Junior Subordination Agreement - China Power International Holding Ltd., Aes China Holding Co. Ltd., Anhui Liyuan Electric Power Development Co. Ltd., Wuhu Energy Development Co. and Wuhu Shaoda Electric Power Development Co. Ltd.


                    CHINA POWER INTERNATIONAL HOLDING LIMITED
                           as Guarantor and a Sponsor


                                       and


                      AES CHINA HOLDING COMPANY (L) LIMITED
                         as Junior Lender and a Sponsor


                                       and


             ANHUI LIYUAN ELECTRIC POWER DEVELOPMENT COMPANY LIMITED


                                       and


                         WUHU ENERGY DEVELOPMENT COMPANY
              together as Junior Subordinated Lenders and Sponsors


                                       and


             WUHU SHAODA ELECTRIC POWER DEVELOPMENT COMPANY LIMITED
                                   as Borrower




                         JUNIOR SUBORDINATION AGREEMENT



                             CHADBOURNE & PARKE LLP
                            AMERICAN ATTORNEYS AT LAW

                           SUITE 3704, PEREGRINE TOWER
                           LIPPO CENTRE, 89 QUEENSWAY
                                    HONG KONG

                                    CONTENTS


Number    Clause Heading                                                   Page
- ------    --------------                                                   ----

1.        Interpretation.....................................................2
2.        Subordination of Indebtedness......................................5
3.        Permitted Payments................................................15
4.        Further Acknowledgments...........................................15
5.        Acknowledgment by Borrower........................................16
6.        Continuing Security...............................................17
7.        Representations and Warranties....................................17
8.        Undertakings......................................................18
9         Borrower's Representations, Warranties and Undertakings...........20
10.       Claims by Junior Creditors........................................21
11.       Taxes and Other Deductions........................................21
12.       Costs, Charges and Expenses.......................................21
13.       Indemnity.........................................................22
14.       Further Assurance.................................................23
15.       Suspense Account..................................................23
16.       Waiver and Severability...........................................23
17.       Miscellaneous.....................................................24
18.       Assignment........................................................25
19.       Notices...........................................................26
20.       Governing Law and Jurisdiction....................................27



Execution Block

THIS DEED is made on the                day of                        1996
                         --------------        ----------------------


AMONG:

(1)      CHINA POWER INTERNATIONAL HOLDING LIMITED of Suite 5306, Central Plaza,
         18 Harbour Road, Wanchai, Hong Kong (in its capacity as guarantor of
         the obligations of the Borrower under the Senior Loan Agreement, the
         Guarantor, and in its capacity as a sponsor of the Project and as a
         provider of subordinated loans under clause 2.02 of the Senior
         Subordination Agreement, a 'Sponsor');

(2)      AES CHINA HOLDING COMPANY (L) LIMITED of Lot A, Level 3, Wisma Oceanic,
         Jalan OKK Awang Besar, 87007, Federal Territory of Labuan, Malaysia (in
         its capacity as a lender under the AES Loan Agreement, the 'Junior
         Lender', and in its capacity as a sponsor of the Project and as a
         provider of subordinated loans under clause 2.02 of the Senior
         Subordination Agreement, a 'Sponsor');

(3)      ANHUI LIYUAN ELECTRIC POWER DEVELOPMENT COMPANY LIMITED of No. 415 Wuhu
         Road, Hefei, Anhui Province, People's Republic of China ('Anhui
         Liyuan');

(4)      WUHU ENERGY DEVELOPMENT COMPANY of Commercial Office Building, West
         Huangshan Road, Wuhu, Anhui Province, People's Republic of China
         ('Wuhu');

         (Anhui Liyuan and Wuhu shall, in their capacities as lenders under
         their respective Committed Junior Subordinated Loan Agreements, be
         collectively referred to as the 'Junior Subordinated Lenders', and in
         their capacities as sponsors of the Project and as providers of
         subordinated loans under clause 2.02 of the Senior Subordination
         Agreement, 'Sponsors'); and

(5)      WUHU SHAODA ELECTRIC POWER DEVELOPMENT COMPANY LIMITED, an equity joint
         venture company formed under the Law of the People's Republic of China
         on Joint Ventures Using Chinese and Foreign Investment and whose
         registered office is at Commercial Office Building, West Huangshan
         Road, Wuhu, Anhui Province, People's Republic of China, as borrower
         (the 'Borrower').


WHEREAS:

(A)      By a guarantee (the 'CPIL Guarantee') executed, or to be executed, by
         (1) the Guarantor and (2) the Facility Agent, the Guarantor has agreed
         to guarantee the payment obligations of the Borrower under the Senior
         Loan Agreement, upon the terms set out therein.

(B)      By a loan agreement (the 'AES Loan Agreement') executed, or to be
         executed, by (1) the Borrower and (2) the Junior Lender, the Junior
         Lender has agreed to make available to the Borrower a term loan
         facility of up to eighteen million Dollars (US$18,000,000) (the 'AES
         Loan'), upon the terms set out therein.

(C)      By a loan agreement (the 'Anhui Liyuan Loan Agreement') executed, or to
         be executed, by (1) the Borrower and (2) Anhui Liyuan, Anhui Liyuan has
         agreed to make available to the Borrower a term loan facility upon the
         terms set out therein.

(D)      By a loan agreement (the 'Wuhu Loan Agreement') executed, or to be
         executed, by (1) the Borrower and (2) Wuhu, Wuhu has agreed to make
         available to the Borrower a term loan facility upon the terms set out
         therein.

(E)      By an undertaking and subordination deed (the 'Senior Subordination
         Agreement') executed, or to be executed, by (1) the Borrower, (2) the
         Facility Agent and (3) the Sponsors, the Sponsors have agreed, among
         other things, to make subordinated loans available to the Borrower to
         meet Working Capital Deficits (as defined in the Senior Subordination
         Agreement), upon the terms set out therein.

(F)      It is a condition precedent to the Junior Lender making the Facility
         available to the Borrower that each of the parties hereto enter into
         this Deed.


NOW THIS DEED WITNESSES as follows:

1.       INTERPRETATION

1.01     Definitions and Construction. In this Deed, unless the context requires
         otherwise:

         (a)      terms and expressions defined in or construed for the purposes
                  of the AES Loan Agreement shall have the same meanings or be
                  construed in the same manner when used in this Deed;

         (b)      'Class A Indebtedness' means all and any sums now or hereafter
                  due and owing by the Borrower to the Guarantor by way of
                  subrogation, set-off, counterclaim or otherwise against the
                  Borrower in respect of any payment made by the Guarantor under
                  the Guarantee, provided that such Class A Indebtedness shall
                  not exceed sixty-five million Dollars (US$65,000,000);

         (c)      'Class B Indebtedness' means all and any sums (whether
                  principal, interest, fees or otherwise) now or hereafter due
                  and owing by the Borrower to the Junior Lender under the AES
                  Loan Agreement or any Subordinated Security Document to which
                  the Borrower is a party and all other monies thereby secured;

         (d)      'Class C Indebtedness' means all and any sums (whether
                  principal, interest, fees or otherwise) now or hereafter due
                  and owing by the Borrower to the Junior Subordinated Lenders
                  under the Committed Junior Subordinated Loan Agreements;

         (e)      'Class D Indebtedness' means all and any sums (whether
                  principal, interest, fees or otherwise) now or hereafter due
                  and owing by the Borrower to the Sponsors under the Sponsor
                  Subordinated Loan Agreements;

         (f)      'Committed Junior Subordinated Loan Agreements' means the
                  Anhui Liyuan Loan Agreement and the Wuhu Loan Agreement;

         (g)      'Committed Junior Subordinated Loans' means the loans made
                  under the Committed Junior Subordinated Loan Agreements;

         (h)      'Event of Default' means, with respect to each class of
                  indebtedness, any occurrence of any event of default in any
                  document evidencing any Senior Indebtedness; and 'prospective
                  Event of Default' means any event or circumstance which with
                  the giving of notice and/or the passage of time and/or the
                  making of any relevant determination and/or the forming of any
                  necessary opinion would be an Event of Default;

         (i)      A 'holder' of any class of indebtedness means the holder of
                  the specified class of indebtedness, as such, for purposes of
                  determining rights and obligations hereunder, without regard
                  to any other class of indebtedness that may also be held by
                  such holder.

         (j)      'Junior Creditor' means any holder of Junior Indebtedness, as
                  such.

         (k)      'Junior Indebtedness' means, with respect to any class of
                  indebtedness subject to this Deed, another class of
                  indebtedness which is subordinated in right of payment as
                  provided in Clause 2, and

                  (i)      with  respect  to  Class A  Indebtedness,  Junior  
                           Indebtedness  means  Class B, C and D Indebtedness;

                  (ii)     with  respect  to  Class  B  Indebtedness, Junior  
                           Indebtedness  means  Class C and D Indebtedness; and

                  (iii)    with respect to Class C Indebtedness, Junior 
                           Indebtedness means Class D Indebtedness;

         (l)      'Senior Creditor' means any holder of Senior Indebtedness, as
                  such.

         (m)      'Senior Indebtedness' means, with respect to any class of
                  indebtedness subject to this Deed, another class of
                  indebtedness which has priority in right of payment as
                  provided in Clause 2, and

                  (i)      with  respect  to  Class D  Indebtedness,  Senior  
                           Indebtedness  means  Class A, B and C Indebtedness;

                  (ii)     with  respect  to  Class  C  Indebtedness,  Senior 
                           Indebtedness  means  Class A and B Indebtedness; and

                  (iii)    with respect to Class B Indebtedness, Senior 
                           Indebtedness means Class A Indebtedness;

         (n)      'Sponsor Subordinated Loan Agreements' means all loan
                  agreements, facility letters or other documents now or
                  hereafter entered into between the Sponsors and the Borrower
                  creating or evidencing all loans made pursuant to clause 2 of
                  the Senior Subordination Agreement;

         (o)      'Subordinated Indebtedness' means the Class A, B, C and D
                  Indebtedness; and

         (p)      'Subordinated Loan Agreements' means all loan agreements,
                  facility letters or other documents now or hereafter entered
                  into between the holders of Class B, C and D Indebtedness and
                  the Borrower.

1.02     The Junior Creditors. References to the Junior Creditors shall mean and
         include each and every person liable hereunder as a Junior Creditor or,
         where the context permits, any one or more of them and all
         representations, warranties, undertakings, agreements and obligations
         of the Junior Creditors herein expressed or implied shall, unless the
         context requires otherwise, be deemed to be made, given or assumed by
         each of the Junior Creditors severally.

1.03     Successors and Assigns. The expressions 'Guarantor', 'Sponsors',
         'Junior Subordinated Lenders', 'Borrower', 'Junior Lender', 'Anhui
         Liyuan', 'Wuhu', 'holder', 'Junior Creditor' and 'Senior Creditor'
         shall where the context permits include their respective personal
         representatives, successors and permitted assigns and any persons
         deriving title under them.

1.04     Miscellaneous. In this Deed, unless the context requires otherwise,
         references to statutory provisions shall be construed as references to
         those provisions as replaced, amended, modified or re-enacted from time
         to time; words importing the singular include the plural and vice versa
         and words importing a gender include every gender; references to any
         document referred to herein shall be construed as references to such
         document as the same may be amended or supplemented (provided that any
         required consent or approval for such amendment or supplement has been
         obtained) from time to time; unless otherwise stated, references to
         Clauses are to clauses of this Deed. Clause headings are inserted for
         reference only and shall be ignored in construing this Deed.


2.       SUBORDINATION OF INDEBTEDNESS

2.01     Class A Indebtedness.

         (a)      Subordination. In consideration of the holder of Class A
                  Indebtedness agreeing to guarantee the obligations of the
                  Borrower under the Senior Loan Agreement and as a continuing
                  security for the due and punctual payment of the Class A
                  Indebtedness and the due and punctual performance and
                  observance by the Borrower of all obligations of the Borrower
                  contained in any security document in favor of the Guarantor
                  to which the Borrower is a party, each of the holders of Class
                  B, C and D Indebtedness agrees that throughout the continuance
                  of this Deed and so long as the Class A Indebtedness or any
                  part thereof remains owing:

                  (i)      except  as  provided  in Clause 3, the  Class B, C 
                           and D  Indebtedness,  as  applicable, owing to it:

                           (A)      is, and shall remain, subordinated and the
                                    payment thereof deferred to all and any
                                    rights, claims and actions which the holder
                                    of Class A Indebtedness may now or hereafter
                                    have against the Borrower in respect of the
                                    Class A Indebtedness;

                           (B)      shall not be repaid or repayable, in whole
                                    or in part, except with the prior written
                                    consent of the holder of Class A
                                    Indebtedness in the event of the winding-up,
                                    liquidation or dissolution of the Borrower
                                    (or any proceedings analogous thereto);

                           (C)      may accrue interest, but such interest shall
                                    not be payable;

                           (D)      except  for the Class B  Indebtedness, is 
                                    and shall  remain  unsecured  by any
                                    Charge over the whole or any part of the 
                                    assets of the Borrower; and

                           (E)      is not, and shall not become capable of 
                                    being, subject to any right of set-off
                                    or counterclaim;

                  (ii)     except as provided in Clause 3, it shall not claim,
                           request, demand, sue for, take or receive (whether by
                           set-off or in any other manner and whether from the
                           Borrower or any other person) any money or other
                           property in respect of the Class B, C or D
                           Indebtedness or any part thereof;

                  (iii)    if any  monies  (including  the  proceeds  of any  
                           set-off  or  counterclaim)  or  other property  are 
                           received  directly  or  indirectly  in  respect  of 
                           any  Class  B, C or D Indebtedness  by or on behalf 
                           of it in breach of any of the  provisions of this 
                           Deed, it will hold the same upon  trust to be  
                           applied  first in or  towards  payment  of Class A
                           Indebtedness   and  second,   as  to  any  balance 
                           remaining  after irrevocable  and unconditional  
                           payment and discharge in full of the Class A 
                           Indebtedness,  in or towards payment of the Class B,
                           C and D Indebtedness  in accordance  with the 
                           provisions of this Deed;

                  (iv)     if any Charge is created as security for the Class C
                           or D Indebtedness then, immediately on the creation
                           thereof, the benefit of such Charge shall be assigned
                           or transferred in favor of the holder of Class A
                           Indebtedness as security for the Class A Indebtedness
                           and any instrument or agreement evidencing such
                           Charge shall be deposited with the holder of Class A
                           indebtedness; and

                  (v)      it shall require the Borrower to, and shall ensure
                           that the Borrower shall pay to the holder of Class A
                           Indebtedness or as the holder of Class A Indebtedness
                           may direct any amounts which, if paid to such holder
                           of Class B, C or D Indebtedness, would be subject to
                           the trust mentioned in paragraph (iii) above.

         (b)      Proceedings for Winding-Up of Borrower. In any proceedings for
                  the compulsory or voluntary winding-up, liquidation or
                  dissolution of the Borrower (or any proceedings analogous
                  thereto):

                  (i)      the holder of Class A Indebtedness shall be entitled
                           to receive payment in full of the Class A
                           Indebtedness before the holders of Class B, C and D
                           Indebtedness shall be entitled to receive any payment
                           on account of the Class B, C or D Indebtedness or any
                           part thereof; and

                  (ii)     the  holders  of Class B, C and D  Indebtedness agree
                           that they will prove for the full amount of their  
                           claims in respect  of their  respective  Class B, C 
                           and D  Indebtedness and that in  accordance  with the
                           trust  mentioned in Clause  2.01(a)(iii), any amounts
                           payable  to the  holders of Class B, C and D  
                           Indebtedness  in respect of the Class B, C and D  
                           Indebtedness  shall  be  applied  in  payment  or  
                           satisfaction  of the  Class  A Indebtedness  until 
                           the whole of the Class A  Indebtedness  shall have 
                           been certified by the holder of Class A Indebtedness
                           as having been  discharged and the remaining  balance
                           (if any)  may be  applied  towards  payment of the  
                           Class  B, C and D  Indebtedness  in accordance with 
                           the provisions of this Deed.

         (c)      Subordinated Loan Agreements. Each of the holders of Class B,
                  C and D Indebtedness agree that:

                  (i)      each and every  Subordinated  Loan  Agreement entered
                           into by it shall be  subject  in every respect to the
                           terms of this Deed;

                  (ii)     insofar as the terms of any Subordinated Loan
                           Agreement entered into by it or any transaction in
                           connection therewith are or may be inconsistent with
                           the terms of this Deed, the terms contained herein
                           shall prevail;

                  (iii)    in respect of any Subordinated Loan Agreement
                           proposed to be entered into by it after the date
                           hereof, the prior written approval of the terms
                           thereof shall first be obtained from the holder of
                           Class A Indebtedness;

                  (iv)     no amendment shall be made to any Subordinated Loan
                           Agreement entered into by it except in writing and
                           with the prior written approval of the terms thereof
                           by the holder of Class A Indebtedness, such approval
                           not to be unreasonably withheld;

                  (v)      immediately after the execution of any Subordinated
                           Loan Agreement entered into by it, or any agreement
                           for the amendment of any Subordinated Loan Agreement
                           entered into by it, copies thereof shall be delivered
                           to the holder of Class Indebtedness as evidence
                           thereof; and

                  (vi)     no prepayment of principal may be made by the
                           Borrower to the holders of Class C or D Indebtedness
                           (or payment in respect thereof accepted by the
                           holders of Class C or D Indebtedness) under any
                           Subordinated Loan Agreement entered into by the
                           holders of Class C or D Indebtedness.

         (d)      Application. All monies and other property received by the
                  holder of Class A Indebtedness in respect of the Class B, C or
                  D Indebtedness may be applied in or towards satisfaction of
                  the Class A Indebtedness due and owing in such manner as the
                  holder of Class A Indebtedness may decide, provided that:

                  (i)      any excess after the Class A Indebtedness has been
                           paid in full shall be paid or delivered to the holder
                           of Class B Indebtedness and may be applied in or
                           towards satisfaction of the Class B Indebtedness due
                           and owing in such manner as the holder of Class B
                           Indebtedness may decide;

                  (ii)     any excess after the Class B Indebtedness has been
                           paid in full shall be paid or delivered to the
                           holders of Class C Indebtedness and may be applied in
                           or towards satisfaction of the Class C Indebtedness
                           due and owing in such manner as the holders of Class
                           C Indebtedness may decide; and

                  (iii)    any excess after the Class C Indebtedness has been
                           paid in full shall be paid or delivered to the
                           holders of Class D Indebtedness and may be applied in
                           or towards satisfaction of the Class D Indebtedness
                           due and owing in such manner as the holders of Class
                           D Indebtedness may decide.

         (e)      Directions and Authorizations. Each holder of Class B, C and D
                  Indebtedness hereby irrevocably:

                  (i)      directs the Borrower to pay to the holder of Class A
                           Indebtedness (or as the holder of Class A
                           Indebtedness may direct) any amounts which, if paid
                           to such holder of Class B, C or D Indebtedness would
                           be subject to the trust mentioned in Clause
                           2.01(a)(iii); and

                  (ii)     authorizes the holder of Class A Indebtedness, in
                           the event of a compulsory or voluntary winding up,
                           liquidation or dissolution of the Borrower (or any
                           proceedings analogous thereto) to ask, demand, sue
                           or prove for, and take and receive, in the name of
                           such holder of Class B, C or D Indebtedness or
                           otherwise, all amounts payable to such holder of
                           Class B, C or D Indebtedness on account of any Class
                           B, C or D Indebtedness owing by the Borrower, and
                           each of the holders of Class B, C and D Indebtedness
                           further covenants that in such event at the request
                           of the holder of Class A Indebtedness, it will take
                           all such action and execute all such documents as
                           the holder of Class A Indebtedness may reasonably
                           require in order to enable the holder of Class A
                           Indebtedness to recover such Class B, C or D
                           Indebtedness or any part thereof.

2.02     Class B Indebtedness.

         (a)      Subordination. In consideration of the holder of Class B
                  Indebtedness agreeing to make the AES Loan available to the
                  Borrower upon the terms and conditions of the AES Loan
                  Agreement and as a continuing security for the due and
                  punctual payment of the Class B Indebtedness and the due and
                  punctual performance and observance by the Borrower of all
                  other obligations of the Borrower contained in the AES Loan
                  Agreement or any Subordinated Security Document or any other
                  security document related thereto to which it is a party, each
                  of the holders of Class C and D Indebtedness agrees that
                  throughout the continuance of this Deed and so long as the
                  Class B Indebtedness or any part thereof remains owing:

         (i)      except as provided in Clause 3, the Class C and D
                  Indebtedness, as applicable, owing to it:

                           (A)      is, and shall remain, subordinated and the
                                    payment thereof deferred to all and any
                                    rights, claims and actions which the holder
                                    of Class B Indebtedness may now or hereafter
                                    have against the Borrower in respect of the
                                    Class B Indebtedness;

                           (B)      shall not be repaid or repayable, in whole
                                    or in part, except with the prior written
                                    consent of the holder of Class B
                                    Indebtedness in the event of the winding-up,
                                    liquidation or dissolution of the Borrower
                                    (or any proceedings analogous thereto);

                           (C)      may accrue interest, but such interest shall
                                    not be payable;

                           (D)      is and shall remain  unsecured by any Charge
                                    over the whole or any part of the assets of 
                                    the Borrower; and

                           (E)      is not, and shall not become capable of
                                    being, subject to any right of set-off
                                    or counterclaim;

                  (ii)     except as provided in Clause 3, it shall not claim,
                           request, demand, sue for, take or receive (whether by
                           set-off or in any other manner and whether from the
                           Borrower or any other person) any money or other
                           property in respect of the Class C or D Indebtedness
                           or any part thereof;

                  (iii)    if any monies (including the proceeds of any set-off
                           or counterclaim) or other property are received
                           directly or indirectly in respect of any Class C or
                           D Indebtedness by or on behalf of it in breach of
                           any of the provisions of this Deed, it will hold the
                           same upon trust to be applied first in or towards
                           payment of Class B Indebtedness and second, as to
                           any balance remaining after irrevocable and
                           unconditional payment and discharge in full of the
                           Class B Indebtedness, in or towards payment of the
                           Class C and D Indebtedness in accordance with the
                           provisions of this Deed;

                  (iv)     if any Charge is created as security for the Class C
                           or D Indebtedness then, immediately on the creation
                           thereof, the benefit of such Charge shall be assigned
                           or transferred in favor of the holder of Class B
                           Indebtedness as security for the Class B Indebtedness
                           and any instrument or agreement evidencing such
                           Charge shall be deposited with the holder of Class B
                           indebtedness; and

                  (v)      it shall require the Borrower to, and shall ensure
                           that the Borrower shall pay to the holder of Class B
                           Indebtedness or as the holder of Class B Indebtedness
                           may direct any amounts which, if paid to such holder
                           of Class C or D Indebtedness, would be subject to the
                           trust mentioned in paragraph (iii) above.

         (b)      Proceedings for Winding-Up of Borrower. In any proceedings for
                  the compulsory or voluntary winding-up, liquidation or
                  dissolution of the Borrower (or any proceedings analogous
                  thereto):

                  (i)      the holder of Class B Indebtedness shall be entitled
                           to receive payment in full of the Class B
                           Indebtedness before the holders of Class C and D
                           Indebtedness shall be entitled to receive any payment
                           on account of the Class C or D Indebtedness or any
                           part thereof; and

                  (ii)     the holders of Class C and D Indebtedness agree that
                           they will prove for the full amount of their claims
                           in respect of their respective Class C and D
                           Indebtedness and that in accordance with the trust
                           mentioned in Clause 2.02(a)(iii), any amounts
                           payable to the holders of Class C and D Indebtedness
                           in respect of the Class C and D Indebtedness shall
                           be applied in payment or satisfaction of the Class B
                           Indebtedness until the whole of the Class B
                           Indebtedness shall have been certified by the holder
                           of Class B Indebtedness as having been discharged
                           and the remaining balance (if any) may be applied
                           towards payment of the Class C and D Indebtedness in
                           accordance with the provisions of this Deed.

         (c)      Subordinated Loan Agreements. Each of the holders of Class C
                  and D Indebtedness agrees that:

                  (i)      each and every  Subordinated  Loan  Agreement  
                           entered  into by it shall be  subject  in
                           every respect to the terms of this Deed;

                  (ii)     insofar as the terms of any Subordinated Loan
                           Agreement entered into by it or any transaction in
                           connection therewith are or may be inconsistent with
                           the terms of this Deed, the terms contained herein
                           shall prevail;

                  (iii)    in respect of any Subordinated Loan Agreement
                           proposed to be entered into by it after the date
                           hereof, the prior written approval of the terms
                           thereof shall first be obtained from the holder of
                           Class B Indebtedness;

                  (iv)     no amendment shall be made to any Subordinated Loan
                           Agreement entered into by it except in writing and
                           with the prior written approval of the terms thereof
                           by the holder of Class B Indebtedness, such approval
                           not to be unreasonably withheld;

                  (v)      immediately after the execution of any Subordinated
                           Loan Agreement entered into by it, or any agreement
                           for the amendment of any Subordinated Loan Agreement
                           entered into by it, copies thereof shall be delivered
                           to the holder of Class B Indebtedness as evidence
                           thereof; and

                  (vi)     no prepayment of principal may be made by the
                           Borrower to the holders of Class C or D Indebtedness
                           (or payment in respect thereof accepted by the
                           holders of Class C or D Indebtedness) under any
                           Subordinated Loan Agreement entered into by it.

         (d)      Application. All monies and other property received by the
                  holder of Class B Indebtedness in respect of the Class C or D
                  Indebtedness may be applied in or towards satisfaction of the
                  Class B Indebtedness due and owing in such manner as the
                  holder of Class B Indebtedness may decide, provided that:

                  (i)      any excess after the Class B Indebtedness has been
                           paid in full shall be paid or delivered to the
                           holders of Class C Indebtedness and may be applied in
                           or towards satisfaction of the Class C Indebtedness
                           due and owing in such manner as the holders of Class
                           C Indebtedness may decide; and

                  (ii)     any excess after the Class C Indebtedness has been
                           paid in full shall be paid or delivered to the
                           holders of Class D Indebtedness and may be applied in
                           or towards satisfaction of the Class D Indebtedness
                           due and owing in such manner as the holders of Class
                           D Indebtedness may decide.

         (e)      Directions and Authorizations. Each holder of Class C and D
                  Indebtedness hereby irrevocably:

                  (i)      directs the Borrower to pay to the holder of Class B
                           Indebtedness (or as the holder of Class B
                           Indebtedness may direct) any amounts which, if paid
                           to such holder of Class C or D Indebtedness would be
                           subject to the trust mentioned in Clause
                           2.02(a)(iii); and

                  (ii)     authorizes the holder of Class B Indebtedness, in
                           the event of a compulsory or voluntary winding up,
                           liquidation or dissolution of the Borrower (or any
                           proceedings analogous thereto) to ask, demand, sue
                           or prove for, and take and receive, in the name of
                           such holder of Class C or D Indebtedness or
                           otherwise, all amounts payable to such holder of
                           Class C or D Indebtedness on account of any Class C
                           or D Indebtedness owing by the Borrower, and each of
                           the holders of Class C and D Indebtedness further
                           covenants that in such event at the request of the
                           holder of Class B Indebtedness, it will take all
                           such action and execute all such documents as the
                           holder of Class B Indebtedness may reasonably
                           require in order to enable the holder of Class B
                           Indebtedness to recover such Class C or D
                           Indebtedness or any part thereof.

2.03     Class C Indebtedness.

         (a)      Subordination. In consideration of the holders of Class C
                  Indebtedness agreeing to make their respective Committed
                  Junior Subordinated Loans available to the Borrower upon the
                  terms and conditions of the Committed Junior Subordinated Loan
                  Agreements and as a continuing security for the due and
                  punctual payment of the Class C Indebtedness and the due and
                  punctual performance and observance by the Borrower of all
                  other obligations of the Borrower contained in the Committed
                  Junior Subordinated Loan Agreements, the holders of Class D
                  Indebtedness agree that throughout the continuance of this
                  Deed and so long as the Class C Indebtedness or any part
                  thereof remains owing:

         (i)      except as provided in Clause 3, the Class D Indebtedness owing
                  to it:

                           (A)      is, and shall remain, subordinated and the
                                    payment thereof deferred to all and any
                                    rights, claims and actions which the holders
                                    of Class C Indebtedness may now or hereafter
                                    have against the Borrower in respect of the
                                    Class C Indebtedness;

                           (B)      shall not be repaid or repayable, in whole
                                    or in part, except with the prior written
                                    consent of the holders of Class C
                                    Indebtedness in the event of the winding-up,
                                    liquidation or dissolution of the Borrower
                                    (or any proceedings analogous thereto);

                           (C)      may accrue interest, but such interest shall
                                    not be payable;

                           (D)      is and shall  remain  unsecured by any 
                                    Charge over the whole or any part of the
                                    assets of the Borrower; and

                           (E)      is not, and shall not become capable of 
                                    being,  subject to any right of set-off
                                    or counterclaim;

                  (ii)     except as provided in Clause 3, it shall not claim,
                           request, demand, sue for, take or receive (whether by
                           set-off or in any other manner and whether from the
                           Borrower or any other person) any money or other
                           property in respect of the Class D Indebtedness or
                           any part thereof;

                  (iii)    if any monies (including the proceeds of any set-off
                           or counterclaim) or other property are received
                           directly or indirectly in respect of any Class D
                           Indebtedness by or on behalf of it in breach of any
                           of the provisions of this Deed, it will hold the same
                           upon trust to be applied first in or towards payment
                           of Class C Indebtedness and second, as to any balance
                           remaining after irrevocable and unconditional payment
                           and discharge in full of the Class C Indebtedness, in
                           or towards payment of the Class D Indebtedness in
                           accordance with the provisions of this Deed;

                  (iv)     if any Charge is created as security for the Class D
                           Indebtedness then, immediately on the creation
                           thereof, the benefit of such Charge shall be assigned
                           or transferred in favor of the holder of Class C
                           Indebtedness as security for the Class C Indebtedness
                           and any instrument or agreement evidencing such
                           Charge shall be deposited with the holder of Class C
                           indebtedness; and

                  (v)      it shall require the Borrower to, and shall ensure
                           that the Borrower shall pay to the holder of Class C
                           Indebtedness or as the holder of Class C Indebtedness
                           may direct any amounts which, if paid to such holder
                           of Class D Indebtedness, would be subject to the
                           trust mentioned in paragraph (iii) above.

         (b)      Proceedings for Winding-Up of Borrower. In any proceedings for
                  the compulsory or voluntary winding-up, liquidation or
                  dissolution of the Borrower (or any proceedings analogous
                  thereto):

                  (i)      the holders of Class C Indebtedness shall be entitled
                           to receive payment in full of the Class C
                           Indebtedness before the holders of Class D
                           Indebtedness shall be entitled to receive any payment
                           on account of the Class D Indebtedness or any part
                           thereof; and

                  (ii)     the holders of Class D Indebtedness agree that they
                           will prove for the full amount of their claims in
                           respect of their Class D Indebtedness and that in
                           accordance with the trust mentioned in Clause
                           2.03(a)(iii), any amounts payable to the holders of
                           Class D Indebtedness in respect of the Class D
                           Indebtedness shall be applied in payment or
                           satisfaction of the Class C Indebtedness until the
                           whole of the Class C Indebtedness shall have been
                           certified by the holder of Class C Indebtedness as
                           having been discharged and the remaining balance (if 
                           any) may be applied towards payment of the Class D
                           Indebtedness in accordance with the provisions of
                           this Deed.

         (c)      Subordinated Loan Agreements. Each of the holders of Class D
                  Indebtedness agrees that:

                  (i)      each and every Subordinated Loan Agreement entered
                           into by it in respect of Class D Indebtedness shall
                           be subject in every respect to the terms of this
                           Deed;

                  (ii)     insofar as the terms of any Subordinated Loan
                           Agreement entered into by it in respect of Class D
                           Indebtedness or any transaction in connection
                           therewith are or may be inconsistent with the terms
                           of this Deed, the terms contained herein shall
                           prevail;

                  (iii)    in respect of any Subordinated Loan Agreement
                           proposed to be entered into by it in respect of Class
                           D Indebtedness after the date hereof, the prior
                           written approval of the terms thereof shall first be
                           obtained from the holders of Class C Indebtedness;

                  (iv)     no amendment shall be made to any Subordinated Loan
                           Agreement entered into by it in respect of Class D
                           Indebtedness except in writing and with the prior
                           written approval of the terms thereof by the holders
                           of Class C Indebtedness, such approval not to be
                           unreasonably withheld;

                  (v)      immediately after the execution of any Subordinated
                           Loan Agreement entered into by it in respect of Class
                           D Indebtedness, or any agreement for the amendment of
                           any Subordinated Loan Agreement entered into by it in
                           respect of Class D Indebtedness, copies thereof shall
                           be delivered to the holders of Class C Indebtedness
                           as evidence thereof; and

                  (vi)     no prepayment of principal may be made by the
                           Borrower to the holders of Class D Indebtedness (or
                           payment in respect thereof accepted by the holders of
                           Class D Indebtedness) under any Subordinated Loan
                           Agreement entered into by it in respect of Class D
                           Indebtedness.

         (d)      Application. All monies and other property received by the
                  holder of Class C Indebtedness in respect of the Class D
                  Indebtedness may be applied by the holders of Class C
                  Indebtedness in or towards satisfaction of the Class C
                  Indebtedness due and owing in such manner as the holders of
                  Class C Indebtedness may decide, provided that any excess
                  after the Class C Indebtedness has been paid in full shall be
                  paid or delivered to the holders of Class D Indebtedness and
                  may be applied in or towards satisfaction of the Class D
                  Indebtedness due and owing in such manner as the holders of
                  Class D Indebtedness may decide.

         (e)      Directions and Authorizations. Each holder of Class D
                  Indebtedness hereby irrevocably:

                  (i)      directs the Borrower to pay to the holders of Class C
                           Indebtedness (or as the holders of Class C
                           Indebtedness may direct) any amounts which, if paid
                           to such holders of Class C Indebtedness would be
                           subject to the trust mentioned in Clause
                           2.03(a)(iii); and

                  (ii)     authorizes the holders of Class C Indebtedness, in
                           the event of a compulsory or voluntary winding up,
                           liquidation or dissolution of the Borrower (or any
                           proceedings analogous thereto) to ask, demand, sue
                           or prove for, and take and receive, in the name of 
                           such holder of Class D Indebtedness or otherwise,
                           all amounts payable to such holder of Class D
                           Indebtedness on account of any Class D Indebtedness
                           owing by the Borrower, and each of the holders of
                           Class D Indebtedness further covenants that in such
                           event at the request of the holder of Class C
                           Indebtedness, it will take all such action and
                           execute all such documents as the holders of Class C
                           Indebtedness may reasonably require in order to
                           enable the holders of Class C Indebtedness to   
                           recover such Class D Indebtedness or any part
                           thereof.


3.       PERMITTED PAYMENTS

         Notwithstanding the terms of Clause 2, the Borrower shall be entitled
         to make scheduled payments of principal and interest to each holder of
         Class B, C and D Indebtedness under and in accordance with the terms of
         their respective Subordinated Loan Agreements, and clause 14 of the
         Senior Loan Agreement until such time as the Class A Indebtedness has
         been paid in full, and clause 14 of the AES Loan Agreement thereafter,
         provided that, with respect to each class, at the relevant time no
         Event of Default or prospective Event of Default has occurred and is
         continuing.


4.       FURTHER ACKNOWLEDGMENTS

4.01     Relationship between the Senior and Junior Subordination Agreements.
         Each of the holders of Class A, B, C and D Indebtedness acknowledges
         that the Class A, B, C and D Indebtedness are subordinated to any and
         all amounts owed by the Borrower to the Senior Financing Parties under
         the Senior Loan Agreement and the Security Documents (as defined in the
         Senior Loan Agreement) (the 'Senior Bank Debt') in accordance with the
         terms of the Senior Subordination Agreement; that the Class B, C and D
         Indebtedness is subordinated to the Class A Indebtedness, the Class C
         and D Indebtedness is subordinated to the Class B Indebtedness and the
         Class D Indebtedness is subordinated to the Class C Indebtedness, all
         in accordance with the terms of this Deed; and that, in the event of
         any inconsistencies between the provisions of the Senior Subordination
         Agreement and this Deed, the provisions of the Senior Subordination
         Agreement shall govern as between the Senior Financing Parties of the
         one part and the holders of the Class A, B, C and D Indebtedness of the
         other part, and the provisions of this Deed shall govern as between or
         among the parties signatory hereto.

4.02     Indebtedness in Same Class. Each of the holders of Class A, B, C and D
         Indebtedness acknowledges that all indebtedness in the same class of
         indebtedness shall rank pari passu in right of payment and any payment
         to any class of indebtedness made hereunder shall be made pro rata to
         all holders of the indebtedness of such class.

4.03     Purpose of Subordination. Each of the holders of Class A, B, C and D
         Indebtedness acknowledges that the provisions of this Deed are and are
         intended solely for the purpose of defining the relative rights of such
         holders of indebtedness of the Borrower. Nothing contained in this Deed
         shall or is intended to impair, as between the Borrower and any holder
         of indebtedness subject to this Deed, the obligation of the Borrower,
         which is unconditional and absolute, to pay to such holder any amounts
         in respect of its indebtedness as and when the same shall become due in
         accordance with its terms.

4.04     AES Loan Agreement. Each of the holders of Class A, C and D
         Indebtedness acknowledges that AES may, without the consent of any such
         holders, (a) sub-participate all or any part of its interest under the
         AES Loan Agreement to any person and (ii) assign all or any of its
         rights under the AES Loan Agreement to any person, provided that each
         such assignee shall accede to this Deed as a holder of Class B
         Indebtedness.


5.       ACKNOWLEDGMENT BY BORROWER

         The Borrower acknowledges the subordination of the Class B, C and D
         Indebtedness and warrants and undertakes throughout the continuance of
         this Deed and so long as the Class A, B, C or D Indebtedness or any
         part thereof remains owing that:

         (a)      it will make all payments due in respect of the Class B, C and
                  D Indebtedness in accordance with the provisions of the Senior
                  Subordination Agreement and this Deed and it will comply with
                  all the other provisions of the Senior Subordination Agreement
                  and this Deed and it will not do, take part in or take the
                  benefit of anything which would or may breach the provisions
                  of the Senior Subordination Agreement or this Deed;

         (b)      it will promptly notify the Senior Creditors prior to
                  incurring any Class B, C or D Indebtedness; and

         (c)      it has no notice of any prior disposal of or Charge over the
                  Class B, C or D Indebtedness or any part thereof to any other
                  person.


6.       CONTINUING SECURITY

         This Deed shall be a continuing security and shall remain in full force
         and effect until the Class A, B and C Indebtedness have been paid in
         full, notwithstanding the insolvency, bankruptcy or liquidation or any
         incapacity or change in the constitution or status of any of the
         holders of Class B, C or D Indebtedness, the Borrower or any other
         person or any intermediate settlement of account or other matter
         whatsoever. This Deed is in addition to, and independent of, any
         Charge, guarantee or other security or right or remedy now or at any
         time hereafter held by or available to the holders of Class A and B
         Indebtedness.


7.       REPRESENTATIONS AND WARRANTIES

7.01     Representations  and Warranties.  Each of the Junior Creditors  
         represents and warrants  severally and for itself to the Senior 
         Creditors that:

         (a)      it has full power, authority and legal right to enter into and
                  engage in the transactions contemplated by this Deed and has
                  taken or obtained all necessary corporate and other action to
                  authorize the execution and performance of this Deed;

         (b)      this Deed constitutes its legal, valid and binding obligation
                  enforceable in accordance with its terms;

         (c)      neither the execution of this Deed nor the performance by it
                  of any of its obligations or the exercise of any of its rights
                  hereunder will conflict with or result in a breach of any law,
                  regulation, judgment, order, authorization, agreement or
                  obligation applicable to it or cause any limitation placed on
                  it to be exceeded or result in the creation of or oblige it to
                  create a Charge in respect of the Class C or D Indebtedness;

         (d)      all authorizations required from any governmental or other
                  authority or from any of its shareholders or creditors for or
                  in connection with the execution, validity and performance of
                  this Deed have been obtained and are in full force and effect;

         (e)      it is not necessary in order to ensure the validity,
                  enforceability or admissibility in evidence in proceedings of
                  this Deed in its country of incorporation or any other
                  relevant jurisdiction that it or any other document be filed
                  or registered with any authority in its country of
                  incorporation or elsewhere or that any tax be paid in respect
                  thereof except as set out in appendix 2 of the AES Loan
                  Agreement;

         (f)      it is generally subject to civil and commercial law and to
                  legal proceedings and neither it nor any of its assets or
                  revenues are entitled to any immunity or privilege (sovereign
                  or otherwise) from any set-off, judgment, execution,
                  attachment or other legal process;

         (g)      its Subordinated Loan Agreement in existence at the date
                  hereof is valid and in full force and effect, the provisions
                  thereof have been fully complied with, the Borrower is not in
                  default in respect of any provision thereof and it has
                  provided true and complete copies thereof to the Senior
                  Creditors;

         (h)      except as provided in Clause 4.04, it is the sole beneficial
                  owner of the Subordinated Indebtedness owing to it; and

         (i)      no Charge exists over all or any part of its Subordinated
                  Indebtedness (except as created under or pursuant to this
                  Deed).

7.02     Continuing Representation and Warranty. Each of the Junior Creditors
         also represents and warrants to and undertakes with the Senior
         Creditors severally and for itself that the foregoing representations
         and warranties set out in Clause 7.01 with respect to it will be true
         and accurate throughout the continuance of this Deed with reference to
         the facts and circumstances existing from time to time, provided that
         each representation and warranty in Clause 7.01(b) shall (where
         applicable) be subject (as to matters of law only) to Schedule 3 of the
         AES Loan Agreement.

7.03     Qualification of Representations and Warranties. Each representation
         and warranty in Clauses 7.01(a) through (d) inclusive shall (where
         applicable) be subject (as to matters of law only) to the
         qualifications specified in Schedule 3 of the AES Loan Agreement.


8.       UNDERTAKINGS

8.01     Affirmative undertakings. Each of the holders of Class C and D
         Indebtedness severally and for itself undertakes and agrees with the
         holder of Class B Indebtedness throughout the continuance of this Deed
         and so long as the Class B Indebtedness or any part thereof remains
         owing that it will, unless the holder of Class B Indebtedness otherwise
         agrees in writing:

         (a)      supply to the holder of Class B Indebtedness:

                  (i)      as soon as they are available, but in any event
                           within one hundred and eighty (180) days after the
                           end of each of its financial years, copies of its
                           financial statements in respect of such financial
                           year (including a profit and loss account and balance
                           sheet) audited and certified by an independent public
                           accountant acceptable to the holder of Class B
                           Indebtedness;

                  (ii)     as soon as they are available, but in any event
                           within one hundred and twenty (120) days after the
                           end of each half of each of its financial years,
                           copies of its unaudited financial statements
                           (including a profit and loss account and balance
                           sheet) prepared on a basis consistent with its
                           audited financial statements together with a
                           certificate signed by its principal financial
                           officer to the effect that such financial statements
                           are true in all material respects and present fairly
                           its financial position as at the end of, and the
                           results of its operations for, such half-year
                           period; and

                  (iii)    promptly on request, such additional financial or
                           other information relating to it as the holder of
                           Class B Indebtedness may from time to time reasonably
                           request;

         (b)      keep proper records and books of account in respect of its
                  business and permit the holder of Class B Indebtedness and/or
                  any professional consultants appointed by the holder of Class
                  B Indebtedness at all reasonable times to inspect and examine
                  its records and books of account;

         (c)      promptly inform the holder of Class B Indebtedness of the
                  occurrence of any Event of Default or prospective Event of
                  Default;

         (d)      maintain its corporate existence and conduct its business in a
                  proper and efficient manner and in compliance with all laws,
                  regulations, authorizations, agreements and obligations
                  applicable to it and pay all taxes imposed on it when due;

         (e)      punctually pay all sums due from it and otherwise comply with
                  its obligations under this Deed;

         (f)      do or permit to be done every act or thing which the holder of
                  Class B Indebtedness may from time to time reasonably require
                  for the purpose of enforcing the rights of the holder of Class
                  B Indebtedness hereunder;

         (g)      not do or knowingly cause or permit to be done anything which
                  may in any way depreciate, jeopardize or otherwise prejudice
                  the value of the security of the holder of Class B
                  Indebtedness hereunder;

         (h)      not create or attempt or agree to create or permit to arise or
                  exist any Charge over all or any part of its Subordinated
                  Indebtedness or any interest therein or otherwise assign, deal
                  with or dispose of all or any part of its Subordinated
                  Indebtedness (except under or pursuant to this Deed);

         (i)      at all times remain the beneficial owners of its Subordinated
                  Indebtedness;

         (j)      not vary the liability of the Borrower in relation to its
                  Subordinated Indebtedness;

         (k)      upon the request of the holder of Class B Indebtedness, supply
                  to the holder of Class B Indebtedness such information
                  regarding the amount and terms of the Junior Indebtedness as
                  the holder of Class B Indebtedness may require;

         (l)      subject to the provisions of this Deed, duly observe and
                  perform all its obligations under any Subordinated Loan
                  Agreement to which it is a party;

         (m)      ensure that each date for repayment of principal and payment
                  of interest under any Subordinated Loan Agreement to which it
                  is a party shall be an Interest Payment Date; and

         (n)      promptly inform the holder of Class B Indebtedness of any
                  breach of this Deed known to it.


9.       BORROWER'S REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS

9.01     Representations and Warranties. The Borrower represents and warrants to
         the holder of Class A, B, C and D Indebtedness in the terms of Clause
         7.01(g) and also represents, warrants and undertakes to the Senior
         Creditors that such representation and warranty will be true and
         accurate from time to time throughout the continuance of this Deed with
         reference to the facts and circumstances existing from time to time.

9.02     Undertakings.  The  Borrower  undertakes  and  agrees  with the  Senior
         Creditors  in the terms of Clause  8.01(f), (g), (n) and (o).





10.      CLAIMS BY JUNIOR CREDITORS

         Each Junior Creditor severally represents to and undertakes with the
         Senior Creditors that it has not taken and will not take any security
         in respect of obligations owing to it under this Deed whether from the
         Borrower or any other person. So long as any sum remains owing by the
         Borrower to the Senior Creditors, no Junior Creditor shall exercise any
         right of subrogation, contribution or any other rights of a surety or
         enforce any security or other right or claim against the Borrower
         (whether in respect of its liability under this Deed or otherwise) or
         any other person who has guaranteed or given any security in respect of
         the Senior Indebtedness or, subject to the provisions of this Deed,
         claim in the insolvency or liquidation of the Borrower or any such
         other person in competition with the Senior Creditors. If any Junior
         Creditor receives any payment or benefit in breach of this Clause 10,
         it shall hold the same upon trust for the Senior Creditors as a
         continuing security for the Senior Indebtedness.


11.      TAXES AND OTHER DEDUCTIONS

         All sums payable by the Junior Creditors under this Deed shall be paid
         in full without set-off or counterclaim or any restriction or condition
         and free and clear of any tax (other than an Excluded Tax) or other
         deductions or withholdings of any nature. If any Junior Creditor or any
         other person are required by any law or regulation to make any
         deduction or withholding (on account of tax (other than an Excluded
         Tax) or otherwise) from any payment for the account of the Senior
         Creditors, the relevant Junior Creditor shall, together with such
         payment, pay such additional amount as will ensure that the Senior
         Creditors receive (free and clear of any tax (other than an Excluded
         Tax) or other deductions or withholdings) the full amount which they
         would have received if no such deduction or withholding had been
         required. The Junior Creditors shall promptly forward to the Senior
         Creditors copies of official receipts or other evidence showing that
         the full amount of any such deduction or withholding has been paid over
         to the relevant taxation or other authority.


12.      COSTS, CHARGES AND EXPENSES

         Each of the holders of Class C Indebtedness and the Borrower shall from
         time to time forthwith on demand pay to or reimburse the holders of
         Class B Indebtedness for:

         (a)      all reasonable costs, charges and expenses (including legal
                  and other fees on a full indemnity basis and out of pocket
                  expenses) reasonably incurred by the holders of Class B
                  Indebtedness in connection with the preparation, execution and
                  registration of any amendment to or extension of, or the
                  giving of any consent or waiver in connection with this Deed;
                  and

         (b)      all reasonable costs, charges and expenses (including legal
                  and other fees on a full indemnity basis and out of pocket
                  expenses) reasonably incurred by the holders of Class B
                  Indebtedness in exercising any of their rights or powers
                  hereunder or in suing for or seeking to recover any sums due
                  hereunder or otherwise preserving or enforcing their rights
                  hereunder or in defending any claims brought against them in
                  respect of this Deed or in releasing or re-assigning this Deed
                  upon payment of all monies hereby secured and until payment of
                  the same in full, all such costs, charges and expenses shall
                  be secured by this Deed.

         The liability of the holders of Class C Indebtedness in respect of
         amounts due under this Clause 12 shall be borne severally by them,
         provided that, in the event that any amount becomes payable to the
         holders of Class B Indebtedness under this Clause 12 solely by virtue
         of the action or inaction of certain holders of Class C Indebtedness,
         those relevant holders of Class C Indebtedness shall bear sole
         liability and responsibility in respect of such amount so payable. To
         the extent practicable, the Senior Creditors shall consult the Junior
         Creditors and the Borrower before incurring any major expenditure.


13.      INDEMNITY

13.01    Junior Creditors' General Indemnity. Each Junior Creditor shall
         indemnify the Senior Creditors against all losses, liabilities,
         damages, costs and expenses incurred by them in the execution or
         performance of the terms and conditions hereof and against all actions,
         proceedings, claims, demands, costs, charges and expenses which may be
         incurred, sustained or arise in respect of the non-performance or
         non-observance of any of the undertakings and agreements on the part of
         that Junior Creditor herein contained or in respect of any matter or
         thing done or omitted by it relating in any way whatsoever to the
         Subordinated Indebtedness of that Junior Creditor.

13.02    Borrower's General Indemnity. The Borrower shall indemnify the Senior
         Creditors against all losses, liabilities, damages, costs and expenses
         incurred by them in the execution or performance of the terms and
         conditions hereof and against all actions, proceedings, claims,
         demands, costs, charges and expenses which may be incurred, sustained
         or arise in respect of the non-performance or non-observance of any of
         the undertakings and agreements on the part of the Junior Creditors and
         the Borrower herein contained or in respect of any matter or thing done
         or omitted relating in any way whatsoever to the Subordinated
         Indebtedness.

13.03    Payment and Security. The Senior Creditors may retain and pay out of
         any money in the Senior Creditors' hands all sums necessary to effect
         the indemnity contained in this Clause 13 and all sums payable by the
         Junior Creditors and the Borrower under this Clause 13 shall form part
         of the monies hereby secured.


14.      FURTHER ASSURANCE

14.01    Further Assurance. Each of the Junior Creditors and the Borrower shall
         at any time and from time to time (whether before or after the security
         hereby created shall have become enforceable) execute such further
         legal or other mortgages, charges or assignments and do all such
         transfers, assurances, acts and things as the Senior Creditors may
         require over or in respect of the Subordinated Indebtedness to secure
         all monies, obligations and liabilities hereby covenanted to be paid or
         hereby secured or for the purposes of perfecting and completing any
         assignment of the Senior Creditor's rights, benefits or obligations
         hereunder and the Junior Creditors and the Borrower shall also give all
         notices, orders and directions which the Senior Creditors may require.

14.02    Enforcement of Senior Creditors' Rights. Each of the Junior Creditors
         and the Borrower will do or permit to be done everything which the
         Senior Creditors may from time to time require to be done for the
         purpose of enforcing the Senior Creditors' rights hereunder and will
         allow the names of the Junior Creditors and the Borrower (as the case
         may be) to be used as and when required by the Senior Creditors for
         that purpose.


15.      SUSPENSE ACCOUNT

         Any Senior Creditor may place and keep any monies received by virtue of
         this Deed (whether before or after the insolvency, bankruptcy or
         liquidation of any of the Junior Creditors or the Borrower) to the
         credit of a suspense account for so long as the Senior Creditor may
         think fit in order to preserve the rights of such Senior Creditor to
         sue or prove for the whole amount of its claims against the Junior
         Creditors, the Borrower or any other person.


16.      WAIVER AND SEVERABILITY

         No failure or delay by any Senior Creditor in exercising any right,
         power or remedy hereunder shall impair such right, power or remedy or
         operate as a waiver thereof, nor shall any single or partial exercise
         of the same preclude any further exercise thereof or the exercise of
         any other right, power or remedy. The rights, powers and remedies
         herein provided are cumulative and do not exclude any other rights,
         powers and remedies provided by law. If at any time any provision of
         this Deed is or becomes illegal, invalid or unenforceable in any
         respect under the law of any jurisdiction, the legality, validity and
         enforceability of such provision under the law of any other
         jurisdiction, and of the remaining provisions of this Deed, shall not
         be affected or impaired thereby.


17.      MISCELLANEOUS

17.01    Continuing Obligations. The liabilities and obligations of the Junior
         Creditors and the Borrower under this Deed shall remain in force
         notwithstanding any act, omission, event or circumstance whatsoever,
         until full, proper and valid payment of the Senior Indebtedness.

17.02    Protective  Clauses.  Without  limiting  Clause 17.01,  neither the  
         liability of the Junior  Creditors or the Borrower nor the validity or
         enforceability of this Deed shall be prejudiced, affected or discharged
         by:

         (a)      the granting of any time or indulgence to the Borrower or any
                  other person;

         (b)      any variation or modification of any document evidencing or
                  securing the Senior Indebtedness;

         (c)      the invalidity or unenforceability of any obligation or
                  liability of the Borrower under any document evidencing or
                  securing the Senior Indebtedness to which it is a party;

         (d)      any invalidity or irregularity in the execution of any
                  document evidencing or securing the Senior Indebtedness;

         (e)      any deficiency in the powers of the Borrower to enter into or
                  perform any of its obligations under any document evidencing
                  or securing the Senior Indebtedness to which it is party or
                  any irregularity in the exercise thereof or any lack of
                  authority by any person purporting to act on behalf of the
                  Borrower;

         (f)      the insolvency, bankruptcy or liquidation or any incapacity,
                  disability or limitation or any change in the constitution or
                  status of the Borrower or any of the Junior Creditors;

         (g)      any document evidencing security, Charge, guarantee or other
                  security or right or remedy being or becoming held by or
                  available to any Senior Creditor or by any of the same being
                  or becoming wholly or partly void, voidable, unenforceable or
                  impaired, or by any Senior Creditor at any time releasing,
                  refraining from enforcing, varying or in any other way dealing
                  with any of the same or any power, right or remedy such Senior
                  Creditor may now or hereafter have from or against the
                  Borrower or any other person;

         (h)      any waiver, exercise, omission to exercise, compromise,
                  renewal or release of any rights against the Borrower or any
                  other person or any compromise, arrangement or settlement with
                  any of the same; and

         (i)      any act, omission, event or circumstance which would or may,
                  but for this provision, operate to prejudice, affect or
                  discharge this Deed or the liability of the Junior Creditors
                  or the Borrower hereunder.

17.03    Binding Nature of Deed. The Borrower and each of the Junior Creditors
         agrees to be bound by this Deed notwithstanding that any other person
         who was intended to sign or be bound by this Deed fails, for any
         reason, so to sign or be bound or that this Deed is for any reason
         invalid or unenforceable against such person.

17.04    Unrestricted Right of Enforcement. This Deed may be enforced without
         the Senior Creditors first having recourse to any other security or
         rights or taking any other steps or proceedings against the Junior
         Creditors, the Borrower or any other person or may be enforced for any
         balance due after resorting to any one or more other means of obtaining
         payment or discharge of the monies, obligations and liabilities hereby
         secured.

17.05    Discharges and Releases. Notwithstanding any discharge, release or
         settlement from time to time between or among any or all the Senior
         Creditors and the Junior Creditors or the Borrower, if any security,
         disposition or payment granted or made to any Senior Creditor in
         respect of the Subordinated Indebtedness by any Junior Creditor, the
         Borrower or any other person is avoided or set aside or ordered to be
         surrendered, paid away, refunded or reduced by virtue of any provision,
         law or enactment relating to bankruptcy, insolvency, liquidation,
         winding-up, composition or arrangement for the time being in force or
         for any other reason, each of the Senior Creditors shall be entitled
         hereafter to enforce this Deed as if no such discharge, release or
         settlement had occurred.

17.06    Amendment. Any amendment or waiver of any provision of this Deed and
         any waiver of any default under this Deed shall only be effective if
         made in writing and signed by or on behalf of the party against whom
         enforcement of the amendment or waiver is asserted.


18.      ASSIGNMENT

18.01    The Holders of Class A, C and D Indebtedness and the Borrower. None of
         the holders of Class A, C and D Indebtedness and the Borrower shall
         assign any of their rights hereunder.

18.02    The Holder of Class B Indebtedness. The holder of Class B Indebtedness
         may assign or grant participations in all or any part of its rights
         under this Deed and make disclosures in accordance with the provisions
         of clause 19 of the AES Loan Agreement as if references therein to the
         Borrower were references to the holders of Class A, C or D Indebtedness
         or the Borrower (as the case may be) and any assignee of or participant
         in Class B Indebtedness may further so assign or grant participations
         in all or any part of its rights under this Deed.

19.      NOTICES

19.01    Delivery. Each notice, demand or other communication to be given or
         made under this Deed shall be in writing and delivered or sent to the
         relevant party at its address or telex number or fax number set out
         below (or such other address or telex number or fax number as the
         addressee has by five (5) days' prior written notice specified to the
         other party):

         To the Guarantor           China Power International Holding Limited
         and Sponsor:               Suite 5306, Central Plaza
                                    18 Harbour Road
                                    Wanchai, Hong Kong

                                    Fax Number:        (852) 2802-3922
                                    Attention:         Zhao Xin Yan/
                                                       Wang Zi Chao


         To the Junior              AES China Holding Company (L) Limited
         Lender and                 9th Floor, Allied Capital Resources Building
         Sponsor:                   32-38 Ice House Street
                                    Central, Hong Kong

                                    Fax Number:        (852) 2530-1673
                                    Attention:         Jeff Safford
                                                       Chief Financial Officer


         To the Junior              Anhui Liyuan Electric Power Limited
         Subordinated               No. 415 Wuhu Road
         Lenders                    Hefei
         and Sponsors:              Anhui Province
                                    People's Republic of China

                                    Fax Number:        (86-551) 363-7642
                                    Attention:         Long Wen Ming/
                                    Susan Jie/
                                                       Chen Liang Bao

                                    Wuhu Energy Development Company
                                    Commercial Office Building
                                    West Huangshan Road
                                    Wuhu
                                    Anhui Province
                                    People's Republic of China

                                    Fax Number:        (86-553) 382-3224
                                    Attention:         Zhai Dao Ping

         To the Borrower:           Wuhu Shaoda Electric Power Development 
                                    Company Limited
                                    Commercial Office Building
                                    West Huangshan Road
                                    Wuhu
                                    Anhui Province
                                    People's Republic of China

                                    Fax Number:        (86-553) 382-3224
                                    Attention:         Zhai Dao Ping

19.02    Deemed Delivery. Any notice, demand or other communication so addressed
         to the relevant party shall be deemed to have been delivered (a) if
         given or made by letter, when actually delivered to the relevant
         address; (b) if given or made by telex, when dispatched with confirmed
         answerback and (c) if given or made by fax, when dispatched.


20.      GOVERNING LAW AND JURISDICTION

20.01    Law. This Deed and the rights and obligations of the parties hereunder
         shall be governed by and construed in accordance with the laws of
         England.

20.02    Jurisdiction. Each of the Junior Creditors and the Borrower agrees that
         any legal action or proceeding arising out of or relating to this Deed
         may be brought in the courts of England and irrevocably submit to the
         non-exclusive jurisdiction of such courts.

20.03    Process Agent. Each of the Junior Creditors and the Borrower
         irrevocably appoints Rowe & Maw (Attention: Mr. Bernd Ratzke) of 20
         Blackfriars Lane London EC4V 6HT, England as its agent to receive and
         acknowledge on its behalf service of any writ, summons, order, judgment
         or other notice of legal process in England. If for any reason the
         agent named above (or its successor) no longer serves as agent of any
         Junior Creditor or the Borrower for this purpose, the relevant Junior
         Creditor or the Borrower (as the case may be) shall promptly appoint a
         successor agent satisfactory to the Senior Creditors and notify the
         Senior Creditors thereof, provided that until the Senior Creditors
         receive such notification, they shall be entitled to treat the agent
         named above (or its said successor) as the agent of such Junior
         Creditor and/or the Borrower (as the case may be) for the purposes of
         this Clause 20.03. Each of the Junior Creditors and the Borrower agrees
         that any such legal process shall be sufficiently served on it if
         delivered to such agent for service at its address for the time being
         in England whether or not such agent gives notice thereof to such
         Junior Creditor or the Borrower as applicable.

20.04    No Limitation on Right of Action. Nothing herein shall limit the right
         of the Senior Creditors to commence any legal action against the Junior
         Creditors or the Borrower and/or their property in any other
         jurisdiction or to serve process in any manner permitted by law, and
         the initiation of proceedings in any jurisdiction shall not preclude
         the initiation of proceedings in any other jurisdiction whether
         concurrently or not.

20.05    Waiver; Final Judgment Conclusive. Each of the Junior Creditors and the
         Borrower irrevocably and unconditionally waives any objection which it
         may now or hereafter have to the choice of England as the venue of any
         legal action arising out of or relating to this Deed. Each of the
         Junior Creditors and the Borrower also agrees that a final judgment
         against it in any such legal action shall be final and conclusive and
         may be enforced in any other jurisdiction, and that a certified or
         otherwise duly authenticated copy of the judgment shall be conclusive
         evidence of the fact and amount of its indebtedness.

20.06    Waiver of Immunity. Each of the Junior Creditors and the Borrower
         irrevocably waives any immunity to which it or its property may at any
         time be or become entitled, whether characterized as sovereign immunity
         or otherwise, from any set-off or legal action in England or elsewhere,
         including immunity from service of process, immunity from jurisdiction
         of any court or tribunal, and immunity of any of its property from
         attachment prior to judgment or from execution of a judgment.


IN WITNESS whereof each of the parties hereto have executed this Deed on the day
and year first above written.



THE GUARANTOR AND A SPONSOR
- ---------------------------
THE COMMON SEAL of                          )
CHINA POWER INTERNATIONAL                   )
HOLDING LIMITED                             )
was hereunto affixed                        )
in the presence of:                         )



THE JUNIOR LENDER AND A SPONSOR
- -------------------------------
THE COMMON SEAL of                          )
AES CHINA HOLDING                           )
COMPANY (L) LIMITED                         )
was hereunto affixed                        )
in the presence of:                         )



THE JUNIOR SUBORDINATED LENDERS AND SPONSORS
- --------------------------------------------
EXECUTED as, and DELIVERED as, a Deed       )
by ANHUI LIYUAN ELECTRIC POWER              )
DEVELOPMENT COMPANY LIMITED                 )
acting by its authorized signatory          )
in the presence of:                         )



EXECUTED as, and DELIVERED as, a Deed       )
by WUHU ENERGY DEVELOPMENT COMPANY          )
acting by its authorized signatory          )
in the presence of:                         )



THE BORROWER
- ------------
EXECUTED as, and DELIVERED as, a Deed       )
by WUHU SHAODA ELECTRIC POWER               )
DEVELOPMENT COMPANY LIMITED                 )
acting by its authorized signatory          )
in the presence of:                         )

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