<PAGE>

                                                                 Exhibit 10.3

     An asterisk ([*]) indicates that confidential information has been
omitted and filed separately with the Securities and Exchange Commission as
part of a Confidential Treatment Request.

                                    GUARANTY
                                   (NO. [*])


                  GUARANTY, made effective as of October 15, 1999, by [*], a
corporation organized and existing under the laws of the State of Delaware
("GUARANTOR"), in favor of AES RED OAK, L.L.C., a limited liability company
organized under the laws of the State of Delaware ("OWNER").

                  WHEREAS, Owner wishes to have engineered, designed, procured,
constructed, equipped, commissioned and tested a combined-cycle electric
generating facility with a nominal electric generating capacity of eight hundred
(800) megawatts (net) to be located in Sayreville, New Jersey (such facility and
the construction thereof, as more fully defined in the EPC Agreement referred to
below, the "PROJECT");

                  WHEREAS, concurrently with the execution and delivery of this
Guaranty, Owner has entered into that certain Agreement for Engineering,
Procurement and Construction Services, of even date herewith, with Raytheon
Engineers & Constructors, Inc., a wholly-owned indirect subsidiary of Guarantor
("CONTRACTOR") (as such Agreement may be amended, supplemented or modified from
time to time, the "EPC AGREEMENT");

                  WHEREAS, Guarantor [*] will continue to obtain substantial
benefits as a result of the EPC Agreement;

                  WHEREAS, in order to induce Owner to enter into the EPC
Agreement, Contractor has agreed that it would cause Guarantor to execute and
deliver to Owner this Guaranty;

                  NOW, THEREFORE, in consideration of Owner's entering into the
EPC Agreement, the foregoing premises, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Guarantor, intending to be legally bound, hereby agrees as follows:


                                    SECTION 1
                                   DEFINITIONS

                  Unless otherwise defined herein, capitalized terms used in
this Guaranty shall have the respective meanings assigned thereto in the EPC
Agreement.


<PAGE>


                                    SECTION 2
                                    GUARANTY

                  Guarantor hereby irrevocably and unconditionally guarantees to
Owner, as a primary obligor and not as a surety, the punctual performance and
payment in full of all obligations of Contractor under the EPC Agreement in
accordance with the terms and conditions thereof (subject to any rights and
defenses of Contractor thereunder, other than any rights and defenses arising
out of the matters described in Section 4 hereof) and agrees that if for any
reason whatsoever Contractor shall fail duly, punctually and fully to perform or
pay any such obligation under the EPC Agreement, Guarantor shall, upon receipt
of written notice from Owner of such failure pursuant to Section 25.6 of the EPC
Agreement, immediately perform or pay each and every such obligation, or cause
each such obligation to be performed or paid, without regard to any exercise or
nonexercise by Owner of any right, remedy, power or privilege under or in
respect of the EPC Agreement against Contractor or under or in respect of any
other guaranty or security relating thereto. In addition, Guarantor agrees to
reimburse Owner on demand for any and all reasonable expenses (including,
without limitation, attorneys' fees and disbursements) incurred by Owner in
enforcing or attempting to enforce any rights under this Guaranty, PROVIDED that
Guarantor shall have no obligation to reimburse Owner if, in any action or
proceeding brought by Owner giving rise to such demand for reimbursement,
Guarantor shall have prevailed on the merits.


                                    SECTION 3
                                 NO SUBROGATION

                  Notwithstanding any payment or payments made by Guarantor
hereunder or any set-off or application of funds of Guarantor by Owner, until
all of the obligations of Contractor under the EPC Agreement are performed or
paid in full, Guarantor shall not (a) be entitled to be subrogated to any of the
rights of Owner against Contractor or any other guarantor or in any collateral
security or guaranty or right of offset held by Owner for the performance and
payment of the obligations of Contractor under the EPC Agreement, or (b) seek
any reimbursement or contribution from Contractor or any other guarantor in
respect of any payment, set-off or application of funds made by Guarantor
hereunder.


                                       2

<PAGE>


                                    SECTION 4
                                GUARANTY ABSOLUTE

                  The liability of Guarantor under this Guaranty with respect to
the guaranteed obligations shall be absolute and unconditional, irrespective of:

                  (a) any lack of validity or enforceability of the EPC
         Agreement or any other agreement, guaranty or instrument relating
         thereto (if such lack of validity or enforceability is due to any act
         or omission of Contractor or Guarantor or an event within the control
         of Contractor or Guarantor);

                  (b) any amendment to, waiver of or consent to departure from,
         or failure to exercise any right, remedy, power or privilege under or
         in respect of the EPC Agreement or any other guaranty; PROVIDED,
         HOWEVER, that for the avoidance of doubt, Guarantor and Owner hereby
         agree that the obligations of Contractor under the EPC Agreement
         guaranteed by Guarantor hereunder shall be such obligations of
         Contractor as they may have been amended or waived in accordance with
         the terms of the EPC Agreement;

                  (c) any exchange, release or nonperfection of any collateral,
         or any release or amendment or waiver of, or consent to departure from,
         any other guaranty of or security for the performance of all or any of
         the obligations of Contractor under the EPC Agreement;

                  (d) the insolvency of Contractor or any other party or
         guarantor or any proceeding, voluntary or involuntary, involving the
         bankruptcy, insolvency, receivership, reorganization, arrangement,
         dissolution or liquidation of Contractor or any other guarantor or any
         defense which Guarantor or Contractor or any other guarantor may have
         by reason of the order, decree or decision of any court or
         administrative body resulting from any such proceeding;

                  (e) any change in ownership of Contractor or any change,
         whether direct or indirect, in Guarantor's relationship to Contractor
         or in the relationship of Contractor to any other guarantor, including,
         without limitation, any such change by reason of any merger or any
         sale, transfer, issuance, or other disposition of any stock of, or
         other equity interest in, Contractor, Guarantor or any other entity;
         and

                  (f) any other circumstance of a similar or different nature
         which might otherwise constitute a defense available to Guarantor as a
         guarantor (PROVIDED, HOWEVER, that this clause 4(f) shall not prevent
         Guarantor from being able to assert as a defense to its performance
         under this Guaranty, any defense which is


                                       3

<PAGE>


         available to Contractor under the EPC Agreement, other than any
         defenses arising out of the matters described in this Section 4).

                  This Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time any payment, or any part thereof,
to Owner by Contractor under the EPC Agreement or by Guarantor hereunder or by
any other guarantor under any other guaranty of the EPC Agreement is rescinded
or must otherwise be returned by Owner to Guarantor or Contractor or any of
their respective representatives or any other guarantor for any reason,
including, without limitation, upon the insolvency, bankruptcy, reorganization,
dissolution or liquidation of Contractor or any other guarantor, all as though
such payment had not been made.


                                    SECTION 5
                                     WAIVER

                  Guarantor hereby waives notice from Owner of its acceptance
and reliance on this Guaranty and notice of any liability to which it may apply,
and waives presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liability, and the taking of any other action by Owner
against, and (except for the notice specified in Section 2 hereof) any other
notice to, any party liable thereon, including Guarantor, and any requirement
that Owner exhaust any right or take any action against or with respect to
Contractor or any other person or entity or any property (PROVIDED, HOWEVER,
that if and to the extent Contractor is entitled by the terms of the EPC
Agreement to a grace or cure period with respect to the applicable failure to
perform thereunder, this Section 5 shall not prevent Contractor or Guarantor
from being entitled to utilize such grace or cure period to remedy such failure
of performance, but in no event shall any such grace or cure period for
Guarantor hereunder extend past the grace or cure period available to Contractor
under the EPC Agreement).


                                    SECTION 6
                  CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES

                  (a) Guarantor hereby irrevocably submits to the jurisdiction
of any State or Federal court sitting in the Borough of Manhattan, City of New
York, in any action or proceeding arising out of or relating to this Guaranty,
and Guarantor hereby irrevocably agrees that, subject to the terms of Section
6(c) hereof and without limiting Owner's rights under Section 6(b) hereof, all
claims in respect of such action or proceeding shall be heard and determined in
such State or Federal court. Guarantor hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient

                                       4


<PAGE>

forum to the maintenance of such action or proceeding. Guarantor hereby
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to Guarantor at its address
specified in Section 11 hereof. Guarantor agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner permitted by law.

                  (b) Nothing in this Section shall affect the right of Owner to
serve legal process in any other manner permitted by law or affect the right of
Owner to bring any action or proceeding against Guarantor or its property in the
courts of any other jurisdiction.

                  (c) Notwithstanding the foregoing, any dispute arising under
the EPC Agreement and any claims under any of the EPC Agreement and/or this
Guaranty relating to any such dispute, whether arising contemporaneously with or
subsequent to such dispute, shall be resolved by Owner, Contractor and Guarantor
in a single, combined proceeding in accordance with the provisions of Article 21
of the EPC Agreement. Subject to Guarantor's ability to assert as a defense to
its performance under this Guaranty Contractor's rights under applicable
provisions of the EPC Agreement, notwithstanding the existence of a dispute
between Owner and Guarantor and regardless of whether such dispute is the
subject of dispute resolution pursuant to this Section 6(c), Guarantor shall not
be entitled to suspend or otherwise delay the performance of this Guaranty.


                                    SECTION 7
                         REPRESENTATIONS AND WARRANTIES

                  Guarantor hereby represents and warrants as follows:

                  (a) Guarantor (i) is a duly organized and validly existing
         corporation in good standing under the laws of Delaware and (ii) has
         the corporate power and authority to own its property and assets and to
         transact the business in which it is engaged;

                  (b) Guarantor has the corporate power, authority and legal
         right to execute, deliver and carry out the terms and provisions of
         this Guaranty and has taken all necessary corporate action to authorize
         the execution, delivery and performance of this Guaranty;

                                       5


<PAGE>

                  (c) This Guaranty has been duly executed and delivered by
         Guarantor and constitutes the legal, valid and binding obligation of
         Guarantor enforceable against it in accordance with its terms, except
         to the extent that its enforceability may be limited by bankruptcy,
         insolvency, reorganization, moratorium or other similar laws affecting
         the rights of creditors generally or by general principles of equity;

                  (d) Neither the execution, delivery or performance by
         Guarantor of this Guaranty nor the consummation of the transactions
         herein contemplated, nor compliance with the terms and provisions
         hereof, (i) will contravene any applicable provision of any law,
         statute, rule, regulation, order, writ, injunction or decree of any
         court or governmental instrumentality or authority, or requires the
         authorization or approval of or any filing with any such
         instrumentality or authority, (ii) will conflict or be inconsistent
         with, or result in any breach of, in any material respect, any of the
         terms, covenants, conditions or provisions of, or constitute a default
         under, or result in the creation or imposition of (or the obligation to
         create or impose) any lien upon or assignment of any of the property or
         assets of Guarantor pursuant to the terms of any agreement or other
         instrument to which Guarantor is a party or by which it or any of its
         property or assets is bound or to which it is subject, or (iii) will
         violate any provision of the charter, by-laws or like organizational
         documents of Guarantor; and

                  (e) As of the date on which this Guaranty is executed by
         Guarantor, there are no actions, suits or proceedings pending or, to
         the best of the knowledge of Guarantor, threatened against or affecting
         Guarantor before any court or before any governmental or administrative
         body or agency, except as disclosed in Guarantor's Form 10-K for the
         year ended December 31, 1998 or Guarantor's Form 10-Q for the quarters
         ended March 31, 1999, June 30, 1999 or September 30, 1999, which could
         reasonably be expected to materially and adversely affect its ability
         to fully perform its obligations hereunder.


                                    SECTION 8
                                    COVENANTS

                  Guarantor hereby covenants and agrees that, until performance
and payment in full of all obligations of Contractor under the EPC Agreement:

                  (a) Guarantor shall comply, and shall cause its subsidiaries
         to comply, with all applicable laws, except to the extent that
         noncompliance therewith could not reasonably be expected to have a
         material adverse effect on the financial


                                       6


<PAGE>

         condition of Guarantor or on its ability to fully perform its
         obligations under this Guaranty;

                  (b) Guarantor shall preserve and maintain, and shall cause its
         subsidiaries to preserve and maintain, its corporate or legal
         existence, rights and franchises, except to the extent that
         noncompliance therewith could not reasonably be expected to have a
         material adverse effect on the financial condition of Guarantor or on
         its ability to fully perform its obligations under this Guaranty; and

                  (c) In the event that at any time Owner shall have reasonable
         grounds for believing that, were Contractor to fail to perform its
         obligations under the EPC Agreement at that time and such failure would
         constitute an Event of Default (as such term is defined under the EPC
         Agreement), Guarantor would be unable to fully perform its obligations
         hereunder, then within fifteen (15) days of Owner's written request
         therefor, Guarantor shall provide either (i) financial or other
         information reasonably demonstrating its ability to so fully perform or
         (ii) other assurances of its ability to so fully perform that are
         reasonably satisfactory to Owner.


                                    SECTION 9
                                EVENTS OF DEFAULT

                  (a) If any of the following events shall occur and be
continuing it shall constitute an "EVENT OF DEFAULT" hereunder:

                  (i) Guarantor shall fail to observe or perform any covenant or
         agreement contained in Section 2 hereof; PROVIDED that if and to the
         extent Contractor is entitled by the terms of the EPC Agreement to a
         grace or cure period with respect to the failure of performance
         thereunder that Guarantor's failure under Section 2 hereof relates to,
         Guarantor shall have the same period of time as is available to
         Contractor under the EPC Agreement to remedy such failure of
         performance before such failure constitutes an Event of Default
         hereunder, but in no event shall any such grace or cure period for
         Guarantor hereunder extend past the grace or cure period available to
         Contractor under the EPC Agreement;

                  (ii) Guarantor shall fail to observe or perform any other
         covenant or agreement contained in this Guaranty (including without
         limitation the covenants and agreements contained in Section 8 hereof),
         and such failure is not remedied within (1) thirty (30) days after
         Guarantor receives actual knowledge thereof, or (2) such longer period
         as may be necessary for Guarantor to cure such failure, not

                                       7

<PAGE>

         to exceed one hundred twenty (120) days, PROVIDED that Guarantor
         diligently pursues the cure of such failure;

                  (iii) Guarantor shall commence a voluntary case or other
         proceeding seeking liquidation, reorganization or other relief with
         respect to itself or its debts under any bankruptcy, insolvency or
         other similar law now or hereafter in effect, or seeking the
         appointment of a trustee, receiver, liquidator, custodian or other
         similar official of it or any substantial part of its property, or
         shall consent to any such relief or the appointment of or taking of
         possession by any such official in an involuntary case or other
         proceeding commenced against it, or shall generally not pay its debts
         as they become due, or shall make a general assignment for the benefit
         of creditors, or shall take any corporate action to authorize any of
         the foregoing;

                  (iv) An involuntary case or other proceeding shall be
         commenced against Guarantor seeking liquidation, reorganization or
         other relief with respect to it or its debts under any bankruptcy,
         insolvency or other similar law now or hereafter in effect or seeking
         the appointment of a trustee, receiver, liquidator, custodian or other
         similar official of it or any substantial part of its property, and
         such involuntary case or other proceeding shall remain undismissed or
         unstayed for a period of sixty (60) days; or

                  (v) Any material representation or warranty made by Guarantor
         hereunder shall prove to have been false or misleading in any material
         respect when made or deemed made and Guarantor fails to remedy such
         false or misleading representation or warranty within thirty (30) days
         after Contractor receives a notice from Owner with respect thereto.

                  (b) Upon the occurrence of an Event of Default, Guarantor
shall be in material breach of this Guaranty and Owner may exercise any and all
remedies it may have hereunder or at law or in equity. Notwithstanding anything
stated to the contrary in this Guaranty, except as otherwise provided in this
sentence, Guarantor shall not be liable under this Guaranty, whether based in
contract, in tort (including negligence and strict liability), under warranty or
otherwise, for any indirect, incidental, special or consequential loss or damage
of any type, including but not limited to loss of use or loss of profit or
revenue, and Owner hereby releases Guarantor from any such liability; PROVIDED,
HOWEVER, that this sentence shall not limit Guarantor's obligations to pay to
Owner the Provisional Acceptance Late Completion Payments and Performance
Guarantee Payments under Articles 7 and 8 of the EPC Agreement (as such terms
are

                                       8


<PAGE>

defined therein) in accordance with the terms and provisions of the EPC
Agreement and this Guaranty.

                  (c) Guarantor's maximum liability hereunder (except for
Guarantor's liability pursuant to the last sentence of Section 2 hereof) shall
be subject to the same limitations as expressly set forth in Article 9 of the
EPC Agreement (which provisions are hereby incorporated by reference, with each
reference therein to Contractor being deemed to be to Guarantor).


                                   SECTION 10
                                   AMENDMENTS

                  No amendment or waiver of any provision of this Guaranty nor
consent to any departure by Guarantor therefrom shall in any event be effective
unless the same shall be in writing and signed by Owner, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.


                                   SECTION 11
                              ADDRESSES FOR NOTICES

                  All notices and other communications provided for hereunder
shall be in writing and, (i) if to Guarantor, mailed by certified mail,
return receipt requested, or communicated by facsimile or delivered to it,
addressed to [*], (ii) if to Owner, mailed or delivered to it, addressed to
it at its address specified in the EPC Agreement, or (iii) as to each party
at such other address as shall be designated by such party in a written
notice to the other party. All such notices and other communications shall,
when mailed or communicated by facsimile transmission, respectively, be
effective when deposited in the mails addressed as aforesaid or when such
facsimile transmission is confirmed.

                                   SECTION 12
                               NO WAIVER; REMEDIES

                  No failure on the part of Owner to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise thereof or the exercise of any other right operate as
a waiver thereof. The

                                       9

<PAGE>

remedies herein provided are cumulative (unless expressly otherwise provided
herein) and are not exclusive of any remedies provided at law or in equity.


                                   SECTION 13
                        CONTINUING GUARANTY; ASSIGNMENTS

                  (a) This Guaranty shall be construed as a continuing, absolute
and unconditional guaranty of payment and performance, and not of collection
only, and the obligations of Guarantor hereunder shall not be conditioned or
contingent upon the pursuit by Owner at any time of any right or remedy against
Contractor or against any other person or entity which may be or become liable
in respect of all or any part of the obligations of Contractor under the EPC
Agreement or against any collateral security or guaranty therefor. This Guaranty
shall: (i) remain in full force and effect until satisfaction in full of all
obligations of Contractor under the EPC Agreement; (ii) be binding upon
Guarantor and its successors and assigns; and (iii) inure to the benefit of and
be enforceable by Owner and its successors and permitted assigns.

                  (b) Guarantor shall have no right, power or authority to
delegate all or any of its obligations hereunder. Guarantor hereby expressly
agrees that Owner may assign all or any of its rights hereunder without
Guarantor's approval to any person or entity to which it has assigned its
rights under the EPC Agreement (including, without limitation, the Financing
Parties referred to in the EPC Agreement) and that any such assignee of Owner
may further assign such rights assigned to it. Notwithstanding anything to
the contrary contained in the foregoing, no such assignment to any Person
which directly competes with [*], Raytheon Engineers & Constructors, Inc., or
any of its affiliates in the field of design, engineering, manufacturing,
procurement and construction of power generation, transmission or
distribution facilities shall be permitted without the prior written consent
of Guarantor. In the event of any such assignment, references herein to
"Owner" shall be deemed to include references to the relevant assignee. If in
connection with such an assignment by Owner any Financing Party requests
Guarantor to consent in writing to such permitted assignment even though such
consent is not required hereunder, Guarantor shall do so promptly, with such
acknowledgment and consent agreement to contain such terms and conditions as
are mutually and reasonably agreed upon by Guarantor, Owner and the Financing
Parties. In addition, at Owner's request, Guarantor shall provide to the
Financing Parties a certificate from Guarantor and/or an opinion of counsel
addressed to the Financing Parties, in form and substance reasonably
satisfactory to Owner and the Financing Parties, concerning such matters as
the Financing Parties reasonably request, including that (w) Guarantor is
duly organized, validly existing and in good standing under the laws of the
state or

                                       10


<PAGE>

commonwealth of its formation or incorporation, as the case may be, (x) the
execution, delivery and performance of this Guaranty and the related
acknowledgment and consent agreement are within the power and authority of
Guarantor, and this Guaranty and such acknowledgment and consent agreement are
not in conflict with Guarantor's organizational documents or any agreement to
which Guarantor is a party or by which it is bound or affected, (y) there is no
law, rule or regulation, nor is there any judgment, decree or order of any court
or governmental entity binding on Guarantor which would be contravened by the
execution, delivery, performance or enforcement of this Guaranty and such
acknowledgment and consent agreement, and (z) each of this Guaranty and such
acknowledgment and consent agreement is a legal, valid and binding obligation
enforceable against Guarantor in accordance with its terms, subject to usual and
customary qualifications.


                                   SECTION 14
                              WAIVER OF JURY TRIAL

                  GUARANTOR AND OWNER EACH HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
COUNTERCLAIM ARISING IN CONNECTION WITH THIS GUARANTY.


                                   SECTION 15
                                  GOVERNING LAW

                  This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York, the United States of
America, without regard to the conflict of laws rules thereof.


                                   SECTION 16
                                  SEVERABILITY

                  If any provision hereof is invalid or unenforceable in any
jurisdiction, (i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and the remaining provisions hereof shall be
liberally construed in order to carry out the provision hereof, (ii) the parties
hereto shall enter into good faith negotiations to replace such invalid or
unenforceable provision, and (iii) the invalidity or unenforceability of such
provision in any jurisdiction shall not affect the validity or enforceability of
any such provision in any other jurisdiction.

                                       11


<PAGE>

                                   SECTION 17
                             SURVIVAL OF PROVISIONS

                  All provisions of this Guaranty which are expressly or by
implication to come into or continue in force and effect after the expiration or
termination of this Guaranty shall remain in effect and be enforceable following
such expiration or termination.


                                   SECTION 18
                            CONFIDENTIAL INFORMATION

                  (a) Guarantor agrees to hold in confidence for a period
commencing with the date hereof and ending five years from the date of Project
Completion any information supplied to it hereunder by the Owner of the type
governed by the confidentiality provisions of the EPC Agreement and any other
information required by Owner to be so treated. Guarantor hereby further agrees
to require third parties to enter into appropriate non-disclosure agreements
relative to such confidential information as may be communicated to them by
Guarantor or Owner; PROVIDED, HOWEVER, that in the event Guarantor discloses any
confidential information to a third party pursuant to such non-disclosure
agreement, Guarantor shall remain liable hereunder for any further disclosure by
such third-party which is in breach of such non-disclosure agreement or would be
in breach of this Section 18 if such further disclosure were made by Guarantor.
The provisions of this Section 18(a) shall not apply to information within any
one of the following categories: (i) information which was in the public domain
prior to receipt thereof from Owner or which subsequently becomes part of the
public domain by publication or otherwise, except by Guarantor's wrongful act;
(ii) information which Guarantor can show was in its possession prior to its
receipt thereof from the other party; (iii) information received by Guarantor
from a third party without a confidentiality obligation with respect thereto
known by the receiving party; (iv) information which Guarantor developed
independently; or (v) information which Guarantor is required by law to
disclose; PROVIDED, HOWEVER, that prior to making any such disclosure under
clause (v) of this Section 18(a), Guarantor shall: (1) provide Owner with timely
advance written notice of the confidential information requested by such
government authority and Guarantor's intent to so disclose; (2) minimize the
amount of confidential information to be provided consistent with the interests
of the Owner and the requirements of the government authority involved; and (3)
at the request and expense of Owner, make every reasonable effort (which shall
include participation by the non-disclosing party in discussions with the
government authority involved) to secure confidential treatment and minimization
of the confidential information to be provided. Guarantor shall not publish


                                       12


<PAGE>

the terms and conditions of this Guaranty, unless Owner provides its express
prior written consent thereto.

                  (b) Guarantor shall not issue any press or publicity release
or any advertisement, or publish or otherwise disclose any photograph or other
information, concerning this Guaranty, the EPC Agreement or the Project without
the express prior written consent of Owner.


                                   SECTION 19
                                 IDENTIFICATION

                  This Guaranty is numbered [*] to distinguish it from other
guaranties granted by the Guarantor.





                                       13

<PAGE>


                  IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.

                                 RAYTHEON COMPANY


                                 By:   /s/ Thomas D. Hyde
                                       ----------------------------------------
                                 Name:     Thomas D. Hyde
                                 Title:    Senior Vice President, Secretary and
                                           General Counsel
                                 Date:



ACCEPTED AND AGREED:


AES RED OAK, L.L.C.


 By:  /s/ Bart R. Rossi
      ---------------------------
      Name: Bart R. Rossi
      Title:   Vice President
      Date:    12-7-99



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