1 EXHIBIT 4.3

1
EXHIBIT 4.3

SECURITY AGREEMENT

among

AES CHINA GENERATING CO. LTD.,

BANKERS TRUST COMPANY,
as Trustee

and

BANKERS TRUST COMPANY,
as Collateral Agent

______________________________

Dated as of December __, 1996

______________________________
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TABLE OF CONTENTS

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ARTICLE 1
DEFINITIONS

SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.03. Generic Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 2
THE COLLATERAL

SECTION 2.01. Grant of Security Interest in the Collateral . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03. The Secured Party's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04. No Transfer of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.05. Perfection of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.06. Maintenance of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.07. Termination Date and Release of Rights . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE 3
THE COLLATERAL ACCOUNTS

SECTION 3.01. Establishment of the Collateral Accounts . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.02. Deposits in the Collateral Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03. Maintenance of the Debt Service Reserve Account . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.04. Investment of Funds in the Collateral Accounts . . . . . . . . . . . . . . . . . . . 10
SECTION 3.05. General Provisions Regarding the Collateral Accounts . . . . . . . . . . . . . . . . 11
SECTION 3.06. Distributions from the Debt Service Reserve Account . . . . . . . . . . . . . . . . . 12
SECTION 3.07. Distribution from the Special Proceeds Account. . . . . . . . . . . . . . . . . . . . 12

ARTICLE 4
COVENANTS OF THE COMPANY

SECTION 4.01. Preservation of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.02. Opinions as to Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.04. Waiver of Stay or Extension Laws; Marshaling of Assets . . . . . . . . . . . . . . . 14
SECTION 4.05. Noninterference, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.06. Company Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE 5
REMEDIES ON OCCURRENCE OF AN INDENTURE DEFAULT

SECTION 5.01. Liquidation and Sale of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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SECTION 5.02. Waiver of an Indenture Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.03. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.04. No Remedy Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 6
THE SECURED PARTY

SECTION 6.01. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.02. Secured Party's Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.03. Degree of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 7
THE COLLATERAL AGENT

SECTION 7.01. Appointment and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.02. Performance of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.03. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.04. Reliance upon Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.05. Successor Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.08. Representations and Warranties of the Collateral Agent . . . . . . . . . . . . . . . 22
SECTION 7.09. Waiver of Set-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 8
MISCELLANEOUS

SECTION 8.01. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.02. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.03. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.05. Notices; Payments and Transfers of Funds . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.06. Terms of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.07. Assignment; Third-Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.08. Consent of Secured Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.09. Trial by Jury Waived . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.11. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8.13. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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SECURITY AGREEMENT, dated as of December __, 1996, among AES China
Generating Co. Ltd., a corporation organized under the laws of Bermuda (the
"Company"), Bankers Trust Company, a New York banking corporation, in its
capacity as Trustee (as defined below) under the Indenture (as defined below),
and Bankers Trust Company, a New York banking corporation, in its capacity as
collateral agent (the "Collateral Agent").

R E C I T A L S

WHEREAS, the Company proposes to issue U.S.$180,000,000 aggregate
principal amount of its ___% Notes due 2006 (the "Notes");

WHEREAS, the Notes are being issued pursuant to an Indenture, dated as
of the date hereof (as amended or supplemented from time to time in accordance
with the terms thereof, the "Indenture"), among the Company and Bankers Trust
Company, as trustee (together with its permitted successors thereunder and any
successor trustee appointed pursuant to the provisions thereof, the "Trustee");

WHEREAS, as security for the payment and performance of all of the
obligations of the Company now or hereafter existing under this Agreement, the
Notes and the Indenture, the Company has agreed to grant a security interest in
all of its right, title and interest in and to the Collateral (as defined
herein) on the terms and conditions set forth herein.

A G R E E M E N T S

NOW THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree for the benefit of the Trustee on
behalf of the Noteholders as follows:

ARTICLE 1
DEFINITIONS

SECTION 1.01. Definitions. Capitalized terms used herein without
definition are used as defined in the Indenture. In addition, the following
terms shall have the following meanings:

"APPROVED DEPOSITARY" means The Depository Trust Company and its
successors.

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"AUTHORIZED OFFICERS" means (i) with respect to the Company,
Authorized Officers as defined in the Indenture and (ii) with respect to the
Trustee or the Collateral Agent, Trust Officers as defined in the Indenture.

"CLOSING DATE" means December __, 1996.

"COLLATERAL ACCOUNTS" means the Debt Service Reserve Account and the
Special Proceeds Account.

"COLLATERAL AGENT" means Bankers Trust Company in its capacity as
collateral agent on behalf of the Secured Party, including its successors in
interest, until a successor Person shall have become the Collateral Agent
pursuant to Section 7.05, and thereafter "Collateral Agent" shall mean such
successor Person.

"COLLATERAL MANAGEMENT RIGHTS" means the powers and rights granted to
the Secured Party in Section 6.02.

"DEBT PAYMENT RESERVE" means, on any date, an amount equal to the
aggregate amount of interest due and payable on the Notes on the next
succeeding Interest Payment Date.

"DOLLAR," "DOLLAR" and "$" means the lawful currency of the United
States.

"ELIGIBLE ACCOUNT" means a Dollar denominated demand deposit account
that (i) is maintained with a depository institution or trust company, the
principal offices of which are located in the Borough of Manhattan, The City
and State of New York, and which is organized and existing under the laws of
the United States or the State of New York and subject to supervision and
examination by U.S. federal or New York State banking authorities and the
long-term unsecured debt obligations of which are assigned a rating of "A-" or
higher by S&P and "A3" or higher by Moody's or the short-term unsecured debt
obligations of which are assigned a rating of "A-1" by S&P and "P-1" by
Moody's or (ii) is a segregated Dollar denominated trust account with the
Collateral Agent.

"ENFORCEMENT EXPENSES" means all reasonable costs, expenses,
attorneys' fees and disbursements, accountants' fees and disbursements, fees
and disbursements of financial and technical advisors and all other sums
expended or incurred by the Collateral Agent in connection with the exercise of
any duty, obligation, right, power, option, privilege or remedy under this
Agreement, including, without limitation, in connection with (i) the protection
or preservation of any Collateral, (ii) any action, litigation or proceeding
relating to any of the Collateral, and (iii) the foreclosure on, and
acquisition or sale of, the Collateral or any portion thereof.

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"INDENTURE DEFAULT" means "EVENT OF DEFAULT" as defined in the
Indenture.

"INTERIM RESERVE" means an amount equal to all scheduled payments of
interest on the Notes due and payable on or prior to July __, 1998.

"LIQUIDATION PROCEEDS" means all cash or other property received by
the Collateral Agent (without making any deduction for Enforcement Expenses)
which represents proceeds from the sale or other disposition of any of the
Collateral.

"NOTEHOLDER" means the registered holder of any Note pursuant to the
terms thereof and the Indenture.

"PAYMENT DATE" means any date on which interest on the Notes is due
and payable.

"PRC" means the Peoples's Republic of China.

"SECURED PARTY" means the Trustee, acting for the benefit of the
Noteholders, the Trustee in its individual capacity and the Collateral Agent,
as their respective interests may appear.

"SECURITY INTEREST" means the Lien on and security interest in the
Collateral granted pursuant to Section 2.01(a).

"TERMINATION DATE" means the earlier of (i) the date on which all
amounts payable on the Notes and pursuant to the Indenture and this Agreement
have been paid in full and (ii) the date on which the Company shall have
satisfied the provisions of Section 7.03 or 7.04 of the Indenture.

"U.S." or "UNITED STATES" means the United States of America.

"UNCERTIFICATED U.S. GOVERNMENT SECURITY" means any Dollar Permitted
Investment which is issued in the form of an entry made on the records of a
Federal Reserve Bank.

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SECTION 1.02. Other Definitions.

Terms Defined in Section
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Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Debt Service Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
Dollar Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Maturing Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.05
Secured Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
Secured Party's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
Special Proceeds Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

SECTION 1.03. Generic Terms. The terms "hereof," "herein" or
"hereunder," unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms "Article" or "Section" shall refer to an Article or Section of this
Agreement. The definition of a term shall include the singular, the plural,
the past, the present, the future, the active and the passive forms of such
term.

ARTICLE 2
THE COLLATERAL

SECTION 2.01. Grant of Security Interest in the Collateral.

(a) In order to secure the full and punctual payment of, and the
performance of all of the Secured Obligations owing from time to time to the
Secured Party in accordance with the terms thereof, the Company hereby assigns,
grants, pledges, transfers and conveys to the Collateral Agent, on behalf of
and for the benefit of the Secured Party, all of its right, title and interest,
including, to the fullest extent permitted by law, all rights, powers and
options (but none of the obligations, except to the extent required by law) in
and to, and hereby grants to the Collateral Agent, on behalf of and for the
benefit of the Secured Party a lien on, and security interest in, all of such
party's right, title and interest in and to the following assets (all being
collectively referred to as the "Collateral"):

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(i) the Collateral Accounts and all amounts on
deposit therein at any time, including all amounts deposited therein
on the Closing Date;

(ii) all of the Company's right, title and
interest in and to investments (including Dollar Permitted
Investments) made with proceeds of the property described in clause
(i) above or made with amounts on deposit in the Collateral Accounts;
and

(iii) all distributions, revenues, products,
substitutions, benefits, profits and proceeds, in whatever form, of
any of the foregoing including, without limitation, any monies,
agreements or securities received by the Collateral Agent in
accordance with Section 7.02 or 7.03 of the Indenture.

(b) In order to effectuate the provisions and purposes of this
Agreement, including the perfection of the Security Interest in the Collateral
granted pursuant to Section 2.01(a), the Company shall take such steps as are
necessary or reasonably requested by the Collateral Agent or the Secured Party
for the preservation, protection, perfection, maintenance or continuation of
such Security Interest, including, but not limited to, the execution and filing
of appropriate financing statements or notices regarding the granting of a Lien
on the Collateral in the United States, Hong Kong, the PRC or Bermuda.

SECTION 2.02. Priority. The Company intends the Security Interest in
favor of the Secured Party to be prior to all other Liens in respect of the
Collateral and will take all actions necessary to obtain and maintain, in favor
of the Collateral Agent, for the benefit of the Secured Party, a first priority
lien on, and a first priority perfected security interest in, the Collateral.
Subject to the provisions hereof specifying the rights and powers of the
Secured Party from time to time to control certain specified matters relating
to the Collateral, the Secured Party shall have all of the rights, remedies and
resources with respect to the Collateral afforded a secured party under the
Uniform Commercial Code of the State of New York and all other applicable law
in addition to, and not in limitation of, the other rights, remedies and
recourse granted to the Secured Party by this Agreement or any other law
relating to the creation and perfection of liens on, and security interests in,
the Collateral.

SECTION 2.03. The Secured Party's Interest. The "Secured Party's
Interest" shall mean the interest of the Trustee in the Collateral, to secure
the full and punctual payment of all amounts from time to time owing by the
Company to the Noteholders, the Trustee and the Collateral Agent, and the
performance by the Company of all of its other obligations from time to time
owing to the Noteholders, the Trustee, and the Collateral Agent under this
Agreement, the Notes and the Indenture (collectively, the "Secured
Obligations") including, without duplication, the following:

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(a) the payment of the principal of the Notes, together with all
interest and Additional Amounts, if any, thereon and any other amounts payable
with respect thereto as provided therein or in the Indenture;

(b) the payment of all other amounts payable to, and the performance
of all other obligations owing to, the Noteholders, the Trustee and the
Collateral Agent pursuant to the terms of this Agreement, the Notes and the
Indenture, including, without limitation, all reasonable costs, expenses,
attorneys' fees and disbursements, accountants' fees and disbursements and
other sums, fees and disbursements expended or incurred by the Trustee or any
of its officers, directors, employees or agents (including the Collateral
Agent) in connection with the exercise by the Trustee or any such officers,
directors, employees or agents, pursuant to this Agreement, the Notes or the
Indenture, of any duty, obligation, right, power, option, privilege or remedy
as collateral assignee of the Collateral, hereunder or under the Notes, to the
extent not previously recovered by the Trustee, including, without limitation,
all reasonable attorneys' fees and expenses and all other reasonable and
necessary amounts paid or advanced from time to time by the Trustee or any of
its agents (A) in connection with (1) the protection or preservation of the
Security Interest, (2) the enforcement of any rights or remedies hereunder or
under the Notes and (3) any action, litigation or proceeding relating to this
Agreement or the Notes, or the Collateral or any portion thereof; and (B) by
reason of or in connection with the acquisition, ownership or sale of the
Collateral or any portion thereof.

The Secured Party's Interest, and all right, title and interest of the
Secured Party in, to and under the Collateral and this Agreement shall continue
until terminated pursuant to Section 2.07.

SECTION 2.04. No Transfer of Duties. The Security Interest is granted
as security only and shall not impose any obligation on the Secured Party or
the Collateral Agent to perform or observe any term, covenant, condition or
agreement of the Company herein or with respect to any of the Collateral or
impose any liability on the Secured Party or the Collateral Agent for any act
or omission on the part of the Company relating hereto or thereto or for any
breach of any representation or warranty on the part of the Company contained
herein or therein or made in connection herewith or therewith.

SECTION 2.05. Perfection of Security Interest.

(a) Upon each investment of funds in the Collateral Accounts in
Dollar Permitted Investments which consist of Uncertificated U.S. Government
Securities, the Collateral Agent shall cause such Uncertificated U.S.
Government Securities to be held by the Collateral Agent as Collateral under
this Agreement.

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(b) Upon each investment of funds in the Collateral Accounts in
Dollar Permitted Investments other than Uncertificated U.S. Government
Securities or securities which have been deposited with an Approved Depositary,
the Collateral Agent shall (i) cause the securities or other instruments
evidencing such Dollar Permitted Investments (A) in the case of instruments, to
be issued in the name of the Collateral Agent or its nominee and (B) to be
delivered to the Collateral Agent either in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or assignment
in blank, with signatures appropriately guaranteed, to be held by the
Collateral Agent as Collateral under this Agreement, and (ii) in the case of
any Dollar Permitted Investment described in clause (c) of the definition
thereof, (A) cause the securities underlying such obligation to be delivered to
the Collateral Agent either in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in blank,
with signatures appropriately guaranteed, to be held by the Collateral Agent as
Collateral under this Agreement, and (B) notify the counterparty to such
obligation that such obligation is subject to the Lien of this Agreement.

(c) Upon each investment of funds in the Collateral Accounts in
Dollar Permitted Investments which have been deposited with an Approved
Depositary, the Collateral Agent shall cause the Approved Depositary to make
appropriate entries to the account of the Collateral Agent on the books of such
Approved Depositary to reflect the transfer of all securities which have been
deposited with such Approved Depositary to the Collateral Agent and to deliver
to the Collateral Agent a written confirmation of the book-entry transfer of
such securities into such account, to be held by the Collateral Agent as
Collateral under this Agreement.

(d) If required for the validity or perfection of the Security
Interest herein, on or prior to the Closing Date, the Company shall file in
Bermuda any registration statements that are necessary in connection with the
execution and delivery of this Agreement and the granting and perfection of the
Security Interest hereunder. The Company shall promptly notify the Collateral
Agent of any filings made pursuant to this Section 2.05(d) and deliver to the
Collateral Agent copies of such filings pursuant to the notice provisions set
forth in Section 8.05.

SECTION 2.06. Maintenance of Collateral.

(a) Safekeeping by the Collateral Agent. The Collateral Agent
agrees to maintain all Collateral received by it and all records and documents
relating thereto at the office of the Collateral Agent specified in Section
8.05. The Collateral Agent shall keep all Collateral and documentation related
thereto in its possession separate and apart from all other property that it is
holding in its possession and from its own

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general assets and shall maintain accurate records pertaining to the Dollar
Permitted Investments, the Collateral Accounts and all other Collateral in such
a manner as shall enable the Secured Party and the Company to verify the
accuracy of such record keeping. The Collateral Agent's books and records
shall at all times show that the Collateral in its possession is held by the
Collateral Agent as agent of the Secured Party and is not the property of the
Collateral Agent. The Collateral Agent will promptly report to the Trustee and
the Company any failure on its part to hold the Collateral as provided in this
subsection 2.06(a) and will promptly take appropriate action to remedy any such
failure.

(b) Access. The Collateral Agent shall permit each of the Company
and the Trustee, or its duly authorized representatives, attorneys, auditors or
designees, to inspect the Collateral in the possession of or otherwise under
the control of the Collateral Agent pursuant hereto at such reasonable times
during normal business hours as the Company or the Trustee may reasonably
request with prior written notice.

SECTION 2.07. Termination Date and Release of Rights. On the
Termination Date, the rights, remedies, powers, duties, authority and
obligations conferred on the Collateral Agent and the Secured Party pursuant to
this Agreement shall terminate and be of no further force and effect, and all
rights, remedies, powers, duties, authority and obligations of the Collateral
Agent and the Secured Party with respect to the Collateral shall be
automatically released. On the Termination Date, the Collateral Agent and the
Trustee will, at the expense of the Company, (i) execute such instruments of
transfer and release, in recordable form if necessary, in favor of the Company
as the Company may reasonably request, (ii) deliver any Collateral in its
possession to the Company or its designee, and (iii) otherwise transfer and
release the lien of this Agreement and transfer and release and deliver to the
Company or its designee the Collateral.

ARTICLE 3
THE COLLATERAL ACCOUNTS

SECTION 3.01. Establishment of the Collateral Accounts.

(a) Debt Service Reserve Account. The Collateral Agent shall, on or
prior to the Closing Date, establish, in the Borough of Manhattan, The City and
State of New York, a segregated account, which shall be an Eligible Account,
designated "Debt Service Reserve Account - Bankers Trust Company, as Collateral
Agent under the Security Agreement dated as of December __, 1996 with AES China
Generating Co. Ltd., et al." (the "Debt Service Reserve Account"). The
Collateral Agent shall not commingle funds in the Debt Service Reserve Account
with any other moneys and

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shall hold all moneys deposited from time to time in the Debt Service Reserve
Account and all investments made with such moneys as part of the Collateral.

(b) Special Proceeds Account. Prior to the delivery to it by the
Company of any Special Proceeds, the Collateral Agent shall establish, in the
Borough of Manhattan, The City and State of New York, a segregated account,
which shall be an Eligible Account, designated "Special Proceeds Account
-Bankers Trust Company, as Collateral Agent under the Security Agreement dated
as of December __, 1996 with AES China Generating Co. Ltd., et al." (the
"Special Proceeds Account"). The Collateral Agent shall not commingle funds in
the Special Proceeds Account with any other moneys and shall hold all moneys
deposited in the Special Proceeds Account and all investments made with such
moneys as part of the Collateral.

SECTION 3.02. Deposits in the Collateral Accounts.

(a) On the Closing Date, the Company shall transfer to the
Collateral Agent from the net proceeds of the sale of the Notes for deposit by
the Collateral Agent in the Debt Service Reserve Account an amount equal to the
Interim Reserve and the Debt Payment Reserve. Thereafter, the Collateral Agent
shall deposit in the Debt Service Reserve Account all interest, principal and
premium payments from Dollar Permitted Investments made by the Collateral Agent
with respect to the Collateral held in the Debt Service Reserve Account.

(b) The Company shall transfer an amount equal to Special Proceeds
to the Collateral Agent for deposit in the Special Proceeds Account. If the
Company receives any Special Proceeds, such proceeds shall be deemed to have
been received in trust for the benefit of the Collateral Agent and shall be
transferred to the Collateral Agent for deposit in the Collateral Accounts as
soon as practicable. Thereafter, the Collateral Agent shall deposit in the
Special Proceeds Account all interest, principal and premium payments from
Dollar Permitted Investments made by the Collateral Agent with respect to the
Collateral held in the Special Proceeds Account.

SECTION 3.03. Maintenance of the Debt Service Reserve Account. From
the Closing Date until July __, 1998, the Company shall maintain on deposit
with the Collateral Agent an amount in the Debt Service Reserve Account in
Dollars at least equal to the sum of (i) the Interim Reserve, less the
aggregate amount of interest paid to Holders on all prior Interest Payment
Dates, and (ii) the Debt Payment Reserve. After July__, 1998, and on or prior
to the Stated Maturity of the Notes, the Company shall be required to maintain
on deposit in the Debt Service Reserve Account an amount in Dollars at least
equal to the Debt Payment Reserve except that if funds in the Debt Service
Reserve Account have been withdrawn by the Collateral Agent and paid to the
Trustee to pay interest due on any Interest Payment Date, the Company

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shall have a period of 90 days after any Interest Payment Date to make
additional deposit into the Debt Service Reserve Account such that the balance
on deposit therein is at least equal to the Debt Payment Reserve.

SECTION 3.04. Investment of Funds in the Collateral Accounts.

(a) So long as no Indenture Default shall have occurred and be
continuing, all funds in the Collateral Accounts shall be invested and
reinvested by the Collateral Agent in Dollar Permitted Investments in
accordance with written instructions given to the Collateral Agent by the
Company or, in the absence of such instructions, in the types of obligations as
set forth in clause (a) of the definition of "Dollar Permitted Investments" in
the Indenture, provided, however, that if any Indenture Default shall have
occurred and be continuing, the Collateral Agent shall invest funds in the
Collateral Accounts in Dollar Permitted Investments only in accordance with the
written instructions of the Trustee. If no written direction with respect to
the Collateral Accounts is received by the Collateral Agent during any period
in which an Indenture Default has occurred and is continuing, investment of
funds in the Collateral Accounts shall be made in the types of Dollar Permitted
Investments that were held by the Collateral Agent immediately prior to the
occurrence of such Indenture Default. All income or other gain from the
investment of moneys deposited in each Collateral Account shall be deposited in
such Collateral Account immediately upon receipt, and any loss resulting from
the investment of moneys deposited in either Collateral Account shall be
charged to such Collateral Account. Each investment made in the Debt Service
Reserve Account pursuant to this Section 3.04(a) on any date shall mature not
later than the Payment Date next succeeding the day such investment is made;
provided, that if, on the date of any investment, the Collateral Agent holds in
the Debt Service Reserve Account Dollar Permitted Investments maturing not
later than the next succeeding Payment Date ("Maturing Securities") and the
aggregate principal and interest payable on such Maturing Securities would be
sufficient to pay all amounts due on the Secured Obligations on such Payment
Date, the Collateral Agent shall invest any remaining funds in the Debt Service
Reserve Account in Dollar Permitted Investments which mature not later than the
next succeeding Payment Date for which Maturing Securities are insufficient to
pay all amounts then due on the Secured Obligations.

(b) Prior to or contemporaneously with the making of any investment
pursuant to Section 3.01(a), the Collateral Agent shall take such steps as may
be necessary to comply with the applicable provisions of Section 2.05.

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SECTION 3.05. General Provisions Regarding the Collateral Accounts.

(a) Promptly upon the establishment (initially or upon any
relocation) of the Debt Service Reserve Account and the Special Proceeds
Account, the Collateral Agent shall advise the Company and the Trustee in
writing of the name of the officer of such depository institution who is
responsible for overseeing such Collateral Account, the Collateral Account
number and the individuals whose names appear on the signature cards for such
Collateral Account, if applicable.

(b) Prior to the deposit of any funds therein pursuant hereto, the
Company shall cause each depository institution with which a Collateral Account
is established (including the Collateral Agent) to execute and deliver to the
Trustee an irrevocable written agreement, in form and substance satisfactory to
the Trustee, waiving, to the extent permitted under applicable law, (i) any
banker's or other statutory or similar Lien and (ii) any right of set-off or
other similar right under applicable law with respect to the Collateral Account
held by it and agreeing to notify the Company, the Collateral Agent and the
Trustee of any charge or claim against or with respect to the Collateral
Account held by it. The Collateral Agent shall give the Company and the
Trustee prior written notice of any change in the depositary institution in
which any Collateral Account is established or in any related Collateral
Account information. Anything herein to the contrary notwithstanding, unless
consented to by the Trustee in advance and in writing, the Collateral Agent
shall not have any right to change the depositary institution in which any
Collateral Account is established.

(c) On or before each Payment Date, the Collateral Agent shall
prepare a collateral report containing a description of the Collateral and
setting forth in reasonable detail the principal balance, as of the last day of
the immediately preceding month, of the Dollar Permitted Investments and shall
furnish copies of such report to the Trustee and the Company.

(d) If at any time either Collateral Account ceases to be an
Eligible Account, the Collateral Agent shall establish, in accordance with the
requirements of Section 3.01(a), a successor Collateral Account thereto which
shall be an Eligible Account at a depository institution acceptable to the
Trustee.

(e) Any investment of funds in the Collateral Accounts shall be made
in accordance with Section 3.04 in the name of the Collateral Agent or in the
name of any nominee of the Collateral Agent. Subject to the other provisions
hereof, the Collateral Agent shall have sole control over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment, if any, shall be delivered directly to the Collateral Agent,
together with each document

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of transfer, if any, necessary to transfer title to such investment to the
Collateral Agent in a manner which complies with Section 2.05 and this section
3.05

(f) All moneys on deposit in the Collateral Accounts, together with
any Dollar Permitted Investments in which such moneys may be invested or
reinvested, and any gains from such investments, shall constitute Collateral
hereunder subject to the Security Interest of the Collateral Agent for the
benefit of the Secured Party.

(g) Subject to Section 7.03, the Collateral Agent shall not be
liable for any loss on any Dollar Permitted Investment, except for losses
attributable to the failure of the Collateral Agent to comply with its
obligations hereunder or to make payments on Dollar Permitted Investments as to
which the Collateral Agent, in its commercial capacity, is obligated.

SECTION 3.06. Distributions from the Debt Service Reserve Account.
Unless an Indenture Default shall have occurred and be continuing, on each
Payment Date, the Collateral Agent shall withdraw and distribute funds from the
Debt Service Reserve Account in the following priorities:

FIRST, the Collateral Agent shall transfer to the Trustee in
accordance with Section 8.05 an amount equal to the amount of interest
due and payable on the Notes on such Payment Date; provided that on
each Payment Date on and after July __, 1998, the Collateral Agent
shall only transfer such amount if and to the extent it has received
notice from the Trustee that the Trustee has not received an amount
from the Company that is sufficient to pay the full amount of interest
payable on such Payment Date.

SECOND, the Collateral Agent shall transfer to the Trustee in
accordance with Section 8.05 for release to the Company any amounts
held by the Collateral Agent in excess of the amounts required to be
held by the Collateral Agent pursuant to Section 3.03.

SECTION 3.07. Distribution from the Special Proceeds Account. In the
event of a Special Proceeds Offer, the Collateral Agent shall transfer to the
Trustee in accordance with Section 8.05 all funds in the Special Proceeds
Account for application by the Trustee in accordance with and subject to the
provisions of Section 3.12 and Article 10 of the Indenture.

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ARTICLE 4
COVENANTS OF THE COMPANY

SECTION 4.01. Preservation of Collateral. Subject to the rights,
powers and authorities granted to the Collateral Agent and the Secured Party in
this Agreement, the Company shall take such action as is necessary with respect
to the Collateral in order to preserve, maintain and service such Collateral
and to permit (subject to the rights of the Secured Party) the Collateral Agent
to perform its obligations with respect to such Collateral as provided herein.
The Company will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such instruments of transfer or take such
other steps or actions as may be necessary, or reasonably required by the
Trustee, to perfect the Security Interest granted hereunder in the Collateral,
to ensure that such Security Interest rank prior to all other Liens and to
preserve the priority of such Security Interest and the validity and
enforceability thereof. Upon a delivery or substitution of Collateral, the
Company shall, to the fullest extent possible, take such actions as are
necessary and appropriate and that may be taken by the Company to create for
the benefit of the Collateral Agent a valid first priority security interest in
the Collateral so delivered and to deliver such Collateral to the Collateral
Agent, free and clear of any other Lien, together with satisfactory assurances
thereof, and to pay any reasonable costs incurred by the Secured Party, the
Collateral Agent, the Company (including its agents) or otherwise in connection
with such delivery.

SECTION 4.02. Opinions as to Collateral. Not more than 90 days nor
less than 30 days prior to each date on which the Company proposes to take any
action contemplated by Section 4.06, the Company shall, at its own cost and
expense, furnish to the Trustee and the Collateral Agent an Opinion of Counsel
either (i) stating that, in the opinion of such counsel, such action has been
taken with respect to the recording, filing, rerecording, amendment and
refiling of this Agreement, any supplements and any other requisite documents
and with respect to the execution, filing, refiling or amendment of any
financing statements and continuation statements as are necessary to perfect,
maintain and protect the Security Interest of the Collateral Agent, on behalf
of the Secured Party, in the Collateral against all creditors of and purchasers
from the Company, and that such security Interest shall remain valid, effective
and of a first priority, and reciting the details of such action, or (ii)
stating that, in the opinion of such counsel, no such action is necessary to
maintain such perfected Security Interest. Such Opinion of Counsel shall
describe each recording, filing, rerecording, amendment and refiling of this
Agreement, any supplements and any other requisite documents and the execution
and filing or refiling as amended of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to perfect,
maintain and protect the Security Interest of the Collateral Agent, on behalf
of the Secured Party for a period, if applicable, specified

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in the Opinion, continuing until a date not earlier than 18 months from the
date of such Opinion.

SECTION 4.03. Notices. In the event the Company acquires knowledge of
the occurrence and continuance of any Indenture Default or any event which,
with the giving of notice or lapse of time, or both, would become an Indenture
Default, the Company shall immediately give written notice thereof to the
Collateral Agent and the Trustee, setting forth the details thereof and the
action which the Company is taking or proposes to take with respect thereto.

SECTION 4.04. Waiver of Stay or Extension Laws; Marshaling of Assets.
The Company covenants, to the fullest extent permitted by applicable law, that
it will not at any time insist on, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any appraisement, valuation, stay, extension
or redemption law wherever enacted, now or at anytime hereafter in force, in
order to prevent or hinder the enforcement of this Agreement or any sale of the
Collateral or any part thereof, or the possession thereof by any purchaser at
any sale under Article 7; and the Company, to the fullest extent permitted by
applicable law, for itself and all who may claim under it, hereby waives the
benefit of all such laws, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Secured Party or the
Collateral Agent, but will suffer and permit the execution of every such power
as though no such law had been enacted. The Company, for itself and all who
may claim under it, waives, to the fullest extent permitted by applicable law,
all right to have the Collateral marshaled upon any foreclosure or other
disposition thereof.

SECTION 4.05. Noninterference, Etc. The Company shall not (i) waive or
alter any of its rights under the Collateral (or any agreement or instrument
relating thereto) without the prior written consent of the Trustee; or (ii)
fail to pay any tax, assessment, charge or fee levied or assessed against the
Collateral, or fail to defend any action, if such failure to pay or defend may
be reasonably likely to adversely affect the priority or enforceability of the
Company's right, title or interest in and to the Collateral or the Collateral
Agent's Security Interest in the Collateral.

SECTION 4.06. Company Changes.

(a) Change in Name, Structure, Etc. The Company shall not change its
name, identity, or corporate or legal structure in any manner unless, prior to
such change, such party shall have effected any necessary or appropriate
recordations of assignments or amendments thereto and filings of financing
statements or amendments thereto and shall have delivered to the Collateral
Agent and the Trustee an Opinion of Counsel of the type described in Section
4.02.

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(b) Relocation of Company. The Company shall give the Trustee and
the Collateral Agent at least 15 Business Days prior written notice of any
relocation of its principal executive office. If the Company relocates (i) its
principal executive office or principal place of business from Beijing, PRC, or
(ii) the locations where it keeps or holds any Collateral from New York, New
York or any records relating to any Collateral from Beijing, PRC, it shall give
prior notice thereof to the Trustee and the Collateral Agent in accordance with
Section 8.05 and shall effect whatever appropriate recordations and filings are
necessary and shall provide an Opinion of Counsel to the Trustee and the
Collateral Agent, to the effect described in Section 4.06.

ARTICLE 5
REMEDIES ON OCCURRENCE OF AN INDENTURE DEFAULT

SECTION 5.01. Liquidation and Sale of Collateral. If an Indenture
Default has occurred and is continuing:

(a) The Trustee may exercise any and all Collateral Management
Rights and, in connection therewith, in its sole discretion, may elect to
preserve all or part of the Collateral and direct the Collateral Agent to
collect and convert into cash all or any part of the Collateral. If the
Trustee directs the Collateral Agent to collect and convert into cash all or
any part of the Collateral, the Collateral Agent shall sell, assign and deliver
for cash the whole or any part of the Collateral for cash, at public or private
sale, in such manner and upon such terms and conditions as the Trustee shall
have directed in writing; provided that, prior to any such sale, the Collateral
Agent, on behalf of the Secured Party, shall have given notice to the Company
that it has been directed by the Trustee to liquidate all or any part of the
Collateral and shall have given such other notices and taken such other steps
as the Trustee has advised the Collateral Agent in writing or as are required
by law or regulation to be given or taken prior to the sale of such property.
Any sale shall be conducted in a commercially reasonable manner. To the extent
permitted by applicable law, the Collateral Agent shall be authorized at any
sale made under this Section 5.01 (if the Trustee deems it advisable and
directs the Collateral Agent to do so) to restrict the prospective bidders or
purchasers to Persons to whom such sale may be made without registration under
any applicable securities laws. The Trustee and the Collateral Agent shall be
entitled to obtain from the Company all records and documentation in the
possession of the Company pertaining to any Collateral. Upon consummation of
any such sale, the Trustee, or the Collateral Agent acting on behalf of and at
the direction of the Trustee, shall have the right to assign, transfer, endorse
and deliver to the purchaser or purchasers thereof, free and clear of any Lien,
the Collateral, or any portion thereof or any interest therein, so sold. To
facilitate the foregoing, the Company hereby irrevocably appoints and empowers
the Trustee and the Collateral

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Agent, or either one acting alone, as its agents and attorneys-in-fact, with
full power of substitution, for the purpose of executing, assigning and
delivering and doing all things necessary to transfer title to the Collateral,
or any part thereof, in connection with a sale thereof pursuant hereto. Each
purchaser at any such sale shall hold the property purchased by it absolutely
free from any claim or right on the part of the Company and the Secured Party;
and the Company hereby irrevocably waives, to the fullest extent permitted by
applicable law, all rights of redemption, stay, marshaling of assets or
appraisal that the Company now has or may at any time in the future have under
applicable law or statute now existing or hereafter enacted.

(b) In the event of any sale, collection, conversion or other
disposition into cash of the Collateral, or any part thereof, after deducting
any actual costs and expenses incurred in connection with any such disposition,
the Collateral Agent shall distribute the proceeds thereof to the Trustee for
distribution in accordance with the priorities set forth in the Indenture.

(c) The Collateral Agent and the Trustee, as the case may be, may
exercise the powers and rights granted by this Section 5.01, without notice or
demand to the Company, except as provided in Section 5.01(a).

SECTION 5.02. Waiver of an Indenture Default. The Trustee, as Secured
Party, shall have the sole right to give effect hereunder to any waiver of an
Indenture Default pursuant to Section 5.04 of the Indenture by means of a
writing setting forth the terms, conditions and extent of such waiver, signed
by such Secured Party and delivered to the Collateral Agent and the Company.
Any such writing shall be binding on the Collateral Agent. Unless such writing
expressly provides to the contrary, the effect of any such writing shall extend
only to the specified event or occurrence which gave rise to the Indenture
Default so waived and not to any other similar event or occurrence which occurs
subsequent to the date of such waiver.

SECTION 5.03. Restoration of Rights and Remedies. If the Collateral
Agent or the Secured Party has instituted a proceeding to enforce any right or
remedy under this Agreement, and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Collateral
Agent or the Secured Party, then and in every such case the Company, the
Collateral Agent and the Secured Party shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Collateral
Agent and the Secured Party hereunder shall, subject to any determination in
such proceeding, continue as though no such proceeding had been instituted.

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SECTION 5.04. No Remedy Exclusive. No right or remedy herein
conferred on or reserved to the Collateral Agent or the Secured Party hereunder
is intended to be exclusive of any other right or remedy, and every right or
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law, in equity or otherwise; and each and every right, power and remedy, whether
specifically herein given or otherwise existing, may be exercised from time to
time and as often and in such order as may be deemed expedient by the Collateral
Agent or the Secured Party, and the exercise of any right, power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy.

ARTICLE 6
THE SECURED PARTY

SECTION 6.01. Appointment. From and after the Closing Date until the
Termination Date, the Trustee shall be the Secured Party hereunder. No party
dealing with the Secured Party in connection with the exercise of its rights or
duties hereunder shall have any obligation to determine the right, power and
authority of the Secured Party to exercise such rights or the compliance of
such exercise with the provisions hereof, and each and every party may
conclusively rely on the existence of such right, power, authority and
compliance.

SECTION 6.02. Secured Party's Authority. The Company hereby
irrevocably appoints the Secured Party its true and lawful attorney, with full
power of substitution, in the name of the Company, the Secured Party or
otherwise, but at the expense of the Company, to the extent permitted by law to
exercise, at any time and from time to time while any Indenture Default has
occurred and is continuing, any and all of the following powers with respect to
all or any of the Collateral: (i) to demand, ▇▇▇ for, collect, receive and
give acquittance for any and all monies due or to become due upon or by virtue
thereof, (ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto, (iii) to sell, transfer, assign or
otherwise deal with the same or the proceeds thereof, and (iv) to extend the
time of payment of any or all thereof and to make any allowance or other
adjustments with respect thereto; provided that the foregoing powers and rights
shall be exercised in accordance with the provisions of Article 5 and Article
7.

SECTION 6.03. Degree of Care. Notwithstanding any term or provision
of this Agreement, the Secured Party shall incur no liability to the Company for
any action taken or omitted by the Secured Party in connection with the
Collateral, except for any gross negligence or wilfull misconduct on the part of
the Secured Party. The Secured Party shall be protected and shall incur no
liability to any such party in relying on the accuracy, acting in reliance on
the contents, and assuming the

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genuineness, of any notice, demand, certificate, signature, instrument or other
document believed by the Secured Party to be genuine and to have been duly
executed by the appropriate signatory, and (absent manifest error or actual
knowledge to the contrary) the Secured Party shall not be required to make any
independent investigation with respect thereto. The Secured Party shall, at
all times, be free independently to establish to its reasonable satisfaction
the existence or nonexistence, as the case may be, of any fact the existence or
nonexistence of which shall be a condition to the exercise or enforcement of
any right or remedy under this Agreement.

ARTICLE 7
THE COLLATERAL AGENT

SECTION 7.01. Appointment and Powers. Subject to the terms and
conditions hereof, the Secured Party hereby appoints Bankers Trust Company as
the Collateral Agent, and Bankers Trust Company hereby accepts such appointment
and agrees to act as Collateral Agent for the Secured Party, to maintain
custody and possession of the Collateral and to perform the other duties of the
Collateral Agent in accordance with the provisions of this Agreement. The
Secured Party hereby authorizes the Collateral Agent to take such action on its
behalf, and to exercise such rights, remedies, powers and privileges hereunder,
as the Secured Party may direct and as are specifically authorized to be
exercised by the Collateral Agent by the terms hereof, together with such
actions, rights, remedies, powers and privileges as are reasonably incidental
thereto. The Collateral Agent shall act on and in compliance with the
instructions of the Secured Party given in accordance with Section 8.05
promptly following receipt of such instructions. Receipt of such instructions
shall not be a condition to the exercise by the Collateral Agent of its express
duties hereunder, except where this Agreement provides that the Collateral
Agent is permitted to act only following and in accordance with such
instructions.

SECTION 7.02. Performance of Duties. Subject to the requirements of
this Agreement, the Collateral Agent may perform any of its duties hereunder by
or through agents, shall be entitled to consult with counsel and financial
advisors concerning matters pertaining to the agencies hereby created or its
duties hereunder and shall not be liable for actions taken, or omitted to be
taken, in good faith and in accordance with the advice of such counsel or
financial advisors. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or as
directed by the Secured Party in accordance with Section 8.05. The Collateral
Agent shall not be required to take any discretionary actions hereunder, except
(i) at the direction and expense of the Secured Party given pursuant to Section
8.05 or (ii) as provided in Article 4 and Sections 3.05 and 3.06. The
relationship between the Collateral Agent and the Secured Party is that of
agent and principal only, and nothing herein shall be deemed to constitute the
Collateral Agent a trustee

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for the Secured Party or impose on the Collateral Agent any obligations other
than those for which express provision is made herein.

SECTION 7.03. Limitation on Liability. Neither the Collateral Agent
nor the Secured Party, nor any of their respective directors, officers or
employees, shall be liable for any action taken or omitted to be taken by it or
them hereunder, or in connection herewith, except that each of the Collateral
Agent and the Secured Party shall be liable for its own gross negligence or
wilfull misconduct; nor shall the Collateral Agent or the Secured Party be
responsible for the validity, effectiveness, value, sufficiency or
enforceability against the Company of this Agreement or the Collateral (or any
part thereof). Notwithstanding any term or provision of this Agreement, the
Collateral Agent shall incur no liability to the Company for any action taken
or omitted by the Collateral Agent in connection with the Collateral, except
for the negligence or wilfull misconduct on the part of the Collateral Agent,
and, further, shall incur no liability to the Secured Party except for a breach
of the terms of this Agreement or for gross negligence or wilfull misconduct in
carrying out its duties to the Secured Party. The Collateral Agent shall be
protected and shall incur no liability to any such party in relying upon the
written instructions of the Secured Party and in relying upon the accuracy,
acting in reliance upon the contents, and assuming the genuineness of any
notice, demand, certificate, signature, instrument or other document reasonably
believed by the Collateral Agent to be genuine and to have been duly executed
by the appropriate signatory, and (absent actual knowledge to the contrary) the
Collateral Agent shall not be required to make any independent investigation
with respect thereto. The Collateral Agent may consult with qualified counsel,
financial advisors or accountants and shall not be liable for any action taken
or omitted to be taken by it hereunder in good faith and in accordance with the
advice of such counsel, financial advisors or accountants. The Collateral
Agent shall not be under any obligation to exercise any of the remedial rights
or powers vested in it by this Agreement unless it shall have received
reasonable security or indemnity satisfactory to the Collateral Agent against
the costs, expenses and liabilities which might be incurred by it.

None of the provisions contained in this Agreement shall require the
Collateral Agent to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.

SECTION 7.04. Reliance upon Documents. In the absence of bad faith or
gross negligence on its part, the Collateral Agent shall be entitled to rely on
any communication, instrument, paper or other document reasonably believed by
it to be genuine and correct and to have been signed or sent by the proper
Person or Persons

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and shall have no liability in acting, or omitting to act, where such action or
omission to act is in reasonable reliance upon any statement or opinion
contained in any such document or instrument.

SECTION 7.05. Successor Collateral Agent.

(a) Merger. Any Person into which the Collateral Agent may be
converted or merged, or with which it may be consolidated, or to which it may
sell or transfer its trust business and assets as a whole or substantially as a
whole, or any Person resulting from any such conversion, merger, consolidation,
sale or transfer to which the Collateral Agent is a party, shall (provided it
is otherwise qualified to serve as the Collateral Agent hereunder) be and
become a successor Collateral Agent hereunder and be vested with all of the
title to and interest in the Collateral and all of the trusts, powers,
discretions, immunities, privileges and other matters as was its predecessor
without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.

(b) Resignation. The Collateral Agent and any successor Collateral
Agent may resign only with the prior written consent of the Trustee and shall
give not less than 60 days' prior written notice of any such permitted
resignation by registered or certified mail to the Trustee and the Company;
provided, that such resignation shall take effect only upon the date which is
the latest of (i) the effective date of the appointment of a successor
Collateral Agent and the acceptance in writing by such successor Collateral
Agent of such appointment and of its obligation to perform its duties hereunder
in accordance with the provisions hereof, (ii) delivery of the Collateral in
the possession of the Collateral Agent (or its New York agent) to such
successor to be held in accordance with the procedures specified in Article 2
and (iii) receipt by the Trustee and the Company of an Opinion of Counsel to
the effect described in Section 4.02. Notwithstanding the preceding sentence,
if by the contemplated date of resignation specified in the written notice of
resignation delivered as described above no successor Collateral Agent or
temporary successor Collateral Agent has been appointed Collateral Agent or
becomes the Collateral Agent pursuant to Section 7.05(d) below, the resigning
Collateral Agent may petition a court of competent jurisdiction in Borough of
Manhattan, The City of New York, for the appointment of a successor.

(c) Removal. The Collateral Agent may be removed by the Trustee at
any time upon 60 days' notice, with or without cause, by an instrument or
concurrent instruments in writing delivered to the Collateral Agent and the
Company. A temporary successor may be removed at any time to allow a successor
Collateral Agent to be appointed pursuant to Section 7.05(d). Any removal
pursuant to this

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subsection 7.05(c) shall take effect only upon the date which is the latest of
(i) the effective date of the appointment of a successor Collateral Agent and
the acceptance in writing by such successor Collateral Agent of such
appointment and of its obligation to perform its duties hereunder in accordance
with the provisions hereof, (ii) delivery of the Collateral in the possession
of the Collateral Agent to such successor to be held in accordance with the
procedures specified in Article 2 and (iii) receipt by the Trustee and the
Company of an Opinion of Counsel to the effect described in Section 4.02.

(d) Acceptance by Successor. Any successor Collateral Agent shall
be a bank or trust company (i) having its principal office in the Borough of
Manhattan, The City of New York, or in such other jurisdiction as the Secured
Party may approve and (ii) having a combined capital and surplus of at least
US$500,000,000. If such bank or trust company publishes reports of condition
at least annually, pursuant to law or to the requirements of a Federal, State
or District of Columbia supervising or examining authority, then for the
purposes of this subsection 7.05(d) the combined capital and surplus of such
bank or trust company shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. The Secured
Party shall have the sole right to appoint a successor Collateral Agent,
subject only to the requirements set forth in the preceding sentence and to the
approval of the Company, which approval shall not be unreasonably withheld. If
the Company and the Secured Party shall not have agreed within ten days on the
selection of a successor Collateral Agent, the Secured Party shall have the
right to appoint a temporary successor to act as the Collateral Agent. If by
the 90th day after appointment of such temporary successor Collateral Agent,
the Secured Party and the Company shall have remained unable to agree on the
selection of a successor Collateral Agent, such temporary successor shall
automatically become the successor Collateral Agent hereunder. Every temporary
or permanent successor Collateral Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Trustee and the Company
an instrument in writing accepting such appointment hereunder; and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral in the possession
of the Collateral Agent to the successor Collateral Agent to be held in
accordance with the procedures specified in Articles 2 and 3, whereupon such
successor, without any further act, deed or conveyance, shall become fully
vested with all the estates, properties, rights, powers, duties and obligations
of its predecessor. Such predecessor shall, nevertheless, on the written
request of the Trustee or the Company, execute and deliver an instrument
transferring to such successor all the estates, properties, rights and powers
of such predecessor hereunder. Every predecessor Collateral Agent shall
assign, transfer and deliver all Collateral held by it as Collateral Agent
hereunder to its successor as Collateral Agent. Should any instrument in
writing from the Company be reasonably required by a successor

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Collateral Agent for more fully and certainly vesting in such successor the
estates properties, rights, powers, duties and obligations vested or intended
to be vested hereunder in the Collateral Agent, any and all such written
instruments shall, at the request of the temporary or permanent successor
Collateral Agent, be forthwith executed, acknowledged and delivered by the
Company. The designation of any successor Collateral Agent and the instrument
or instruments removing any Collateral Agent and appointing a successor
hereunder, together with all other instruments provided for herein, shall be
maintained with the records relating to the Collateral and, to the extent
required by applicable law, filed or recorded by the successor Collateral Agent
in each place where such filing or recording is necessary to effect the
transfer of the Collateral to the successor Collateral Agent or to protect the
Security Interest granted hereunder.

SECTION 7.06. Indemnification. The Company shall indemnify the
Collateral Agent, its officers, directors, employees and agents for, and hold
the Collateral Agent, its officers, directors, employees and agents harmless
against, any claim, loss, liability or reasonable expense (including all
reasonable costs, expenses, attorneys' fees and disbursements) arising out of
or in connection with the Collateral Agent's acting as Collateral Agent
hereunder, except such loss, liability or expense as shall result from the
[gross] negligence or wilfull misconduct of the Collateral Agent or its
officers, directors, employees or agents. The obligation of the Company under
this Section 7.06 shall survive the termination of this Agreement and the
resignation or removal of the Collateral Agent.

SECTION 7.07. Compensation and Reimbursement. The Company agrees (i)
to pay to the Collateral Agent, from time to time, such compensation as may be
agreed in writing by the Company and the Collateral Agent for all services
rendered by it hereunder and (ii) to reimburse the Collateral Agent on request
for all reasonable expenses, disbursements and advances incurred or made by the
Collateral Agent in accordance with any provision of, or carrying out its
duties and obligations under, this Agreement (including the reasonable
compensation and fees and the reasonable expenses and disbursements of its
agents, any independent certified public accountants and counsel retained by
it), except any expense, disbursement or advance resulting from the [gross]
negligence or wilfull misconduct of the Collateral Agent.

SECTION 7.08. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to the Company and to the Secured
Party as follows:

(a) Due Organization. The Collateral Agent is a New York banking
corporation, duly organized, validly existing and in good standing under the
laws of the United States, is duly authorized and licensed under applicable law
to conduct its

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business as presently conducted and meets the eligibility requirements set
forth in the first sentence of Section 7.05(d).

(b) Corporate Power. The Collateral Agent has all requisite right,
power and authority to execute and deliver this Agreement and to perform all of
its duties hereunder and thereunder.

(c) Due Authorization. The execution and delivery by the Collateral
Agent of this Agreement, and the performance by the Collateral Agent of its
duties hereunder and thereunder, have been duly authorized by all necessary
corporate proceedings; and no further approvals or filings, including any
governmental approvals, are required for the valid execution and delivery by
the Collateral Agent, or the performance by the Collateral Agent, of this
Agreement.

(d) Valid and Binding Agreement. The Collateral Agent has duly
executed and delivered this Agreement and this Agreement constitutes a valid
and binding obligation of the Collateral Agent, enforceable against the
Collateral Agent in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency, reorganization and
similar laws relating to or affecting the enforcement of creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.

SECTION 7.09. Waiver of Set-offs. The Collateral Agent hereby
expressly waives any and all rights of set-off that the Collateral Agent may
otherwise at any time have under applicable law with respect to any Collateral
Account and agrees that amounts in the Collateral Accounts shall at all times
be held and applied solely in accordance with the provisions of Article 3 and
the other provisions of this Agreement.

ARTICLE 8
MISCELLANEOUS

SECTION 8.01. Further Assurances. Each party hereto shall take such
action and deliver such instruments to any other party hereto, in addition to
the actions and instruments specifically provided for herein, as may be
reasonably requested or required to effectuate the purpose or provisions of
this Agreement or to confirm or perfect any transaction described or
contemplated herein. Within 20 days after the date hereof, the Company shall
(i) take such actions and deliver, file and record such instruments as may be
necessary to amend any financing statements relating to the Collateral which do
not identify the Secured Party, so that such financing statements identify the
Secured Party as such and so that the benefits thereof inure to the Secured

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Party and (ii) furnish to the Secured Party copies of such instruments and
evidence of the filing and recording thereof.

SECTION 8.02. Waiver. Any waiver by any party of any provision of
this Agreement or any right, remedy or option hereunder shall only prevent and
estop such party from thereafter enforcing such provision, right, remedy or
option if such waiver is given in writing and only as to the specific instance
and for the specific purpose for which such waiver was given. The failure or
refusal of any party hereto to insist in any one or more instances, or in a
course of dealing, on the strict performance of any of the terms or provisions
of this Agreement by any party hereto or the partial exercise of any right,
remedy or option hereunder shall not be construed as a waiver or relinquishment
of any such term or provision, but the same shall continue in full force and
effect.

SECTION 8.03. Amendments. No amendment of this Agreement shall be
effective unless the same shall have been made or consented to in writing by
each of the parties hereto.

SECTION 8.04. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be
invalid or unenforceable under any applicable statute, regulation or rule of
law, then such provision shall be deemed inoperative to the extent that it is
invalid or unenforceable; and the remainder of this Agreement, and the
application of any such invalid or unenforceable provision to the parties,
jurisdictions or circumstances other than to whom or to which it is held
invalid or unenforceable, shall not be affected thereby, nor shall the same
affect the validity or enforceability of any other provision of this Agreement.
The parties hereto further agree that the holding by any court of competent
jurisdiction that any remedy pursued by the Collateral Agent or the Secured
Party hereunder is unavailable or unenforceable shall not affect in any way the
ability of the Collateral Agent or the Secured Party to pursue any other remedy
available to it.

SECTION 8.05. Notices; Payments and Transfers of Funds. (i) All
notices, demands, certificates, requests, instructions and communications
hereunder ("notices") shall be in writing and shall be effective (a) five
Business Days after delivery to an air courier, or (b) on the date personally
delivered to an Authorized Officer of the party to which sent, or (c) on the
date transmitted by legible facsimile transmission upon written confirmation of
receipt and (ii) all payments and transfers of funds made by or on behalf of
any party hereto to any other party hereto pursuant to the terms hereof shall
be made by delivery of an official bank check in, or wire transfer of,
immediately available funds, in all cases addressed and sent to the recipient
as follows:

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If to the Company:

AES China Generating Co. Ltd.
9/F Allied Capital Resources Building
▇▇-▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇

Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇▇-▇▇▇▇
Wire transfer instructions: [to come]

If to the Trustee:

Bankers Trust Company
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Attention: Corporate Trust and Agency Group/Debt Adminstration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Wire transfer instructions: [to come]

If to the Collateral Agent:

Bankers Trust Company
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Attention: Corporate Trust and Agency Group/Debt Adminstration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Wire transfer instructions: [to come]

Any notices or documents sent by facsimile to the Collateral Agent shall be
promptly followed by an original copy thereof sent by mail. A copy of each
notice given hereunder to any party hereto shall also be given to each of the
other parties hereto. Each party hereto may, by notice given in accordance
herewith to each of the other parties hereto, designate any further or
different address to which subsequent notices shall be sent.

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SECTION 8.06. Terms of this Agreement. This Agreement shall take
effect on the Closing Date and shall continue in effect until the Termination
Date. On the Termination Date, this Agreement shall terminate, all obligations
of the parties hereunder shall cease and terminate and, subject to Section
2.07, the Collateral, if any, held hereunder and not to be used or applied in
discharge of any obligations of the Company in respect of the Secured
Obligations or otherwise under this Agreement, shall be released to and in
favor of the Company, provided that the provisions of Sections 7.06 and 7.07
shall survive any termination of this Agreement and the release or transfer of
any Collateral upon such termination.

SECTION 8.07. Assignment; Third-Party Rights. This Agreement shall be
a continuing obligation of the Company and shall (i) be binding upon the
Company and its respective successors and assigns and (ii) be binding upon and
inure to the benefit of and be enforceable by the Secured Party and the
Collateral Agent, and by their respective successors, transferees and assigns.
The Company may not assign this Agreement, or delegate any of its duties
hereunder, without the prior written consent of the Trustee and the Collateral
Agent, provided that no such consent shall be required in the case of a merger,
consolidation, amalgamation or other transaction effected in accordance with
Article 4 of the Indenture.

SECTION 8.08. Consent of Secured Party. In the event that the Secured
Party's consent is required under the terms hereof, it is understood and agreed
that, except as otherwise provided expressly herein, the determination whether
to grant or withhold such consent shall be made solely by the Secured Party in
its sole discretion.

SECTION 8.09. Trial by Jury Waived. Each of the parties hereto
waives, to the fullest extent permitted by law, any right it may have to a trial
by jury in respect of any litigation arising directly or indirectly out of,
under or in connection with this Agreement, the Notes or the Indenture or any of
the transactions contemplated hereunder or thereunder. Each of the parties
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it has been induced to enter into this Agreement, the Notes
and the Indenture to which it is a party by, among other things, this waiver.

SECTION 8.10. Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law thereof.

SECTION 8.11. Consent to Jurisdiction. The Company hereby irrevocably
submits to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, any court in the State of New York
located in the city

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and county of New York, and any appellate court from any thereof, in any
action, suit or proceeding brought against it and related to or in connection
with this Agreement, the Notes or the Indenture or the transactions
contemplated hereunder or thereunder or for recognition or enforcement of any
judgment and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such suit or action or proceeding may be
heard or determined in such New York State court or, to the extent permitted by
law, in such federal court. Each of the parties hereto agrees that a final
judgment in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. To the extent permitted by applicable law, each of the
parties hereby waives and agrees not to assert by way of motion, as a defense
or otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or the subject matter
hereof may not be litigated in or by such courts. The Company hereby
irrevocably appoints and designates The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc.
having an address at the date hereof at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ as its true and lawful attorney and duly authorized agent for
acceptance of service of legal process. The Company agrees that service of such
process on The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc., shall constitute
personal service of such process upon the Company. Nothing contained in this
Agreement shall limit or affect the rights of any party hereto to serve process
in any other manner permitted by law or (other than the Company) to commence
legal proceedings relating to this Agreement against the Company or its
property in the courts of any jurisdiction.

SECTION 8.12. Counterparts. This Agreement may be executed in two or
more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.

SECTION 8.13. Headings. The headings of sections and paragraphs and
the Table of Contents contained in this Agreement are provided for convenience
only. They form no part of this Agreement and shall not affect its
construction or interpretation.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof.

AES CHINA GENERATING CO. LTD.

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

BANKERS TRUST COMPANY,
as Trustee under the Indenture

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

BANKERS TRUST COMPANY,
as Collateral Agent

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

1 EXHIBIT 4.3

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