the occurrence of any
Automatic Acceleration Event, (A) the Commitments and the commitments of the
Issuing Banks to make Extensions of Credit shall automatically be terminated,
(B) all amounts payable hereunder by the Account Party, whether matured or
unmatured (including all Reimbursement Obligations and all interest thereon),
shall immediately become due and payable without demand, presentment, protest or
further notice of any kind, all of which are hereby expressly waived by the
Account Party, and (C) without any request or the taking of any other action by
the Administrative Agent or any Participating Bank, (1) subject to Section
2.14(d), the Account Party shall be obligated forthwith to pay to the
Administrative Agent in immediately available funds for deposit in the Cash
Collateral Account, as provided in Section 2.14, an amount equal to the
aggregate Available Amount at such time, or (2) the Account Party shall be
obligated to deliver to the Administrative Agent (for the benefit of the Issuing
Banks and the Participating Banks) an irrevocable standby letter of credit
(issued pursuant to the Existing Credit Facility or any other credit facility or
agreement (other than this Agreement) to which the Account Party is a party)
having a stated amount equal to the aggregate Available Amount at such time,
which letter of credit shall be issued by a commercial bank, and shall be in
form and substance, satisfactory to the Administrative Agent. Notwithstanding
anything to the contrary contained herein, no notice given or declaration made
by the Administrative Agent pursuant to this Section 6.2 shall affect (1) the
obligation of any Issuing Bank to make any payment under any Letter of Credit
issued by such Issuing Bank in accordance with the terms of such Letter of
Credit, or (2) the participatory interest of each Participating Bank in each
such payment.
<PAGE>

                                                                              61


                                    ARTICLE 7
                   THE ADMINISTRATIVE AGENT, THE PARTICIPATING
                           BANKS AND THE ISSUING BANKS

     SECTION 7.1 APPOINTMENT. Each of the Issuing Banks and the Participating
Banks hereby irrevocably designates and appoints Union Bank as the
Administrative Agent under this Agreement and irrevocably authorizes Union Bank,
as Administrative Agent, to take such action on its behalf under the provisions
of this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the Administrative Agent by
the terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in this Agreement or any other Loan Document, the
Administrative Agent and the Issuing Banks shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Participating Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent or the Issuing Banks.

     SECTION 7.2 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.

     SECTION 7.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent, the
Issuing Banks nor any of their respective Related Parties shall be (i) liable
for any action lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or any other Loan Document (except for its
or such Person's own gross negligence or willful misconduct) or (ii) responsible
in any manner to any of the Participating Banks for any recitals, statements,
representations or warranties made by the Account Party or any officer thereof
contained in any Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, any Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any Loan Document
or for any failure of the Account Party to perform its obligations hereunder or
thereunder. Except as otherwise expressly set forth herein, the Administrative
Agent and the Issuing Banks shall not be under any obligation to any
Participating Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Account Party. Neither the Syndication Agent nor the
Documentation Agent shall have any liabilities, duties or obligations in such
capacity under any of the Loan Documents.
<PAGE>

                                                                              62


     SECTION 7.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent and
the Issuing Banks shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Account Party), independent accountants and other experts selected by the
Administrative Agent or any Issuing Bank, as the case may be. The Administrative
Agent shall be fully justified in failing or refusing to take any action under
any Loan Document unless it shall first receive such advice or concurrence of
the Required Banks as it deems appropriate or it shall first be indemnified to
its satisfaction by the Participating Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under any Loan Document in accordance
with a request of the Required Banks, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Participating
Banks.

     SECTION 7.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default unless the
Administrative Agent has received notice from a Participating Bank, an Issuing
Bank or the Account Party referring to this Agreement, describing such Default
and stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Issuing Banks and the Participating Banks. The
Administrative Agent shall take such action with respect to such Default as
shall be reasonably directed by the Required Banks; PROVIDED that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Participating Banks.

     SECTION 7.6 NON-RELIANCE ON ADMINISTRATIVE AGENT, ISSUING BANKS AND OTHER
PARTICIPATING BANKS. Each Participating Bank expressly acknowledges that neither
the Administrative Agent, the Issuing Banks nor any of their respective Related
Parties has made any representations or warranties to it and that no act by the
Administrative Agent or any Issuing Bank hereinafter taken, including any review
of the affairs of the Account Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent or such Issuing Bank to
any Participating Bank. Each Participating Bank represents to the Administrative
Agent and the Issuing Banks that it has, independently and without reliance upon
the Administrative Agent, any Issuing Bank or any other Participating Bank, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Account Party and made
its own decision to enter into this Agreement. Each Participating Bank also
represents that it will, independently and without reliance upon the
Administrative Agent, any Issuing Bank or any other Participating Bank, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and to make such
<PAGE>

                                                                              63


investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Account Party. Except for notices, reports and other documents expressly
required to be furnished to the Banks by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Participating Bank with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Account Party that may come into the possession of the
Administrative Agent or any of its Related Parties.

     SECTION 7.7 INDEMNIFICATION. The Participating Banks agree to indemnify
each of the Administrative Agent and the Issuing Banks in its capacity as such
(to the extent not reimbursed by the Account Party and without limiting the
obligation of the Account Party to do so), ratably according to their respective
Commitment Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of all amounts arising under this
Agreement) be imposed on, incurred by or asserted against the Administrative
Agent or any Issuing Bank in any way relating to or arising out of this
Agreement, any Letter of Credit, any other Loan Document or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent or such Issuing Bank under or in connection with any of the
foregoing; PROVIDED that no Participating Bank shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or any Issuing Bank's gross negligence or willful
misconduct. The agreements in this Section shall survive the termination of this
Agreement and the payment of all amounts payable hereunder.

     SECTION 7.8 ADMINISTRATIVE AGENT AND ISSUING BANKS IN INDIVIDUAL CAPACITY.
The Administrative Agent and each Issuing Bank and their respective affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Account Party as though the Administrative Agent was not the
Administrative Agent hereunder and such Issuing Bank was not an Issuing Bank
hereunder. The Administrative Agent and each Issuing Bank shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Participating Bank and may exercise the same as though it were not the
Administrative Agent or an Issuing Bank, and the terms "PARTICIPATING BANK" and
"PARTICIPATING BANKS" shall include the Administrative Agent and each Issuing
Bank (to the extent applicable) in their individual capacity.

     SECTION 7.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon ten (10) days' notice to the Banks and the
Account Party. If the Administrative Agent shall resign as Administrative Agent
under this Agreement, then the Required Banks shall appoint from among the
Participating Banks a successor agent for the Participating Banks, which
successor agent shall be approved by the Account Party (PROVIDED that such
approval shall not be required upon the occurrence and during the continuance of
an Event of Default), whereupon such successor agent shall succeed to the
rights, powers and duties of the
<PAGE>

                                                                              64


Administrative Agent, and the term "ADMINISTRATIVE AGENT" shall mean such
successor agent effective upon its appointment, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.

                                    ARTICLE 8
                                  MISCELLANEOUS

     SECTION 8.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other
Loan Document may be amended, supplemented or modified except in accordance with
the provisions of this Section. With the written consent of the Required Banks,
the Administrative Agent and the Account Party may, from time to time, enter
into written amendments, supplements or modifications of any Loan Document for
the purpose of adding any provisions to such Loan Document or changing in any
manner the rights of the Participating Banks, the Issuing Banks or of the
Account Party hereunder or thereunder or waiving, on such terms and conditions
as the Required Banks may specify in such instrument, any of the requirements of
such Loan Document or any Default and its consequences; PROVIDED, HOWEVER, that
no amendment, waiver or consent shall, unless in writing and signed by all of
the Participating Banks, do any of the following: (a) waive, modify or eliminate
any of the conditions specified in Section 4.1, (b) increase or decrease the
Commitment of any Participating Bank (except for a ratable decrease in
Commitments of all Participating Banks) or subject any Participating Bank to any
additional obligations, (c) reduce the principal of, or interest on, the
Reimbursement Obligations or any fees or other amounts payable hereunder (other
than any fees payable to the Administrative Agent, any Issuing Bank, the
Syndication Agent or the Documentation Agent pursuant to the Agency Fee Letters,
any Issuing Bank Agreement or Section 2.3(c)), (d) extend the Termination Date
or postpone any date fixed for any payment of principal of, or interest on, any
Reimbursement Obligations or any fees or other amounts payable hereunder (other
than any fees payable to the Administrative Agent, any Issuing Bank, the
Syndication Agent or the Documentation Agent pursuant to the Agency Fee Letters,
any Issuing Bank Agreement or Section 2.3(c)), (e) amend, modify or waive the
definition of "REQUIRED BANKS" contained in Section 1.1 or otherwise change the
percentage of the Commitments or of the participations in the aggregate
outstanding Letter of Credit Liabilities, or the number of Participating Banks,
which shall be required for the Participating Banks or any of them to take any
action hereunder, (f) amend this Agreement or any other Loan Document in a
manner intended to prefer one or more Participating Banks over any other
Participating Banks, (g) release all or any portion of any cash collateral held
in the Cash Collateral Account (or any other similar account) other than in
accordance with the terms of this Agreement, (h) release any Guarantee of a
Subsidiary Guarantor that guaranties the obligations of the Account Party
hereunder, (i) amend, waive or modify this Section 8.1, or (j) amend, waive or
modify the last sentence of Section 2.1(a); and PROVIDED, FURTHER, that no
amendment, waiver or
<PAGE>

                                                                              65


consent shall, unless in writing and signed by the Administrative Agent in
addition to the Participating Banks required above to take such action, affect
the rights or duties of the Administrative Agent under this Agreement or any
other Loan Document; and PROVIDED, FURTHER, that no amendment, waiver or consent
shall, unless in writing and signed by each Issuing Bank in addition to the
Participating Banks required above to take such action, affect the rights or
duties of such Issuing Bank under this Agreement or any other Loan Document; and
PROVIDED, FURTHER, that any agreement entered into pursuant to Section 2.3(c)
may be amended, supplemented or otherwise modified by the parties thereto. Any
such waiver and any such amendment, supplement or modification shall apply
equally to each of the Participating Banks and shall be binding upon the Account
Party, the Participating Banks, the Issuing Banks and the Administrative Agent.
In the case of any waiver, the Account Party, the Participating Banks, the
Issuing Banks and the Administrative Agent shall be restored to their former
position and rights hereunder, and any Default waived shall be deemed to be
cured and not continuing, but only to the extent so waived; but no such waiver
shall extend to any subsequent or other Default or impair any right consequent
thereon.

     SECTION 8.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy, telegraph or telex), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or five
(5) days after being deposited in the mail, postage prepaid, or, in the case of
telecopy notice, when received, or, in the case of telegraphic notice, when
delivered to the telegraph company, or, in the case of telex notice, when sent,
answerback received, addressed as follows or to such other address as may be
hereafter notified by the respective parties hereto:

         Account Party:           The AES Corporation
                                  1001 North 19th Street
                                  Arlington, Virginia 22209
                                  Attention: Chief Financial Officer
                                  Telephone:  (703) 522-1315
                                  Telecopy: (703) 528-4510

         Administrative Agent:    Union Bank of California, N.A.
                                  Power and Utilities
                                  445 South Figueroa Street
                                  Los Angeles, CA 90071
                                  Attention: Susan Johnson
                                  Telephone: (213) 236-4125
                                  Telecopy: (213) 236-4096

         Each Issuing Bank:       As set forth in the Issuing Bank Agreement to
                                  which it is a party

         Each Participating Bank  As set forth in Schedule I hereto or in the
                                  Commitment Transfer Supplement to which it is
                                  a party;
<PAGE>

                                                                              66


PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Participating Banks pursuant to Article 2 shall not be effective until
received.

     SECTION 8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent, any Issuing Bank
or any Participating Bank, any right, remedy, power or privilege hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
under any other Loan Document preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

     SECTION 8.4 PAYMENT OF EXPENSES AND TAXES; GENERAL INDEMNITY. (a) The
Account Party shall pay (i) all out-of-pocket expenses of the Administrative
Agent, including reasonable fees and disbursements of special counsel for the
Administrative Agent, in connection with the preparation and administration of
this Agreement and the other Loan Documents, any waiver or consent hereunder or
any amendment hereof or any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all out-of-pocket expenses incurred by the
Administrative Agent, each Issuing Bank and each Participating Bank, including
(without duplication) the fees and disbursements of outside counsel and the
allocated cost of inside counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom.

     (b) The Account Party agrees to indemnify the Administrative Agent, the
Syndication Agent, the Documentation Agent, each Issuing Bank and each
Participating Bank, and the Related Parties of the foregoing (each an
"INDEMNITEE") and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be designated a
party thereto) brought or threatened relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Letters of Credit or the
issuance or deemed issuance of any Letter of Credit; PROVIDED that no Indemnitee
shall have the right to be indemnified hereunder for such Indemnitee's own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.

     (c) The Account Party's obligations under this Section 8.4 shall survive
the repayment of all amounts owing to the Participating Banks, the Issuing
Banks, the Administrative Agent, the Syndication Agent and the Documentation
Agent under the Loan Documents and the termination of the Commitments. If and to
the extent that the obligations of the Account Party under this Section 8.4 are
unenforceable for any reason, the Account Party agrees to make the maximum
contribution to the payment and satisfaction thereof which is permissible under
applicable law.

     SECTION 8.5 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING BANKS. (a)
The provisions of this Agreement shall be binding upon and inure to the benefit
of
<PAGE>

                                                                              67


the parties hereto and their respective successors and assigns, except that the
Account Party may not assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.

     (b) Any Participating Bank may at any time grant to one or more banks or
other institutions (each, a "PARTICIPANT") participating interests in its
Commitment or any or all of its participating interests in Letter of Credit
Liabilities. In the event of any such grant by a Participating Bank of a
participating interest to a Participant, whether or not upon notice to the
Account Party, the Issuing Banks and the Administrative Agent, such
Participating Bank shall remain responsible for the performance of its
obligations hereunder, and the Account Party, the Issuing Banks and the
Administrative Agent shall continue to deal solely and directly with such
Participating Bank in connection with such Participating Bank's rights and
obligations under this Agreement. Any agreement pursuant to which any
Participating Bank may grant such a participating interest shall provide that
such Participating Bank shall retain the sole right and responsibility to
enforce the obligations of the Account Party hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement or any other Loan Document; PROVIDED that such
participation agreement may provide that such Participating Bank will not agree
to any modification, amendment or waiver of this Agreement described in clause
(b), (c), (d), (g) or (h) of Section 8.1 without the consent of the Participant.
The Account Party agrees that each Participant shall, to the extent provided in
its participation agreement, be entitled to the benefits of Sections 2.8 and 2.9
with respect to its participating interest. An assignment or other transfer
which is not permitted by subsection (c) or (h) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).

     (c) Any Participating Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to any
Participating Bank or any affiliate thereof and, with the consent of the Account
Party (which consent of the Account Party shall not be unreasonably withheld or
delayed, and shall not be required upon the occurrence and during the
continuance of an Event of Default), the Issuing Banks and the Administrative
Agent, to one or more additional banks or financial institutions ("PURCHASING
BANKS") all or any part of its rights and obligations under this Agreement
pursuant to a Commitment Transfer Supplement executed by such Purchasing Bank
and such transferor Participating Bank (and, in the case of a Purchasing Bank
that is not then a Participating Bank or an affiliate thereof, by the Account
Party (except as set forth above), the Issuing Banks and the Administrative
Agent) and delivered to the Administrative Agent for its acceptance and
recording in the Register, together with a processing and recordation fee of
$4,000. The amount of the Commitment of the transferor Participating Bank being
transferred pursuant to each such Commitment Transfer Supplement shall in no
event be less than the lesser of the aggregate amount of such Participating
Bank's Commitment and $5,000,000 and shall be an integral multiple of
$1,000,000. Upon such execution, delivery, acceptance and recording, from and
after the Transfer Effective Date determined pursuant to such Commitment
Transfer Supplement, (x) the Purchasing Bank thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Participating
<PAGE>

                                                                              68


Bank hereunder with a Commitment and a Commitment Percentage as set forth
therein, and (y) the transferor Participating Bank thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement (and, in the case of a Commitment Transfer
Supplement covering all or the remaining portion of a transferor Participating
Bank's rights and obligations under this Agreement, such transferor
Participating Bank shall cease to be a party hereto). Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Bank and the
resulting adjustment of Commitment Percentages arising from the purchase by such
Purchasing Bank of all or a portion of the rights and obligations of such
transferor Participating Bank under this Agreement.

     (d) The Administrative Agent shall maintain at its address referred to in
Section 8.2 a copy of each Commitment Transfer Supplement delivered to it and a
register (the "REGISTER") for the recordation of the names and addresses of the
Participating Banks and the Commitment of each Participating Bank from time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Account Party, the Administrative Agent, the Issuing
Banks and the Participating Banks may treat each Person whose name is recorded
in the Register as the owner of the Commitment recorded therein for all purposes
of this Agreement. The Register shall be available for inspection by the Account
Party, any Issuing Bank or any Participating Bank at any reasonable time and
from time to time upon reasonable prior notice.

     (e) Upon its receipt of a duly executed Commitment Transfer Supplement, the
Administrative Agent shall (i) promptly accept such Commitment Transfer
Supplement, and (ii) on the Transfer Effective Date determined pursuant thereto
record the information contained therein in the Register and give notice of such
acceptance and recordation to the Issuing Banks, the Participating Banks and the
Account Party.

     (f) The Account Party authorizes each Participating Bank to disclose to any
Participant or Purchasing Bank (each, a "TRANSFEREE") and any prospective
Transferee any and all financial information in such Participating Bank's
possession concerning the Account Party and its Affiliates and Subsidiaries
which has been delivered to such Participating Bank by or on behalf of the
Account Party pursuant to this Agreement or which has been delivered to such
Participating Bank by or on behalf of the Account Party in connection with such
Participating Bank's credit evaluation of the Account Party and its Affiliates
and Subsidiaries prior to becoming a party to this Agreement; PROVIDED, that,
prior to any such disclosure, the Transferee or prospective Transferee shall
agree to preserve the confidentiality of any such information received by it
from such Participating Bank.

     (g) If, pursuant to this Section, any interest in this Agreement is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any state thereof, the transferor
Participating Bank shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Participating
Bank (for the benefit of the transferor Participating Bank, the Administrative
Agent and the Account Party) that under applicable law and treaties no
<PAGE>

                                                                              69


taxes will be required to be withheld by the Administrative Agent, the Account
Party or the transferor Participating Bank with respect to any payments to be
made to such Transferee hereunder, (ii) to furnish to the transferor
Participating Bank (and, in the case of any Purchasing Bank registered in the
Register, the Administrative Agent and the Account Party) either U.S. Internal
Revenue Service Form W-8BEN or U.S. Internal Revenue Service Form W-8ECI
(wherein such Transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Participating Bank, the Administrative Agent
and the Account Party) to provide the transferor Participating Bank (and, in the
case of any Purchasing Bank registered in the Register, the Administrative Agent
and the Account Party) a new Form W-8BEN or W-8ECI upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

     (h) Nothing herein shall prohibit any Participating Bank from pledging or
assigning its Commitment or its participation interest in any Reimbursement
Obligations it to any Federal Reserve Bank in accordance with applicable law. No
such pledge or assignment shall release the assigning Participating Bank from
its obligations hereunder.

     (i) No Transferee shall be entitled to receive any greater payment under
Section 2.8 or 2.9 than the transferor Participating Bank would have been
entitled to receive with respect to the rights transferred, unless such transfer
is made with the Account Party's prior written consent or by reason of the
provisions of Section 2.8 or 2.9 requiring such transferor Participating Bank to
designate a different lending office through which it participates in Letters of
Credit hereunder under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.

     SECTION 8.6 SET-OFF. In addition to any rights and remedies of the Issuing
Banks and the Participating Banks provided by law, each Issuing Bank and
Participating Bank shall have the right, without prior notice to the Account
Party, any such notice being expressly waived by the Account Party to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Account Party hereunder (whether at the stated maturity, by acceleration or
otherwise), to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Issuing Bank or such Participating
Bank or any affiliate, branch or agency thereof to or for the credit or the
account of the Account Party. Each Issuing Bank and Participating Bank agrees
promptly to notify the Account Party and the Administrative Agent after any such
set-off and application made by such Issuing Bank or such Participating Bank, as
the case may be, PROVIDED that the failure to give such notice shall not affect
the validity of such set-off and application.
<PAGE>

                                                                              70


     SECTION 8.7 ISSUING BANKS NOT LIABLE. As between the Administrative Agent,
the Issuing Banks and the Participating Banks on the one hand, and the Account
Party on the other, the Account Party assumes all risks of the acts or omissions
of the beneficiary or transferee of any Letter of Credit with respect to its use
of such Letter of Credit. Neither the Administrative Agent, any Issuing Bank,
any Participating Bank, nor any of their respective Related Parties shall be
liable or responsible for: (a) the use which may be made of any Letter of Credit
or any acts or omissions of the beneficiary or any transferee thereof in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement(s) thereon, even if such documents should prove to be in
any or all respects invalid, insufficient, fraudulent or forged; (c) payment by
any Issuing Bank against presentation of documents which do not comply with the
terms of any Letter of Credit, including failure of any documents to bear any
reference or adequate reference to such Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, EXCEPT that the Account Party shall have a claim against the
applicable Issuing Bank, and such Issuing Bank shall be liable to the Account
Party, to the extent, but only to the extent, of any direct, as opposed to
consequential or special, damages suffered by the Account Party which the
Account Party proves were caused by (i) such Issuing Bank's willful misconduct
or gross negligence, as determined by a final, nonappealable judgment of a court
of competent jurisdiction, in determining whether documents presented under any
Letter of Credit are genuine or comply with the terms of such Letter of Credit
or (ii) such Issuing Bank's willful or grossly negligent failure, as determined
by the final, nonappealable judgment of a court of competent jurisdiction, to
make lawful payment under any Letter of Credit after the presentation to it by
the beneficiary (or any transferee of such Letter of Credit) of a draft and
other required documentation strictly complying with the terms and conditions of
such Letter of Credit. In furtherance and not in limitation of the foregoing, an
Issuing Bank may accept sight drafts and accompanying documents presented under
a Letter of Credit that appear on their face to be in order, without
responsibility for further investigation.

     SECTION 8.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Account Party and the Administrative Agent.

     SECTION 8.9 SEVERABILITY. It is the intention of the parties that this
Agreement be enforceable to the fullest extent permissible under applicable law,
but that the unenforceability (or modification to conform to such law) of any
provision or provisions hereof shall not render unenforceable, or impair, the
remainder hereof. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, this Agreement shall, as
to such jurisdiction, be deemed amended to modify or delete, as necessary, the
offending provision or provisions and to alter the bounds thereof in order to
render it or them valid and enforceable to the maximum extent permitted by
applicable law, without in any manner affecting the validity or enforceability
of such provision or provisions in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
<PAGE>

                                                                              71


     SECTION 8.10 INTEGRATION. This Agreement represents the agreement of the
Account Party, the Administrative Agent, the Issuing Banks and the Participating
Banks with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent, the
Issuing Banks or any Participating Bank relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.

     SECTION 8.11 GOVERNING LAW. This Agreement and the rights and obligations
of the parties under this Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.

     SECTION 8.12 SUBMISSION TO JURISDICTION; WAIVERS. The Account Party hereby
irrevocably and unconditionally:

          (a) submits for itself and its property in any legal action or
     proceeding relating to this Agreement and the other Loan Documents, or for
     recognition and enforcement of any judgment in respect thereof, to the
     non-exclusive general jurisdiction of the courts of the State of New York,
     the United Stated District Court for the Southern District of New York, and
     appellate courts from any thereof;

          (b) consents that any such action or proceeding may be brought in such
     courts and waives any objection that it may now or hereafter have to the
     venue of any such action or proceeding in any such court or that such
     action or proceeding was brought in an inconvenient court and agrees not to
     plead or claim the same;

          (c) agrees that service of process in any such action or proceeding
     may be effected by mailing a copy thereof by registered or certified mail
     (or any substantially similar form of mail), postage prepaid, to the
     Account Party at its address set forth in Section 8.2 or at such other
     address of which the Administrative Agent shall have been notified pursuant
     thereto; and

          (d) agrees that nothing herein shall affect the right to effect
     service of process in any other manner permitted by law or shall limit the
     right to sue in any other jurisdiction.

     SECTION 8.13 ACKNOWLEDGMENTS. The Account Party hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and
     delivery of this Agreement and the other Loan Documents;

          (b) none of the Administrative Agent, the Issuing Banks nor any
     Participating Bank has any fiduciary relationship to the Account Party, and
     the relationship between the Administrative Agent, the Issuing Banks and
     the Participating Banks, on the one hand, and the Account Party, on the
     other hand, is solely that of creditor and debtor; and
<PAGE>

                                                                              72


          (c) the Loan Documents do not create or constitute a joint venture
     among the Participating Banks or among the Account Party and the
     Participating Banks.

     SECTION 8.14 JUDGMENT CURRENCY. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
any other Loan Document in any currency (the "ORIGINAL CURRENCY") into another
currency (the "OTHER CURRENCY") the parties hereto agree, to the fullest extent
that they may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Administrative Agent
could purchase the Original Currency with the Other Currency at 11:00 a.m. (Los
Angeles time) on the Business Day preceding that on which final judgment is
given.

     (b) The obligation of the Account Party in respect of any sum due in the
Original Currency from it to any Bank or the Administrative Agent hereunder or
under any other Loan Document shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by such Bank or the Administrative Agent (as the case may be) of any sum
adjudged to be so due in such Other Currency such Bank or the Administrative
Agent (as the case may be) may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency; if the amount of the
Original Currency so purchased is less than the sum originally due to such Bank
or the Administrative Agent (as the case may be) in the Original Currency, the
Account Party agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify such Bank or the Administrative Agent (as the case may
be) against such loss, and if the amount of the Original Currency so purchased
exceeds the sum originally due to any Bank or the Administrative Agent (as the
case may be) in the Original Currency, such Bank or the Administrative Agent (as
the case may be) agrees to remit to the Account Party such excess.

     SECTION 8.15 WAIVERS OF JURY TRIAL. THE ACCOUNT PARTY, THE ADMINISTRATIVE
AGENT, THE ISSUING BANKS AND THE PARTICIPATING BANKS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     SECTION 8.16 DESIGNATED SENIOR DEBT. The Account Party hereby designates
this Agreement and all Debt and other obligations of the Account Party hereunder
and under the other Loan Documents as "Designated Senior Debt", as contemplated
by, and for all purposes under, the Subordinated Note Indentures.
<PAGE>

                                                                             S-1


     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                                 THE AES CORPORATION

                                 By:_________________________________________
                                    Title:

                                 UNION BANK OF CALIFORNIA, N.A., as
                                 Administrative Agent and a Participating Bank

                                 By:_________________________________________
                                    Title:

                                 MORGAN GUARANTY TRUST COMPANY
                                 OF NEW YORK, as Syndication Agent and a
                                 Participating Bank

                                 By:_________________________________________
                                    Title:

                                 BANK OF AMERICA, N.A., as Documentation
                                 Agent and a Participating Bank

                                 By:_________________________________________
                                    Title:
<PAGE>

                                                                             S-2
                                 PARTICIPATING BANKS

                                 BARCLAYS BANK PLC, NEW YORK BRANCH

                                 By:____________________________________________
                                    Title:

                                 CITIBANK, N.A.

                                 By:____________________________________________
                                    Title:

                                 EXPORT DEVELOPMENT CORPORATION

                                 By:____________________________________________
                                    Title:

                                 THE ROYAL BANK OF SCOTLAND PLC

                                 By:____________________________________________
                                    Title:

                                 THE INDUSTRIAL BANK OF JAPAN, LTD.

                                 By:____________________________________________
                                    Title:
<PAGE>

                                                                             S-3

                                 ARAB AMERICAN BANK

                                 By:____________________________________________
                                    Title:

                                 By:____________________________________________
                                    Title:

                                 BANKBOSTON, N.A.

                                 By:____________________________________________
                                    Title:

                                 THE BANK OF NOVA SCOTIA

                                 By:____________________________________________
                                    Title:

                                 BAYERISCHE LANDESBANK
                                 GIROZENTRALE

                                 By:____________________________________________
                                    Title:

                                 By:____________________________________________
                                    Title:

                                 THE CHASE MANHATTAN BANK

                                 By:____________________________________________
                                    Title:
<PAGE>

                                                                             S-4


                                 SUNTRUST BANK, CENTRAL FLORIDA, N.A.

                                 By:____________________________________________
                                    Title:

                                 NATIONAL BANK OF EGYPT
                                 INTERNATIONAL LIMITED

                                 By:____________________________________________
                                    Title:

                                 By:____________________________________________
                                    Title:
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>8
<DESCRIPTION>EXHIBIT 11
<TEXT>

<PAGE>

                                                           EXHIBIT 11
THE  AES CORPORATION
FOR THE PERIODS ENDED SEPTEMBER 30, 1999
AND 1998

<TABLE>
<CAPTION>

                                                       THREE              THREE              NINE               NINE
                                                      MONTHS             MONTHS             MONTHS             MONTHS
                                                       ENDED              ENDED             ENDED              ENDED
                                                      9/30/99            9/30/98           9/30/99            9/30/98
                                                   -----------        -----------       ------------        ---------
<S>                                             <C>                 <C>              <C>                 <C>
BASIC

Weighted average shares outstanding                   191.9               178.6             186.8              176.4
                                                   -----------        -----------       ------------        ---------
Income before extraordinary item                    $    58            $     79          $    116           $    215

Extraordinary Item                                       --                   2                --                  2
                                                   -----------        -----------       ------------        ---------
Net Income                                          $    58            $     81          $    116           $    217
                                                   -----------        -----------       ------------        ---------
                                                   -----------        -----------       ------------        ---------
Basic earnings per share before
Extraordinary item                                  $  0.30            $   0.44          $   0.62           $    1.21
Extraordinary item                                       --                0.01                --                0.01
                                                   -----------        -----------       ------------        ---------
                                                    $  0.30            $   0.45          $   0.62           $    1.22
                                                   -----------        -----------       ------------        ---------
                                                   -----------        -----------       ------------        ---------
DILUTED
Weighted average number of shares of
common stock outstanding                              191.9               178.6             186.8               176.4

Net effect of dilutive stock options and
warrants based on the treasury stock
method using ending market price                        4.8                 4.0               4.5                 4.1

Stock units allocated to the deferred
compensation plans for executives and                   0.2                 0.2               0.2                 0.2
directors
Effect of tecons-based on the                            --                 6.9                --                 6.9
if-converted method
                                                   -----------        -----------       ------------        ---------
Weighted average shares outstanding                   196.9               189.7             191.5               187.6
                                                   -----------        -----------       ------------        ---------
                                                   -----------        -----------       ------------        ---------
Income before extraordinary item                    $    58            $     79          $    116             $   215
Additional contribution to net income if
tecons fully converted                                   --                   3                --                   7
                                                   -----------        -----------       ------------        ---------
Adjusted net income before extraordinary            $    58            $     82          $    116             $   222
item
Extraordinary item                                       --                   2                --                   2
                                                   -----------        -----------       ------------        ---------
Adjusted net income                                 $    58            $     84          $    116             $   224
                                                   -----------        -----------       ------------        ---------
                                                   -----------        -----------       ------------        ---------
Diluted items per share before                      $  0.29            $   0.43          $   0.61             $  1.18
extraordinary item
Extraordinary item                                       --                0.01                --                0.01
                                                   -----------        -----------       ------------        ---------
Total diluted earnings per share                    $  0.29           $    0.44            $ 0.61            $   1.19
                                                   -----------        -----------       ------------        ---------
                                                   -----------        -----------       ------------        ---------

</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>9
<DESCRIPTION>EXHIBIT 27
<TEXT>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE AES CORPORATION AS OF AND FOR
THE PERIOD ENDED SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               SEP-30-1999
<CASH>                                             702
<SECURITIES>                                        49
<RECEIVABLES>                                      679
<ALLOWANCES>                                        49
<INVENTORY>                                        146
<CURRENT-ASSETS>                                 1,866
<PP&E>                                           5,990
<DEPRECIATION>                                     718
<TOTAL-ASSETS>                                  12,106
<CURRENT-LIABILITIES>                            1,878
<BONDS>                                          6,837
<PREFERRED-MANDATORY>                              550
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                       1,500
<TOTAL-LIABILITY-AND-EQUITY>                    12,106
<SALES>                                          2,111
<TOTAL-REVENUES>                                    14
<CGS>                                            1,432
<TOTAL-COSTS>                                    1,432
<OTHER-EXPENSES>                                    44
<LOSS-PROVISION>                                     7
<INTEREST-EXPENSE>                                 417
<INCOME-PRETAX>                                    214
<INCOME-TAX>                                        55
<INCOME-CONTINUING>                                116
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       116
<EPS-BASIC>                                       0.62
<EPS-DILUTED>                                     0.61


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
